Experts: Proposed Sixers arena economic impact report lacks credibility
Ajay Suresh via Flickr
(The Center Square) – Philadelphia Mayor Cherelle Parker released four reports on the impact of a new Sixers arena in Center City this week, but economic experts say its conclusions are inaccurate and lead to incorrect assumptions about the proposed project.
Several estimates of projected costs for the arena fluctuate between $1.3 billion and $1.9 billion. A taxpayer subsidy proposal for the arena has not been announced.
The economic impact analysis referenced by Parker was completed by marketing firm Convention, Sports and Leisure, which is owned by Dallas Cowboys and New York Yankees venture Legends Hospitality Management.
The company has been hired across the country to produce reports that conclude cities will receive economic benefits from paying for new sports stadiums and arenas. Economists who study those projects, however, consistently show that the promised public benefit is never realized.
“Econ imp studies are useless even if done well, bc they don’t tell you anything about tradeoffs,” wrote the University of Colorado Denver’s Geoffrey Propheter on X, formerly known as Twitter. “Lawmakers’ public service responsibility is to weigh tradeoffs of alternative policies, so a report that says nothing about tradeoffs is useless. Stop asking for these things.”
The CSL report was paid for by project developers through the city of Philadelphia as part of a four-report analysis of community impact, design review, transportation impact and economic impact.
CSL’s report claims the proposed 76 Place at Market East arena would bring the city 53 additional annual events, including 35 concerts with 463,000 attendees; fifteen family shows with 118,000 attendees; and three additional sporting events with 32,000 attendees.
Economist Victor Matheson of the College of Holy Cross – who has extensively studied new arenas and the impact of building new facilities on event totals – said comparing Philadelphia with New York City and Los Angeles is “complete economic malpractice” in an analysis reprinted by the stadium subsidy blog “Field of Schemes.”
“The proposed Philly arenas are like 6-7 miles apart, maybe 20 minutes even in traffic,” Matheson wrote. “The Forum and Honda Center in LA are about 60 miles apart and Prudential Center in Newark is about 50 miles from UBS Arena on Long Island and both are way over an hour separated during normal traffic conditions. Any suggestion that a 2nd Philly arena will generate business like additional arenas in those two places is absurd.”
A separate analysis of a new arena from Comcast Spectator, which owns the Philadelphia Flyers, pointed out that there were no comparable markets with two arenas and there is not sufficient event potential to support a second facility
“Ultimately the lack of events and net revenue reduces the value of the venue and in turn, creates a long-term reliance on public tax dollars for upgrades to stay competitive,” the report says.
That analysis said that any taxpayer subsidies toward a new arena would not bring returns for the city.
“For markets of similar size, the average taxpayer subsidy is 46 percent, or ~$600 million for a $1.6+ billion project,” the report says. “The estimated economic value, or impact, of 76 Place to the City/County of Philadelphia over 30 years is $134 million, or a present value of $63 million. Any taxpayer contribution to the project of more than $63 million negates any positive impact.”
CSL’s analysis claimed that a new arena would generate $390 million in present-value tax revenue for the city, state, and school district, including construction and a 30-year lease. That would send $197 million to Philadelphia, roughly $52 million to the district, and nearly $141 million to the state itself.
Economist J.C. Bradbury of Georgia’s Kennesaw State University said that consultants such as CSL are part of a “snake-oil business of selling placebos that customers desire.”
“The economic prostitutes who peddle economic impact ‘studies’ don’t even bother to get any training in the subject,” Bradbury wrote. “They don’t have to when media outlets and policymakers credulously accept their bogus fantasy documents as real research. Has CSL ever predicted anything correctly?”
CSL did not respond to The Center Square’s request for comment on its report.
Jon Styf is an award-winning editor and reporter who has worked in Illinois, Texas, Wisconsin, Florida and Michigan in local newsrooms over the past 20 years, working for Shaw Media, Hearst and several other companies.
This article was republished with permission from The Center Square.
It doesn’t surprise me that experts want to argue about a study in their field. Or that there is disagreement.
I’m sure the stadium would have bad and good effects.
But it strikes me that if you were going to design an urban location to put a stadium, it would look a whole lot like that location.
Reading Terminal, room on Market street for overflow crowds, multiple large hotels and nearby beer-hall style bars, atop regional public transit hub and a mall.
Once again this is said without correction?
The project is entirely self funded! No Tax Payer Money will be used!
“That analysis said that any taxpayer subsidies toward a new arena would not bring returns for the city.
“For markets of similar size, the average taxpayer subsidy is 46 percent, or ~$600 million for a $1.6+ billion project,” the report says. “The estimated economic value, or impact, of 76 Place to the City/County of Philadelphia over 30 years is $134 million, or a present value of $63 million. Any taxpayer contribution to the project of more than $63 million negates any positive impact.”
The Sixers in fact are counting on two public subsidies because the plan is for the city to own the land and lease it to the Sixers. As a result, they won’t have to pay real estate taxes, but only voluntary payments in lieu of taxes. Second, the city will be left holding the arena after it is obsolete and the Sixers can go elsewhere. The City should not take title so the taxes are paid and the team will have to carry the burden of ownership and upgrades on their own.
Remember these very same sorts of claims that were made about the “thousands” of jobs” that allegedly would have been created in order to justify the cost of building the Philadelphia Convention Center and later, expansion of same? Turned out that after all the tax money was spent, the Center generated less than 200 jobs, the vast majority of which were low-paying, part time jobs that were purely event-driven, meaning that you only worked if there was an event booked. The citizenry must not again fall for this same nonsensical moonshine, peddled by those with vested political and financial interests in building the arena. The team’s owners are all uber-wealthy hedge fund guys who own multiple sports teams, so if they need money to build a new stadium, let them pay for it out of their own very deep Armani pockets.
Agree with “Jeff.” If stadiums are the money makers claimed, why don’t the team owners fund them all by themselves? These projects, no matter where in the country they are, always need great ministrations of public resources, either financial subsides, tax breaks, public guarantees of debt financing, and/or infrastructure investment. The public could probably get a better return from a vacant lot with trash can lids marking the baseball bases.