Should Virginia try to land the Nats?

Story by Chris Graham

The uncertainty over the latest twist in the ongoing saga involving the Washington Nationals and their quest to land a new stadium in the District might result in bringing Virginia back into the Major League Baseball picture.

Published reports regarding the D.C. City Council’s move earlier this month to put a cap on the amount of money that it would commit to a new stadium for the Nationals had Gov. Tim Kaine’s office expressing interest in the team on behalf of the Commonwealth.

Kaine spokesman Kevin Hall appeared to reiterate that interest in response to a query from The Augusta Free Press on the subject.

“The governor welcomes the return of Major League Baseball to the Capital region, and we’re supportive of the District’s effort to maintain their franchise,” Hall said last week.

“If, for some reason, the D.C. deal falls through, and Major League Baseball wants to talk, they know where to find us,” Hall told the AFP.

Whether or not the Democratic governor would find support among Virginia political leaders for pitching a publicly-financed-stadium plan is another question.

“I’ve not been supportive of this effort – because I don’t think we ought to use taxpayer dollars to promote basically a private-sector business that makes lots of money to encourage them to come into the state,” said Steve Landes, a Weyers Cave Republican who is the chair of the Republican caucus in the Virginia House of Delegates.

“I don’t think we need to use public funds for these kinds of purposes,” Landes said. “Virginia citizens would be forced to pay twice for this stadium – once if we use these special funds or special authority, and then they’ll be paying again for years through ticket sales.

“I think it’s ridiculous that we’ve set up a separate authority and a stream of separate, dedicated funding and given them the bonding authority and these kinds of things – because basically the taxpayers shouldn’t be responsible for funding a private-sector entity like that, especially in professional sports, where they make tons of money,” Landes said.

“It seems to me that they ought to have enough money to build a new stadium and to locate or relocate wherever they want to,” Landes told the AFP.

Public financing for pro-sports stadiums is touted by supporters as being a win-win for taxpayers – who get sports franchises in their backyards and the economic growth that is said to come with the attention given the games that are played.

Whether or not the economic impact is sufficient to justify the expenditures is a question on the mind of Scott Wallsten, a resident scholar at the Washington-based American Enterprise Institute.

“There’s no real justification for public financing of stadiums,” Wallsten said. “They don’t generate economic benefits. They don’t help revitalize neighborhoods. The economic research on this is pretty solid. The only studies that show positive effects are the ones commissioned by baseball and people who want a stadium built.”

Washington city officials are projecting the addition of 3,500 jobs and $15 million in local tax revenues from the stadium. What is left unsaid there is that a shopping-mall development can generate a similar amount of economic activity at a much reduced taxpayer price tag.

Wallsten cited the development of a $150 million shopping complex in the District that is expected to add 1,000 jobs to the local economy and $12 million a year in tax revenues – with relatively limited public involvement in the project.

“Even if you assume that they were right about the revenues that baseball would be expected to generate, and I don’t think that they are, it’s pretty much exactly the same amount. And the developers of this project didn’t get any public funds. And that’s going to be a bigger benefit for the city,” Wallsten said.

“If someone would have suggested giving them $600 million to build a shopping complex in the city, you can imagine the outrage. And in fact, the economic benefit is bigger,” Wallsten told the AFP.

A key reason for that is that a retail development has impact on an economy 365 days a year, notes Dennis Coates, an economics professor at the University of Maryland-Baltimore County.

“Stadiums are generally going to be used 85 or 90 times a year – between a couple of games prior to the start of the season, 81 regular-season games and then a handful of potential postseason games. It’s hard to imagine that that kind of use of the facility could compare with the shopping center that’s used every day,” Coates told the AFP.

A drawback for each is that in the case of both new retail developments and sports-stadium developments, “the kind of spending that they can bring to an economy is probably not new spending,” Coates said.

“It’s spending that would have happened otherwise – just in a different location,” Coates said. “By and large, if you think about as people have a fixed budget, and they’re going to spend a certain proportion of that budget, generally speaking, on entertainment activities, and that could mean movies, dinner out, bowling, going camping, whatever, now you throw attending baseball games into the mix.

“OK, so what are they going to do? Save less? Borrow against their other assets so they can increase their spending on entertainment? Or are they going to reduce their spending on other things – generally entertainment kinds of things – to be able to finance attending baseball games?

“If you think they’re going to substitute between different kinds of spending, then there’s no new spending created – it’s just substitution. Different people are getting the benefits of the spending, but there isn’t any new kind of benefit generated,” Coates said.

That realization hasn’t stopped cities and states across the country from getting themselves involved in stadium-construction projects.

“A stupendous amount of money goes into public stadiums and arenas – probably somewhere upwards of $2 billion a year, when you count all the local, state and federal money that goes into it. And the public does not get back any sort of benefit close to what it’s putting into it,” said Neil deMause, the coauthor of Field of Schemes: How the Great Stadium Swindle Turns Public Money Into Private Profit.

“The bulk of the funds comes from taxpayer money – whether it’s direct subsidies, whether it’s property-tax breaks, whether it’s requiring the teams to only have to pay a dollar a year in rent – and the vast majority of the benefits goes to the teams. They’re the ones who get all the luxury-suite money, they’re the ones who get all the naming-rights money, they’re the ones who get all the money from the huge concessions concourses that are built,” deMause said.

“It’s an inequitable deal, but teams continue to use the leverage of, if you want a team, well, you’ve got to play by our rules to extract money from the public,” deMause told the AFP.

The question as to why elected leaders play along is “the $64,000 Question,” deMause said.

“Building stadiums is something that appeals to local politicians and mayors, especially, because it’s something that you can show off,” deMause said. “You can put a plaque on a stadium, but you can’t put a plaque on reduced first-grade class sizes. You can’t go sit in the front row on opening day at the new grade school and wave at the crowd, but you can at a baseball stadium.”

Wallsten said he would have no problem with the political efforts to this end if those presenting the case for public financing of sports stadiums were up front with the facts.

“If politicians went to the voters and said, look, this isn’t going to bring any economic development, but we’re going to spend this much money, and have a team here, is it worth that much to you, and then put it to a vote, and the citizens said yes, well, then I think everything would be just fine,” Wallsten said.

“The problem is that they sell it on a lie – which is economic development. And it doesn’t bring economic development,” Wallsten said.

“And so if instead you were to ask people – this started out as $500 million, and now it’s pushing toward $700 million – and say, this is going to run about $1,000 a person, are you willing to commit that to have baseball come here to Washington? They’re going to look at you and say, are you kidding me?” Wallsten said.

 

(Published 02-27-06)



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