Thursday, January 1, 2009

Economic Impact

How Much Is That Stadium in the Window?

Excerpts:  “… We do it all the time. When discussing stadium finance, sports journalists are used to casually tossing off figures as if they came straight from the pages of the Baseball Encyclopedia: Safeco Field, $517 million. Miller Park, $414 million. Pac Bell Park, $306 million (but just $15 million from the public).

We do all this knowing full well that these numbers--sometimes supplied by the teams themselves, sometimes through a sort of spontaneous accretion of news reports--never tell the whole story. While the official figures may be true as far as construction costs go, how then to account for the $1-a-year lease payments, "operating costs" funds, tax breaks and other goodies that play a key role when teams and cities sit down to negotiate a new stadium deal? But we use the official numbers nonetheless, because no one has undertaken the gargantuan task of poring through leases and tax rolls to determine precisely who wins and loses how much from these deals.

The most common omissions from the public record, Long found, included: land and infrastructure costs; ongoing annual expenses required by the stadium lease; and property tax exemptions, an often-substantial subsidy that has become de rigueur for almost all U.S. sports facilities…”


The Stadium Gambit and Local Economic Development

Excerpts: “… The practice of professional sports profiting at the expense of taxpayers is not new.  Before the stadium gambit there was the tax shelter dodge in which the purchase and reorganization of a team could generate up to five years of losses, which could be used to offset the new owner’s income from other ventures.  And there is the common practice of funding stadium construction using private-purpose local bonds because their interest payments are exempt from federal income taxation and they therefore carry a low interest rate. 

There are strong reasons to doubt the accuracy of the estimated benefits claimed by economic impact studies.  These impact studies rely upon input-output models of the local or regional economies into which the team and its new stadium will be placed and estimate the economic impact prospectively.  These studies ask the question:  what will happen if a new franchise and stadium enter this community?  The results of these studies invariably reflect the desires of those who commission them, and advocates of stadiums and franchises typically produce impact studies that find large economic impacts, translated as benefits, from building a stadium or enticing a team to enter the city.

The methodology used by impact studies has been criticized on a variety of grounds.  All impact studies use multipliers to estimate the effect of each dollar spent directly on sports on the wider local economy Critics argue that at best the multipliers used in prospective impact studies overstate the contribution that professional sports make to an area’s economy because they fail to differentiate between net and gross spending and the effects of taxes.  In computing the benefits of the investment in a stadium, the appropriate focus is on net benefits, that is, on benefits that would not have occurred in the absence of the stadium.  Impact studies rarely consider the issue.  One could think of this concern as the substitution effect.  Specifically, because of sport- and stadium-related activities, other spending declines as people substitute spending on one for spending declines as people substitute spending on one for spending on the other.  If the stadium simply displaces dollar-for-dollar spending that would have occurred otherwise, then there are no net benefits generated.  To consider the spending on stadium- and sport-related activities as all benefits is, therefore, to widely overstate the value of the investment.  A key issue for getting the right sense of the value of the stadium investment is, consequently, how much of stadium-related spending substitutes for otherwise intended spending and how much is net gain in spending.

…the consensus in the academic literature has been that the overall sports environment has no measurable effect on the level of real income in metropolitan areas.  Our own research suggests that professional sports may be a drain on local economies rather than in engine of economic growth…


AT & T Park

Excerpts: “… The stadium cost $319 million to build and supplanted the Giants’ former home,…

When it opened on March 31, 2000, the ballpark was the first Major League park built without public funds since the completion of Dodger Stadium in 1962.  However, the Giants did receive a $10 million tax abatement from the city and $80 million for upgrades to the local infrastructure (including a connection to the Muni Metro).  The Giants have a 66-year lease on the 12.5-acre ballpark site, paying $1.2 million in rent annually to the San Francisco Port Commission.  The park opened with a seating capacity of 40,800, but this has increased over time as seats have been added.

