Hearing consultants and boosters tell us that a new Jets stadium would have a positive economic impact is like hearing Lucy tell Charlie Brown she'll hold the football for him. It is a testament to the power of sports that stadium subsidies, given their appalling track record, still enjoy a presumption of innocence in the court of public opinion.
There is one very good reason to think that the stadium subsidy won't pay for itself: Stadium subsidies never pay for themselves. Stadiums are everywhere touted as urban miracle drugs: they'll boost business, generate tax revenue, create jobs and revitalize downtrodden neighborhoods. Yet every time someone tests the hypothesis, the stadium flunks. (Convention centers, for those about to protest that the development will also host large meetings, don't fare much better.)
The most convincing argument for subsidizing a stadium is the idea of "externalities." This argument says that a local team provides social benefits the team's owners can't charge for. Only a minority of fans actually goes to games or buys merchandise, but many more enjoy following the team, talking about it, or basking in civic pride when it does well. These people pay nothing for their enjoyment, and as a result the social value of the sport exceeds its market value. Since the social value comes from the team's having a place to play, it's appropriate for the public sector to subsidize a stadium.
But this argument is much more convincing for places that don't yet have a team. The Jets aren't being moved from across the country, but across the river. They are already covered by New York media and followed by New York fans. The social benefits of moving them are negligible, so the externality argument doesn't apply.
Now the magic wands come out. Consultants and boosters, armed with strange assumptions and dubious multipliers, have determined that the stadium is just the economic engine the city needs. But there's a contradiction here. One of the reasons the externality argument is plausible at all-that is, one of the reasons the social value of sports can exceed its economic value-is that the economic value is utterly trivial. One of the best-kept (and most valuable) secrets of professional sports is just how small they are.
Sports loom large in American culture, and some people in sports make a tremendous amount of money. But professional sports, while a business, are not big business; the amverage revenue of an NFL team is $160 million, classifying them as medium-sized. Professional teams have nowhere near the size necessary to produce significant economic growth. To put this in perspective, there's a lot of evidence that the presence of a major university can boost a city's economy. Few would argue that Stanford isn't a huge asset to Silicon Valley. But in 1997 (not an atypical year) Stanford generated $1.5 billion. Compared to that, the economic contributions of a single pro team just don't add up to much.
Why not? For starters, most stadiums are empty most of the time. Even if you grant the project some wildly optimistic projections (35 conventions of three days each, 10 football games, and assorted concerts and big ticket events) the Westside stadium will still sit unused almost eight months of the year. And the majority of the stadium's economic output is payroll, the majority going to athletes who are unlikely to live in New York full-time. Likewise, most revenue from concessions and merchandise goes to the companies that make them, which tend to be located in the South and Midwest. Money for t-shirts and hot dogs is economic development for Virginia and Pennsylvania, not New York.
As for creating jobs, a few neighborhood people might pick up part-time, low-wage work selling concessions or taking tickets, but the influx of fans (or convention-goers) just isn't frequent enough to sustain new businesses. The 1994 baseball strike offered stark evidence of this: sociologist John Zipp studied the impacts of cancelled games on retail stores and found that strike had no significant effect on them. In fact, in 17 of the 24 cities studied, retail sales increased.
Maybe Mayor Bloomberg and Dan Doctoroff should take a trip down to Indianapolis, which staked the entire redevelopment of its urban core on professional sports. Over a 20-year period, Indianapolis built two pro sports stadiums, a track and field stadium, a world-class pool, a tennis stadium, a bike-racing stadium and the National Institute for Fitness and Sports. It spent $2.7 billion in its downtown, about 40 percent of which was public. It hosted the NCAA Final Four three times. But in the end, as political scientist Mark Rosentraub found, sports still accounted for 0.32 percent of the city's economy. And the downtown lost jobs overall.
Sports don't create jobs. They aren't engines of economic growth. They aren't anchors of community redevelopment. They are games that make a few people very rich and a lot of people very happy. There's nothing wrong with that, but it's a truth that gets too easily lost in deceptive cost-benefit analyses. Even if the Jets subsidy did pay for itself, that doesn't automatically make it a good use of public funds. The appropriate measure of a subsidy isn't cost-benefit at all, but opportunity cost. We need to look at the Westside, and at the $600 million, and ask: Is there anything more productive we could do with this land, and this money?
Nobody honest could say no.