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Steer Clear of Stadium Madness


Steer Clear of Stadium Madness

November 23, 1998
Urban PolicyNYC

Connecticut has already plunged into sports stadium madness with Gov. John Rowland's decision to build a $350 million football arena for the New England Patriots in Hartford. Can New York City be far behind?

Apparently not, since, as the Daily News reported last week, the city's Economic Development Corp. has quietly agreed to give the Yankees $3 million to study building a new stadium on the West Side or in the Bronx.

The Giuliani administration's pursuit of a new Yankee Stadium is understandable. It is a maxim of New York politics that no mayor can afford to be remembered as someone who stood by helplessly while the Big Apple's oldest and most beloved sports franchise abandoned the city.

Even so, the mayor's determination to use some $500 million of taxpayer money to build a glittering new field of dreams for the Yankees is a terrible idea. It is a dismaying retreat from his pledge to lower taxes and reduce government intrusion into the economy. It is the exact reverse of the fiscal policies Mayor Giuliani needs to follow to help the city achieve real economic growth.

The administration tries to justify its venture into state capitalism as an economic boon for the city. But there are dozens of reputable economic studies that argue sports stadiums cannot reasonably be justified by expectations of increased economic activity. The consensus runs almost across the board from economists on the right to those on the left.

Despite all this evidence, elected officials sometimes succeed in convincing the public that sports stadiums are worthwhile investments — just look at all the applause for Gov. Rowland in Connecticut.

It's true that new businesses do sprout up around relocated stadiums. No doubt, a new stadium on the West Side would attract new souvlaki stands and souvenir shops, new bars and restaurants, possibly even a new hotel. Some of the revenue these new businesses would generate might come out of the pockets of out-of-towners who might not otherwise have spent money in the city.

But as recent studies of Baltimore and Cleveland show, a substantial amount of the revenues would represent merely a shift of entertainment spending from one part of the city to another.

Take Baltimore's Oriole Park at Camden Yards. When Giuliani paid this new stadium a highly publicized visit last spring, he not only gushed about its beauty and comfort but repeated the claim that everyone benefited from the public expenditure on it.

Parts of the "Camden Yards miracle" are certainly true. Immediately following its construction, average attendance at Orioles games increased to 45,000, from 28,000.

However, several recent definitive studies have demolished the myth that building the stadium led to overall economic betterment for the city and state.

Johns Hopkins University economists Bruce Hamilton and Peter Kahn stated: "Public expenditures on [Camden Yards] cannot be justified on the grounds of local economic development."

They went on to say: "We estimate that baseball at Camden Yards generates approximately $3 million in annual economic benefits to the Maryland economy at an annual cost to the taxpayers of Maryland of approximately $14 million."

Though economic activity increased considerably in the spruced-up waterfront area near Camden Yards, much of this represents a relocation of businesses from other parts of the city. And while it is true that Orioles fans spend a lot more money in and around the new stadium, this, too, is money shifted from other Baltimore entertainment venues.

Baltimore was an economically troubled city before the building of its new stadium. It still is.

Giuliani is entitled to try to move the mountain a little to keep his beloved Yankees in the city. What he ought not do in the process is undermine his own political legacy and further impair the city's economic prospects.