Giants Enterprises, a wholly owned subsidiary of the San Francisco Giants created and headed by longtime team executive and marketing legend Pat Gallagher, brings non-baseball events to AT&T Park on days when the Giants do not play…”


Privately built Pacific Bell Park a curse to other teams

Excerpts: “… The Giants say private financing only worked in their case because they built the park at a time when San Francisco and Silicon Valley were flush with cash from booming technology companies.

"We had a very strong economy in the late 1990s, a strong company base and a storied franchise," says Giants chief operating officer Larry Baer, who assembled $75 million in sponsorships including $50 million in naming rights fees from Pacific Bell and $75 million from 15,000 charter seat licenses.

Giants president Peter Magowan says most teams couldn't build a stadium without public funds, and that even the Giants couldn't do it now.

The Giants president says new ballparks now require a mix of public and private money…


In San Francisco, the Giants went private for their stadium

Excerpts: “… Joel Ventresca headed up a citizens group called "Committee to Stop the Giveaway," which opposed public financing of a baseball stadium in San Francisco. He says residents are paying indirect costs -- for city services to the park, and the loss of land that could be used for housing or industry that would generate more tax dollars than baseball.

"For PR purposes they claim it's privately financed," said Ventresca. "In reality when you look at the hard numbers, the stadium in San Francisco is heavily subsidized by the local taxpayers. And that means tax dollars are going to support this sports team and their sports palace instead of those tax dollars going for public education, public parks or other types of high-need services that exist here in San Francisco."

It's a mistake, agrees Stanford University economist Roger Noll, to think of SBC Park as purely private. Noll, who studies sports economics, says the Giants' $175 million investment is paying off for now because the park is bringing in more than enough money to cover debts. But Noll sees signs the new-park honeymoon may be coming to an end. The Giants are having an off year on the field, and for the first time some games are not being sold out. Noll says trouble looms.

"Most likely, as one gets out past 10 years, the interest costs will in fact exceed the revenue enhancement," said Noll. "The reason teams have in fact asked for public subsidies is that these stadiums aren't worth it. They actually cost more than the incremental revenues they generate over their lifetimes. And that's why they go for public subsidies. It's not really a good business investment over the long run."

Noll says that means the Giants could come calling on taxpayers again when SBC Park turns from asset to financial burden. But as for the present, Noll says there's a lesson to be learned from San Francisco for cities struggling with stadium issues.

For their part, the Minnesota Twins say the level of private financing seen in St. Louis and San Francisco is not feasible in the Twin Cities. The team points out that San Francisco benefited from the dot-com boom when the city was awash in money; and that the Cardinals already own land where the stadium will be built, and have much higher attendance than the Twins…”


Oakland A’s Press Release 11/18/2008

Excerpt:  “… The project is not planned to include any public funding…”

Comment:  Is the project absolutely will not include any public funding?  What is the definition or scope of the project?  Is the project only inclusive of the stadium itself, or is the upgrade of infrastructures inclusive?  If the infrastructure upgrades are not included, who will be responsible for the cost?


Oakland A’s Press Release 11/8/2007

Excerpts: “… Bring thousands of jobs to Fremont and the surrounding area during the construction phase and then the hundreds of ongoing jobs at the ballpark and surrounding village.

Generate additional revenue from the ballpark and accompanying baseball village that will contribute to the City’s general fund and help pay for vital city services, such as police, fire, and street repair…”

Comment:  Are the jobs regular long term position or on a contract base, and are the jobs guaranteed for Fremont residences as a first priority?  How much additional revenue are we talking about?  What is the current revenue contribution from the A’s to the City of Oakland?


