Athletics’ Move To Las Vegas Not A Slam Dunk

The Athletics have become disenchanted with their stadium situation in Oakland, and have identified Las Vegas as their first choice for a new home. On June 7, the Nevada legislature met to discuss a proposal for a 30,000 seat stadium on Las Vegas Boulevard, toward which the state would contribute up to $380 million. That proposal was not approved during the legislative session.

According to an article by the Athletic’s Evan Drellich, the legislators debated the expected points well past midnight. Some said that building the stadium partially with public money (the Athletics would contribute up to $1.1 billion) would be good for the economy, bringing in tax dollars and attracting even more tourism to one of the most popular destinations in the country. Others argued that the funds should go to build schools and improve roadways, among other projects in the public’s best interests.

From the article, here is a quote from state senator Rochelle Nguyen, as she addresses state advocates for the stadium:

“You’ve all called us in here for a special session, and are asking, minimally, for the state to give you all $36 million per year for the next five years for a taxpayer-funded stadium, at the same time that the governor has vetoed funding for summer school, a bill to support children’s mental health, a bill requiring paid family leave — all because the governor said we couldn’t afford them.” 

The use of public money to build sports and other entertainment venues is an issue every time such an opportunity presents itself. Conventional wisdom would suggest that the use of public money is an investment. The venue will sell taxable tickets, merchandise, and concessions, among other things. Bars and restaurants may pop up in the area, providing even more tax revenue and creating jobs.

Why wouldn’t a state and municipality want to do this? It turns out these venues often do not generate increased local revenue streams that can be redirected to public projects.

Economist J.C Bradbury expressed some counterpoints to the revenue-generation idea to the Athletic.

“First, and perhaps most important, nearly all empirical studies find little to no tangible impacts of sports teams and facilities on local economic activity, and the level of venue subsidies typically provided far exceeds any observed economic benefits,” the study concludes. “In total, the deep agreement in research findings demonstrates that sports venues are not an appropriate channel for local economic development policy.”

This is thought-provoking, and at least initially, counter-intuitive. Bradbury goes on the back up his argument.

“But when you look beneath the surface, what you’re seeing is that most of those dollars seen at the stadium were previously being spent by people who live locally. So I was going out to dinner, I was going to movies, I was going bowling. That’s where my entertainment dollars were being spent. And so that was money that was being spent among other local merchants.

When I go and spend that money at the stadium, it’s very easy to see all that money concentrated being spent in one area. What’s not really easy to see is that every restaurant in town is serving two less tables at night.

This is an argument that constantly gets made: “Look at all the people buying beers at the stadium, and there’s an extra tax that’s put on that. That’s money that’s going to fund our schools and fund our community.”

Well, no, it’s not. It’s just money that was being spent elsewhere that was going in there.”

The above may be amplified in a locations such as Las Vegas, where tourists flock regardless of whether or not there is a baseball team. The analysis would have to be, how many more people came to Las Vegas and spent money than would have been the case were there no baseball team?

Further, Bradbury notes the obvious point that residents go to the games in far greater numbers than tourists, so the “spending base” is not dramatically impacted by the presence of a professional sports team.

Of course, there are exceptions. A team like the Pirates may be averaging, say, 20,000 fans per game. When the Mets come to town, there may be 30,000 people at PNC Park, as many Mets’ fans may make the six-hour drive to see that amazing ballpark. But this is the exception and not the rule. Following Bradbury’s logic, it becomes easier to see how he gets to his conclusion.

“Some things we know that are also attracting businesses to your community are not just subsidizing their business, but why don’t you put more money into roads or schools or other things? Because when I’m looking to relocate my company, knowing that my employees have a place to send their kids to school is very valuable. And that has clear benefits to the rest of the community, and isn’t just concentrating most of the benefits in the hands of a few very wealthy individuals, particularly the owners.”

How About More Domed Facilities?

The air-quality events of this past week had a significant effect on Major League Baseball, with several games being canceled. As teams build new stadiums or relocate to do so, should they be even more focused on venues with domes or retractable roofs?

Climate data from EPA.gov suggests that wildfires are more common now than they were in the 1980s. From the EPA website, “the wildfire season has lengthened in many areas due to factors including warmer springs, longer summer dry seasons, and drier soils and vegetation. Similarly, climate change threatens to increase the frequency, extent, and severity of fires through increased temperatures and drought.”

The Athletics move to Las Vegas will be interesting to watch, as will the desire of teams to have covered facilities. Rainouts and air quality issues represent postponement potential, and with the new scheduling where every teams plays every other team each season (with many matchups being three games only), the opportunity to make up missed games is that much more difficult to come by.

Baseball is adjusting the on-field product to fan preference with the new rules. Facilities have traditionally been funded, or co-funded, with public money. We may see that change in the future. And who knows, maybe Mets owner Steve Cohen will put that retractable roof on Citi Field after all.