Wednesday, June 10, 2015

Chris Abele's Sports And Snake Oil Super Center

Milwaukee County Emperor Chris Abele is teaming up with his good friend, Scott Walker, to try to shove the horrible arena deal down are throat.  There is so much wrong with this deal that it could not be covered adequately in just one post.

So for now, let's just look at the false bill of goods Abele is trying to sell us.

First, keep in mind that Abele has unilaterally agreed to put Milwaukee County on the hook for $55 million to help pay for the arena.  To pay for that, hell hand over $80 million in uncollected taxes and fines to mercenary collection agencies, who get to take another 15% from these people who couldn't afford to pay in the first place.  On top of that, he wants to sell county-owned land, worth $9 million, for one dollar.

In exchange for sacrificing the poor, Abele is making the claim that if we build the new arena, it will create a boatload of jobs.  Most of these jobs will be temporary construction jobs. The remaining few jobs will be mostly part-time jobs that pay sub-poverty wages.

If the arena isn't built, Abele warns that we'll lose a gajillion dollars in tax revenue and Milwaukee wii fall into Lake Michigan to become a fresh water Atlantis.  Or something like that.

Unfortunately for Abele, real life doesn't match his cherry-picked numbers.

Bruce Thompson, writing at Urban Milwaukee, points out that economic benefits from arenas are way overrated:
The appealing vision of economic prosperity conveyed in this statement runs counter to the consensus among sports economists who have studied the issue. Summarizing a number of studies, John Siegfried and Andrew Zimbalist reported in The Economics of Sports Facilities and Their Communities that “independent work on the economic impact of stadiums and arenas uniformly found that there is no statistically positive correlation between sports facility construction and economic development.”

In their review of the debate on the economic effects of professional sports and their role as an engine of urban economic redevelopment, Dennis Coates and Brad R. Humphreys summarize the divide between economists and advocates of public support for sports facilities and franchises:
Local political and community leaders and the owners of professional sports teams frequently claim that professional sports facilities and franchises are important engines of economic development in urban areas. These structures and teams allegedly contribute millions of dollars of net new spending annually and create hundreds of new jobs, and provide justification for hundreds of millions of dollars of public subsidies for the construction of many new professional sports facilities in the United States over the past decade. Despite these claims, economists have found no evidence of positive economic impact of professional sports teams and facilities on urban economies.
Thompson points out another interesting tidbit - that when Seattle lost their basketball team, it proved to be a good thing for them:
By contrast, a recent paper found that the Supersonics move from Seattle to Oklahoma City actually had a positive effect on property values near the Seattle arena:
After controlling for these different price dynamics, we find that the departure of the Seattle SuperSonics resulted in positive excess price appreciation for condominiums located within one mile of Key Arena. This result is robust to various measures of distance from Key Arena and impact periods over which the departure of the team might affect property values. The evidence supports the idea that the traffic, crowds, noise, trash, and other activities associated with NBA games in Key Arena represented a disamenity in the immediate neighborhood.

The results have important policy implications. Sports facilities and teams have generally been thought to generate positive amenity effects in nearby neighborhoods. Recently, TIF districts have become a popular financial mechanism for publicly funded stadium and arena construction projects. If these facilities generate important local disamenities, then TIF districts may not generate sufficient new tax revenues to pay for the facility construction, especially if the TIF district is relatively small. Also, existing local residents who live near new sports facilities may experience declines in the value of their dwellings… suggesting transfers to local residents from the owners of sports franchises are more appropriate.
Then again, this shouldn't be news to long time readers.  For two years, I've been sounding the siren that Abele wanted his own "stick it to Milwaukee" moment.  Likewise, I've been warning that Abele and friends were going to use artificially inflated numbers:
The plutocrats have tried to point to Oklahoma City as a guide on why we need to build the new arena.  But as Brewtown Gumshoe points out, Oklahoma City has a lot of things we don't, like warmer weather and Big Oil to help fund things.  He also points out that they also have a much lower quality of life.  (It is a right to work state, so it's expected that they have lower salaries and higher levels of poverty.)

On top of it all, the plutocrats will need to show what benefit there is to building an arena.  In short, arenas are money losers for the community:
Dennis Coates and Brad Humphreys found, "The multiplier for spending on sports in a city may be substantially smaller than the multiplier on other forms of entertainment spending, perhaps the most plausible explanation. The majority of the revenues from professional sports go into salaries for players, managers, coaches, trainers, scouts and to income for the ownership. Most of these individuals, especially the more highly paid ones, do not live full time in the city where the games take place. Unlike the wages and salaries paid to employees of local restaurants, movie theaters, car dealerships, department stores, etc., the large salaries earned by players and coaches leak out of the local economy."
This whole discussion is a fine example of what it wrong with the county, the state and even the nation.
Thankfully, people are catching on quickly and there is a bipartisan groundswell opposing to this awful bit of corporate welfare.

It might not be enough or in time to kill this waste of money but the politicians that support it could very well be ending their political careers with it.

1 comment:

  1. Arent these justifications largely the same as for things like THE TRAIN and that other institution known as the UW?
    Oh the irony!