Oakland A’s Press Release 11/14/2006

Excerpt:  “… The anticipated funding for the ballpark will be a combination of private equity and the application of the value of land use entitlements that will be generated by the activities of the ballpark and the adjacent ballpark village developments.  The public assistance sought will be in the form of processing the development activity in the most efficient manner possible, the agreement that benefits generated solely by the development will in part or in total be used to facilitate the development program in a manner that will not impose on general fund or bonding issues on local government and other aspects of public-private cooperation that will stand the test of public acceptance…

Comment: Are there other types of funds that the A’s can tap into that utilize which are taxpayer dollars?


A’s owner explains stadium concerns

Excerpt: “… They're all asking for things they deserve," Wolff said Thursday. "But the problem is we can't give them exactly what they want…


Ex-mayor steps up criticism of Fremont ballpark proposal

Excerpts: “… In an e-mail sent to city leaders Sunday, Morrison wrote that the ballpark village proposal couldn't rely on nearby businesses to remedy a potential long-term parking shortage.

With only 5,800 permanent parking spaces identified for the proposed 32,000-seat ballpark, A's brass had told the City Council in September that the team might be able to contract with nearby businesses to use their parking spaces on game nights and weekends.

The team says it intends to supply at least 10,500 spaces for patrons.

However, Morrison said than an eight-hour survey he conducted using Google Earth turned up only 4,199 non-retail parking spaces within a mile of the proposed ballpark

The council Tuesday night was scheduled to hire the consulting firm LSA Associates Inc. to perform the review, which is expected to take at least 18 months to complete. The contract with the consultant was not to exceed $804,000 and is to be paid by the Athletics…


A’s exploring new stadium site in Fremont, near planned BART station

Excerpts: “… Wasserman, Fremont's mayor and a vocal stadium booster, said that even though he still prefers the original site, "My druthers might be one thing, but my bet might be another."

He said the most important thing is seeing Cisco Field open for business, even if the housing promised with it materializes later, or even never.

"As long as we get the ballpark," he said, "we'll wait."…”


Reports: Athletics will build stadium in Fremont

Excerpts: “… Wolff has asked Fremont staff members about housing and land-use issues near the proposed site adjacent to Interstate-880, city officials told the Mercury News. But the A's have not yet filed a development application with the city, and Fremont will not negotiate terms of the deal until that happens.

"The city doesn't have a project yet," Councilmember Anu Natarajan told the Mercury News. "There cannot be one because we don't have an application yet."

Fremont Vice Mayor Steve Cho said he is open-minded to the idea, but warned that city taxpayers should not have to pay for any part of the new stadium.

"It sounds like something that should work out for the city," Cho told the Mercury News. "But the devil is in the details."…”


The Fremont Athletics: How the deal went down, and why it was inevitable

Excerpts: “… By early 2005, after De La Fuente made it clear that using public money for an A's stadium was out of bounds, Wolff began working on a plan to finance one privately. He decided to build a "ballpark village," featuring a new stadium surrounded by a mini-city of single-family houses, condos, restaurants, bars, retail, and a hotel. He planned to use the profits from the houses and condos to pay for the stadium…”

“… Scott Haggerty is a persistent man, and on June 1, 2005, he wrote to Wolff, asking him once again to "seriously consider" Fremont. A week later, Mayor Wasserman did the same thing. The two knew Wolff was getting nowhere in Oakland and that Fremont would greet him as a savior. Shortly after receiving the letters, Wolff met Wasserman, and this time he didn't cut anyone off. "He was very, very interested from the moment I met him," Wasserman recalled.

In less than a week, Wolff killed the Oakland Coliseum parking lot idea. But he gave little explanation; he vaguely mentioned concerns about building atop underground utility lines and having to negotiate with the Raiders and Warriors. The truth was that his ballpark village would not pencil out unless he had a lot of land for all of those homes and condos. The Coliseum parking lot was just too small.

In Fremont, meanwhile, Wolff sent his son, Keith Wolff, on a driving tour with Wasserman. The mayor showed the younger Wolff the property that HOK had studied, but the owner's son, who was now helping lead the ballpark project, was more intrigued with the Catellus-Cisco land. "He had never seen it before, but he already knew about it," Wasserman recalled. At 143 acres, it appeared to be the perfect size for a ballpark village, but the elder Wolff decided to give Oakland one last chance.

