You'd think they were building on top of a major archaeological site with costs like that for site prep.
Looking at the finances in more depth, it looks like the city is going to make back several times the money its spending. The Commanders are paying $2.7 million plus overruns. Voters are paying $202 million for utilities. The Sports Facilities fee, a tax on large area businesses will fund $500 million on infrastructure and $600 million of improving public transit. $356 million is being spent on two garages, funded by bonds issued by Events DC. DC anticipates $5 billion in additional tax revenue over 30 years, which probably a wildly generous estimate but even if it's half that it seems like a good deal for the District. Comparing that to a fully taxpayer funded project, Amtrak is spending $16 billion on digging two new tunnels in New York.
Amtrak is a national public good, kind of an odd comparison to a local stadium that will financially benefit a private organization. The deal that exempts the Commanders from property taxes on the stadium (since the district will “own” it), and the surrounding development, and sales taxes on personal seat licenses, and also gives them the exclusive right to develop housing and retail around the stadium for a grand total of $1 per year - in addition to the direct costs the taxpayers are contributing, seems like much less of a benefit to the public than tunnels that (I’m guessing?) will help facilitate smoother passenger rail travel for a major transportation hub. I am not an economist (most of whom call Washington one of the worst stadium deals in history) but I think it’s safe to say the development rights themselves could probably net the district more than a single dollar per year if they hadn’t gifted it to the team for that “cost”. Most economists look at the opportunity costs of what the giveaways could have netted had they not been given way, as that is an unrealized cost that the municipality is forgoing by not doing something like putting the development rights out for bid, where they can chose the deal that brings in the most immediate and potential revenue overall. It’s smarter to have all interested parties competing to make the best offer than to just choose an entity to essentially hand it over to for nothing. EDIT - I’m not sure why you responded to my post saying that Field of Schemes hasn’t done anything raising to the level of ‘losing their credibility’ with this but the site usually does point out some of the unseen costs that don’t always get accurately reported on.
You don't think there's any societal or cultural benefit of having a sports team. Taxpayers are making no money from that area today. Voters are being asked to contribute $200 million in return for which they'll receive $5 billion over 30 years (though I'm sure that's a wild exaggeration). In addition they'll get a $billion in transit and transport improvements from high revenue businesses. How many economists have called this the worst stadium deal in history? Allegiant seems like a far worse deal to me but taxpayers voted in favor in a referendum. Buffalo is a horrible deal for the majority of New Yorkers, as most of them live more than 350 miles away. "An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today." Laurence J Peter. Getting two economists to agree on anything is a major achievement. Stefan Szymanski(sp?) said MLS was about to go bust in 2014 and lots of people assumed it must be true because he once predicted something that happened. The site may point out some unseen costs but doesn't point out the unseen benefits. They could have put an Amazon distribution center there, with minimum wage "gig" jobs, or a giant AI data center operated remotely which raises the cost of local utilities exponentially, both with $billions on taxpayer subsidies, as other states have done, but I think the residents of DC will get more benefit from having a local team. As for the Commanders getting the revenue, most of that revenue will be spent on salaries, enabling them to attract the best players, and the people paying the majority of the costs are the ones who will buy the hospitality boxes and long-term seat licenses. I guess what I'm ranting is people complaining of public money being spent on things that actually benefit society rather than the $trillions in taxpayer subsidies that go straight into the pockets of billionaires. If you want to get upset about something, get upset about the Walmart employees working 60 hour weeks and still needing food stamps to feed their families, or Elon Musk receiving $billions from the government to blow up spacecraft, or even the unprecedented Economic Depression that's about to occur when the AI bubble bursts.
But not always. A lot of times there is a lower profile, lower stakes, "soft opening" event where they can see if there are any kinks that need worked out. When the Crew opened their 2nd stadium, for instance, it was cashless (which I hate). The stadium Wifi crashed for a bit, and you could not buy concessions. That is problematic.
