Saturday, April 28, 2007


Economists? We Don't Need No Stinkin' Economists.

A story from the Palm Beach Post this week on the proposed new stadium for the Florida Marlins, via Rob Neyer. Here's the point that counts:

For years, proponents have pitched the idea of a new Marlins subsidy as a way to encourage growth in the Miami economy, which in turn would generate more in new tax revenue each year than the $2 million annual cost to taxpayers.

But that theory has been disputed year after year in analyses by the state's Revenue Estimating Conference, the four economists who work for the legislature and the governor. Their take - which aligns with academic studies done during the past four decades - is that sports stadiums for professional teams bring negligible economic benefit because the attendance base is the local area.

In contrast to spring training parks, which lure out-of-state tourists who might not have come to Florida otherwise, regular-season pro teams by and large attract local fans. And these people do not take on second jobs, dip into savings or cut into spending on nontaxable items, such as groceries or medicine, to attend sporting events. That means the money they would spend for tickets, food and parking is money that is probably already being spent at restaurants, movies or other taxable activities.

Emphasis mine.

And this is the point where LT rants about Jeffrey Loria. Rightly so, I might add.



Time to move the Oilers, I guess. We could just open a few movie theatres to soak up the load, the EIG gets a bunch of money, part of which would go into civic coffers due to taxation, we come out ahead, and every bodys!

In other words, "this seems a mite simplistic".

Is that title a direct quote from mclea?

Oh yeah, I completely agree with Lord Bob's sarcasm. Edmonton would totally slide into the North Saskatchewan never to be seen again like the lost city of Atlantis if the Oilers ever left.

First off, I think what you are doing is a great services. I don’t know enough (or care enough) about the issue to take a side, but it’s obvious that you’ve put a lot of time and effort into this, and for the most part your arguments appear well reasoned.

But having said that, I have to take issue with this:

Do we have hard, factual, evidence of this? I don't mean speculation and guessing, but hard numbers.

I think worth pointing out that it’s easier to kick and scream for “hard numbers” than it is to actually provide them. Now I don’t believe for a second that any of players here have any interest whatsoever in providing any numbers, and I’m sure they’ll try to get by with their ambiguous, unquantifiable justifications as best they can, but let’s just think for one second about what you are asking for here.

You’re asking them to isolate the economic benefits, adjusted for opportunity cost, of building an arena in Edmonton. Does this strike anyone else as being an impossible request? First of all, I’m quite sure you could come with a number, no question. The problem is that this number would be so dependent on countless assumptions, many of them largely being subjective shot in the wind guesses, that any number you would come with would be essentially meaningless. Off the top of my, here are a bunch of assumptions you would have to make to come up with any sort of “economic benefits” number.

1) Assume the behaviour of the 17,000 people going to rink every night.
2) What increases in economic activity/expenditure are attributed to the newly built arena? Sure business is up, but how much of the increase is due to other factors. How the fuck are you going to isolate the benefits?
3) Determine the incremental expenditure induced by the new rink. How do we know this money wouldn’t be spent otherwise somewhere else? This, as far as I can tell, would be near impossible.
4) Measuring the immeasurable. How the hell do you put a $ figure on civic pride? Increased vibrancy downtown? All these things are seemingly important, but how important is impossible to measure.
5) Assume the quality of the Oilers product over X amount of years. If Oilers two years from now turn into Edmonton’s version of Calgary’s 1990s “Youngs Guns” things will change dramatically.
6) The quality of entertainment options available in the surrounding area. It’s one thing to open restaurant, but it’s quite another to open one that people want to go to.
7) If you want rely done elsewhere, then you have adjusted the results to the account for the circumstances unique to Edmonton. In order to these you’re going to have to make a bunch of assumptions with respect to not only what is different between Edmonton and the test city, but how different, and how this difference would manifest itself dollar wise.
8) To get the number, you’re going have to assume the economic conditions in the city/province for the next 20 years. This isn’t as big of a stretch as the others, you might actually be able to do it, but in a boom/bust province like Alberta this is a very important assumption.

So sure, you could probably come up with a number, but it would be a garbage in garbage out number. The number would be so dependent on so many important assumptions, that the quality of the number would become wholly dependent on the quality of the assumptions made. And most of these assumptions are just plain impossible to make with any amount of certainty.

So to answer your question, the reason you aren’t see any hard numbers is because they a) don’t want to give you a number and b) even if they did, they wouldn’t be able to, because a number doesn’t exist.

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