Dr. Victor Matheson, professor of economics at College of the Holy Cross, spoke to a capacity crowd at the Blackstone Valley Visitor Center in Pawtucket on the economics of public money funding sports stadiums, and specifically on public money building a new stadium in downtown Providence for the Pawtucket Red Sox (PawSox).
Overall, Matheson was not very amenable to the idea.
Matheson is an engaging speaker, an economist who specializes in sports. He prepared his remarks and his PowerPoint presentation for the price of a PawSox game, a hotdog and a beer, a far cry from the money Speaker Nicholas Mattiello or Governor Gina Raimondo are spending for their experts.
“Let me just lay it on the table here,” said Matheson at the start, “I’m going to be a critic of public subsidies for stadiums.”
Showing the ubiquitous artists rendering of the proposed downtown stadium, Matheson said that it “would be a fantastic stadium for the owners to spend their own money on.”
Studying stadiums and their impacts, said Matheson, generates the “weird impression that the newer the stadium, the higher the attendance or the older the stadium, the higher the attendance.” McCoy Stadium, where the PawSox currently play, is the one of the oldest stadiums in the country.
Built for $1.5 million, McCoy was the most expensive stadium ever, in 1942. It’s construction, said Matheson, was a “massive debacle.” In 1966, when owners talked of moving out of the region, $100,000 in upgrades were done to McCoy, mostly taxpayer supported. In 1999, taxpayers ponied up for most of the $14.9 in needed upgrades, once again because the owners threatened to move.
Matheson is not a fan of “Economic Impact” studies. If there is one thing to take home from his talk, said Matheson, it’s that “any economic impact study published by the people who are trying to justify public subsidies, you should always take with a grain of salt. And many grains of salt.”
There is, “remarkable agreement among economists finding that spectator sports result in little or no measurable economic benefits on host cities,” said Matheson, pointing out that money spent on such ventures is then not spent on other things a city needs. (Such as infrastructure, school repair and Medicaid, I will point out.)
Matheson then went on to explain how modern stadiums, unlike Fenway Park in Boston or Wrigley Field in Chicago, are not centers of economic activity that benefit surrounding businesses. Instead, modern sports stadiums are self contained oases surrounded by parking. The restaurants and amenities are not located throughout the city but within the stadium itself, generating revenue for the stadium owners, not the city.
Matheson compared minor league baseball teams to average 16-screen movie mega-plexes. In general, they perform about the same economically, yet no one is suggesting that movie theaters be publicly subsidized in anything like the kind of deal that baseball stadiums traditionally receive. “Are movie theaters exempt from sales tax, property tax, market value leases, etc.?” asked Matheson, “We would say that’s crazy.”
The kind of low paying jobs a minor league baseball stadium would generate will end up costing the state around $80,000 per year, per job. Matheson compared this number to the good paying jobs lured into South Carolina with the new Volvo plant. Good middle class jobs there cost the state $3,500 per year, per job in subsidies.
Towards the end of his presentation Matheson explored the possibility of the PawSox moving out of state in the event that they do not get the deal and the land they want in Providence. Looking at population statistics and the current locations of Major League, AA and AAA baseball teams, Matheson doesn’t see many viable options.
Matheson talked about the threats made by the owners of the Patriots when they talked about moving to Hartford or Providence. After not getting the deal they wanted from these other cities, they decided to stay in the Boston area, and built Gillette Stadium, because it was the best location, just as the Providence region (which includes Pawtucket) is the best place for the PawSox.
I hope to have the slides from Matheson’s talk soon and will post a video of his talk with the slides as soon as possible.