I didn’t say that. That wasn’t a point being made. You begin with an assumption that people just weren’t looking at the numbers “in depth” and I just responded by adding some depth that you were missing. There’s some societal and cultural benefit to having a sports team, at least to sports fans. They already pay to support the team by buying PSLs, tickets and merch though, if a team isn’t making enough from that to build their own stadium, or pay reasonable rent to a municipality to play in one, then maybe more competent ownership is needed. I’m a sports fan, of course I see societal and cultural benefit to having a sports team, I just have some issues, when the team is privately owned, with taxpayers having to chip in and support my hobby and the owner’s business because some politicians decided to hand over valuable civic assets. Correct. The District’s own report this found that a mixed-use development of the 24-acre RFK site would be generating about $1 billion more yearly in tax revenue by 2059 without the football stadium. Maybe there should have been some sort of process that solicited the best deal for taxpayers instead of just handing over a bunch of cash and subsidies to one business. Both JC Bradbury and Peter Propheter (two economists) agree that, based on the potential $6.6 billion ($4.4 billion in subsidies, and the district’s own estimate that the site will generate $2.2 billion less in tax revenue over time vs developing the land without the stadium), it’s the biggest giveaway ever, but Kansas City’s new stadium is going to give it a run for the money, pun possibly intended. Yes, economist’ predictions can be wrong, just like anyone else’s, I don’t know too many professions with a 100% success rate on predicting the future, but there have been enough of these stadium deals where it’s hardly a prediction anymore to say that the more taxpayer money that is involved the less chance it will provide any ROI close to the expense. I don’t want to get too far off topic so I’ll just say the state could’ve had Amazon and the Commanders and anyone else compete for the rights to the site and analyzed which benefitted taxpayers most instead of what they did. As for the Commanders using the revenue on salaries, the NFL has a salary cap, and if we’re going to say, ‘hey, we should subsidize these teams so they can use revenues to sign better players’ why have team owners at all? If we’re socializing the costs, and using ‘teams will sign better players’ to justify it, we also run into a fallacy of composition in a salary capped league- if all teams are using revenues that are propped up by taxpayer funding to sign players, the competitive balance is the same as if none of them were, so we could just remove the public financing and let the teams thrive or barely survive on their own. A tax subsidy on a stadium also goes into (or better yet just stays inside of) the pocket of a billionaire. Every dollar the team doesn’t pay in property taxes (and for this project that will be whole whole lot of them) is a dollar more that never makes it to the team itself, never shows up on their books, never gets accounted for any real way by the billionaire owner, but one that taxpayers, whether fans of the team or not, ultimately sacrifice for the owner’s sole benefit. I don’t think being upset - or simply scrutinizing - any of these things is wrong at all (those are all valid criticisms of things that deserve to be criticized), I also don’t think criticizing them I has to compete with criticizing sports stadium subsidies. I’m a sports fan, I have conflicted feelings about it all myself - when the former mayor of Chicago told FIFA to go scratch when it came to bidding for WC games, I was like ‘Hell yeah, a victory for the common man’ even though as a fan I still get a little bummed we don’t have a game. I think it just comes down to, again, sports are my hobby and the owners private business - yes there are some civic benefits to hosting a sports team but - if we’re asking all taxpayers to chip in to house these teams, there should be a clear, not up for debate, economic benefit and return of investment on the funding (with guarantees that the teams can’t up and leave for a better deal and if they do the team name and history stays with the city) involved, and so far, there haven’t been too many instances where that has been the case. And the higher the subsidies get, the last chance we have of that happening.
So...there's no person named Peter Propheter. Geoffrey Propheter, an associate professor at UC Denver, has a hilariously low h-index for his research. JC Bradbury, at Kennesaw State, has a slightly less terrible h-index (that has tailed off in the last 5 years) and has made his only real impact in being a sabrenomics nerd. Bradbury's most cited articles are 20-25 years old and don't deal with sports economics at all. Neither shows up on any list of the top economics researchers today, with some of those lists going upwards of 4,000 university professors.