On August 12, 2005, Wolff unveiled his ballpark village plan publicly for the first time, saying he wanted to build it on about a hundred acres of industrial land north of the Coliseum, from 66th Avenue to High Street. The bold proposal was met immediately with skepticism. Wolff asked for no public money, but he said he would need Oakland's help relocating about one hundred blue-collar businesses that occupied the land. His plan instantly raised the ugly specter of politicians using eminent domain to confiscate private property and then hand it to a wealthy sports franchise owner…”

 “…For his part, the council president believes Wolff set up a series of straw men that could easily be knocked down, allowing him to leave town, say he gave Oakland plenty of chances, and still save face. "There was never a real effort to park someplace and really make it work," De La Fuente said…”

“…Pundits have warned that it's not yet a done deal. There are transportation issues to be resolved — the Nimitz is a nightmare, Fremont city streets are choked at rush hour, and the stadium will be about two miles from the still-unbuilt Warm Springs BART station. There's also the question of who will pay for infrastructure — new roads, electrical lines, and sewer pipes. Wasserman said the A's would have to foot the bill just like any other developer, but he expects the team will request a tax break on its mega-project…”

“…Still, concessions may be the one revenue source with potential for the greatest expansion. Can smaller-market teams really narrow the revenue gap — and the resulting achievement gap — selling spicy tubers? Teams today think so, especially once fans throw in an imported lager at the bar, lunch at the fancy club, and an embroidered jacket at the fan-gear shop. Remember the days when people sat in the bleachers for the whole nine innings? No more, says Victor Matheson, a College of the Holy Cross sports economist. "Once they have you in the ballpark, the last thing they want you to do is watch the game," he says. Today's new stadiums are designed for milling around and near-constant spending, and to appeal as much to casual watchers as to diehard baseball fans.

That means children's play areas, bars where people can catch a few innings, sit-down restaurants, and high-end concessions such as AT&T Park's famous ahi tuna sandwich. It means keeping fans in or around the park, wallets out, as long as possible. That's hard to do at McAfee Coliseum, Crowley notes. "Right now, our stadium is pretty much a destination," he says. "You get in the car or on BART and you come to the park, watch the game, and leave." The new A's stadium, he said, will boost the number of attractions inside and nearby the park. "We're hoping people will show up earlier, stay later, and obviously have an opportunity to enjoy the game," he says. "But we're looking for them to spend more...”


Oakland Ballpark Watch: HOK Executive Summary

Comment:  This website contains the initial HOK study for site probing by the A’s.


    Property tax revenue for City of Fremont will decrease drastically. The amount would be in the range of 400-thousand $ per year revenue lost for City and 1.2-million $ per year revenue lost for school.
    Warm Springs/Mission areas are high-end residential area, so with stadium around, property value likely to drop 100K to 400K per house. Conservatively, say each house price drop only 200K and only 1,000 houses are affected. That’s 200 million dollars of property tax lost. If we base on 1% tax rate and 20% distribution to City, 60% distribution to School; this would means 200 million x 1% x 20% =400 K budget lost per year for City and 200 million x 1% x 60% =1.2 Million budget lost per year for School.
    (Please see Redwood City/San Mateo County’s distribution for reference: )

  2. Is is possible to file class-action law suit against City of Fremont, A's, Council Members and Mayor, who did not properly plan what's best for Fremont and cause huge property value loss from this?

    TUESDAY FEBRUARY 24th, 2009
    7:00 P.M. (the building is across from Raleys on Paseo Padre)
    The Con- Man Lew Wolff Comes into Our Community and tries to sell us his Stadium Lie.
    He insults our intelligence
    He threatens the safety of our children
    He threatens our security, and
    He attempts to ruin our quality of life

    This is OUR COMMUNITY!