Jencunas: Providence PawSox Stadium - Boon or Bust?
Thursday, February 26, 2015
As usual, the truth is somewhere in the middle. The new stadium is hardly an economic panacea. It’s a good idea though, and government should be a partner, not an obstacle, in making the new stadium a reality.
The deal hasn’t been finalized, but the new Paw Sox owners hope to build a new stadium on the currently unused I-95 land. The stadium will be privately funded but they’re hoping for generous tax breaks. In exchange, Providence is promised the economic benefits of stadium tourism.
First, here’s the bad news. Stadiums and sports teams are rarely a major economic boost for their host city. To quote a study from the nonpartisan Brookings Institute, “a new sports facility has an extremely small (perhaps even negative) effect on overall economic activity and employment.”
Brookings found this was because most fans were from the host city, not tourists. Therefore, most spending that occurs from a sports stadium is a replacement for spending that would have happened otherwise. For example, a family who would have gone to dinner and a movie instead go to a minor league baseball game.
So if the new owners start making wild claims about generating hundreds of millions in economic growth, don’t believe them. That’s just puffery, empty words akin to a boxing promoter promising that a match between two washed up fighters will be The Fight of The Century.
But there are exceptions to that rule. Teams and their stadiums can benefit cities, and a minor league team would probably benefit Providence.
In Durham for example, the Durham Bulls succeed in bringing fans from outside the city. Also, the Bulls aggressively market to corporate clients. That means Durham gets spending that otherwise would have gone back to the neighboring suburbs, where most of the city’s white collar workers live.
The Durham Bulls have something the newly renamed Rhode Island Red Sox won’t – a famous movie about the team that draws tourists from across the country. But neither did Toledo, Charlotte, or El Paso’s league teams, and all of those have been major boons for their host city.
More importantly, he has a good track record with stadiums. Camden Yards in Baltimore is one of the most successful stadiums for tourism, drawing between a quarter and a third of its fans from outside the Baltimore area.
But even if the stadium is a good idea, should the government subsidize its construction? The short answer is yes.
Right now, the I-195 land has been vacant despite a state commission promoting its development. A stadium will be much better than a vacant lot.
The longer answer is it depends. Tax breaks are certainly a good idea, since the state is currently getting no tax revenue from vacant land. Even generous tax concessions will yield more revenue than the state and city get now.
This doesn’t mean the government doesn’t need to negotiate well. The biggest priority needs to be preventing the team from moving again, especially if another city is willing to build a better stadium.
Many cities have provisions with their local teams that ban the team from moving for a certain amount of years after the stadium is built. Other cities have provisions forcing the team to pay back the city’s subsidies if they leave their stadium before a lease expires.
These would all be good ideas for the government to insist upon before giving subsidies to the Rhode Island Red Sox. The more subsidies the team gets, the more stringent the agreement should be.
If the state makes a good deal, this should be a win-win. The ownership group is top notch and should be able to bring in tourists and corporate revenues. Providence could use more development. The land is currently sitting useless.
So it won’t be a home run, but it won’t be a strikeout. Instead it’s a line drive down the right field line. That’s a good at-bat for a ballplayer, and it’s a good deal for Providence.
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