lol, that’s on me, I was referencing Geoffrey Propheter but invented Peter somehow in my response to the “getting two economists to agree on anything is a major achievement” comment. If only Peter was real, it would’ve been three. H score appears to be an indicator of research output and how many times their work has been cited- okay. I can’t claim to be an expert on that or its utility/relevance to the topic at hand. I’ve not seen reference to academic research showing these stadiums are good investments for municipalities, I have seen references to academic research (including this relatively recent one that Bradbury contributed to) saying they’re bad deals, and reports (this one is a little dusty and leads to a dead citation but I’m happy to look at something more recent if available) that a large % of economists believe the costs to relevant taxpayers is greater than the expense. With how much the taxpayer cost has gone up over the past decade I would be surprised if there has been a shift in consensus.
Apologies, that was a study conducted to determine whether the subsidies were necessary for the team to operate as business - I had that open but didn’t think it was a point worth making - I meant to link to this economic analysis there and just pasted the wrong link.
Hold by beer. 1. that doesn't say that other uses would generate $1 billion a year more than the stadium...until at least 2047; 2. it doesn't state what would replace the stadium. Is it assuming maximum density residences? What if, for instance, they decided to create a large public park? Imagine how much Central Park costs New Yorkers in potential tax revenue A rough real estate valuation is $39 trillion. 3. it doesn't allow for tax abatements for new businesses and residents in the area. Generally a city will give people a generous tax incentives to move to a developing area. For instance, when I moved from the Upper West-Side of Manhattan to Sugar Hill in Harlem I was given a ten year 100% property tax abatement worth, to me, about $5k a year 4. it doesn't take into account the economic impact of relocation on the neighbourhoods people are moving from. It appears to assume that the 1.87 people per household earning an average of $73k are moving from elsewhere. 5. and most importantly, it doesn't take into account that in the stadium deal the city retains ownership of the real estate, which by 2050 will probably be worth $tens of billions. Other than that it supports your argument that this is a bad deal. This is why I hated economics from the day I walked into the classroom at college. You can make any argument you want with numbers.
This time of year that beer better be a stout or you can hold it yourself, friend. 1. It starts out-generating the site with the football stadium by 2047, but “only” by about $80m, it is at 2059 (and beyond) where it outpaces by a billion per year. Seems like something that should have prompted a bidding process before using the land for a stadium to lure a team that already plays in the area and didn’t have too many potential sites outside of the immediate region to move to. 2. It compares a stadium and mixed-used development to no stadium and all mixed-use development so it seems to be like-for-like to me. It does specify the number of units that would replace the parking garages and clarifies that income tax revenues would be the largest component. There are some assumptions in there, of course, just as there would have to be in any study- if one model could account for every variable this would all be pretty easy to figure out. That will also never happen. A park is a public good - last time I was in NYC I didn’t have to pay a private entity an admission fee to walk around and enjoy it so I don’t see how that’s relevant here. I’m sure someone smarter than I could even make the argument that a public park would have a higher taxpayer ROI than a stadium for a football team. By definition that person couldn’t be me. 3. It also doesn’t take into account the amount that the city is kicking in to help the Commanders pay for the project- from what I can tell, it’s just looking at anticipated new tax revenues generated by each project, with everything else out of scope. So again, it seems to be like for like. 4. I’m not quite sure I get the particular nit you are picking with this - this would be adding to the housing stock in the study area and is treating both the stadium and non-stadium tax revenues equally, the main difference is obviously that you will generate more by not dedicating a ton of the space in the study area to parking and football stadium. Right now the study area is generating $0 (right?) in tax revenue so it would all be new once built. 5. Sure, and it also doesn’t take into account that there’s a limited amount of uses for the real estate when a football stadium and parking are sitting on it. At that point, the city could eat the costs for demolition and redevelopment, or offer it to the team for another few decades tax free since the team will have already begun begging for more taxpayer money from the surrounding municipalities about 5 years prior if past history is any indication. I don’t know how you model that, but again, this study was just looking at one element of the deal (new tax revenues in the project area), on top of the other money taxpayers are contributing. Lies, damn lies, and statistics, I get it - but just like we say in the attendance threads that we can only work with the numbers we’re given (tickets distributed) we can only work with what we have here. A study by the same government that’s on the hook for a chunk of costs associated to this project that says they’d generate more new tax revenue by doing something else seems pretty compelling to me. I initially pointed out the Field of Schemes is a credible source that has a bias toward taxpayers, not that this was a “bad” deal per se. If you can look at everything, in depth, and say “taxpayers are getting a bargain here” nothing I say is going cause you to reach an opposite conclusion. I would think a softer statement, such as “the District should have put this valuable real estate out for bid instead of practically gifting it to a single business” would be agreeable, but maybe that’s just the stout talking.
Didn't he die last year? I'm just shocked all of the Commanders stadium discussion isn't about the roof amplifying the crowd noise.
Just to clear things up for people: a sports team isn't a public good. It's literally private. The fact that people enjoy rooting for it doesn't change that crucial distinction.
And because of that they don't make as bold stadium demands from taxpayers. They can't threaten to move.
I can't claim to be 'an economist' but it was my undergrad major, so I can give an insight about the term 'public good.' In econ jargon, being a 'public good' does not derive strictly from who owns it (though it is rare for a private owner to intentionally provide a public good, because how would that owner make money?). It derives from whether you can/whether you do charge people for access. The classic example of a 'pure' public good is streetlights, in that you don't buy a ticket for the light, it's awfully hard to deny people on an individual basis the light because they didn't buy a ticket. Once upon a time, roads were a pretty good example, in that once you built a road it was often hard and not worth it to try to prevent people from using it. As technology progresses, this has become more and more feasible, and NYC recently became the first in the US to charge people a toll for entering into a big chunk of the urban core--basically, all of Manhattan south of Central Park now has a congestion toll. Speaking of parks, the second category is goods or services that are not inherently public, but are provided as a public good. Central Park would be an example. They could slap a fence around it and charge a fee to get in, but they don't. Amtrak is not a public good because you have to buy a ticket to ride. It isn't about it being a government agency (it's only quasi-government anyway).
Some additional color: the textbook definition is that a public good is one that is purely nonrival and nonexclusive. Nonrival means that one person's consumption of the good doesn't preclude another person's ability to consume it. A cookie is a rival good. Once I've eaten a cookie, nobody else can eat it. A radio broadcast is nonrival for people within the broadcast range. Roads are partially nonrival, but once they reach capacity, another car on the road reduces the utility others derive from it. A good is nonexclusive if it's impossible to prevent someone else from benefitting from it. Computer software is nonrival, since perfect copies are created trivially, but not necessarily nonexclusive, since it may be possible to prevent use without a license. A park could be exclusive with tall enough walls and an entrance fee. The best examples of pure public goods are national defense, herd immunity from disease, and possibly some public services like emergency fire services (although I've heard of rural community fire departments that will allow houses to burn to the ground if the homeowner hasn't paid the nontax fee). Because anyone can benefit from these goods, it's very hard to provide them without the government stepping in to force contributions through taxes to fund them. As a professional economist, I personally think there is some public good element (or positive externality with public good qualities) to professional sports teams in a city. It's limited, obviously, probably (much) less than the owners like to claim but more than the hardcore anti-subsidy brigade acknowledges. I'm not an expert in public finance, though.
Yeah, a sports stadium, in a strict sense, is clearly not a public good. But there's some argument to be made about the feelings of civic pride. As you say, they're nonexclusive, you can't make every city dweller who just wants to feel happy that their team won pay for that privilege, and they're non-rival in that four more units of pride on my part does not come at your expense. That sort of argument is easy to abuse, and gets abused in the real world, but it should be engaged with, at least as an explanation for why this type of thing goes on. I think that one of the countercurrents to this that can make the citizens angry is the feeling that owners cynically exploit these feelings to ask for stadiums that are 'too nice,' that the bells and whistles go past the point of diminishing returns, a feeling that you could make them half as expensive and you'd only lose 10% of the benefit (which tends to be aimed at the uppermost of the upper crust anyway, non-premium seat holders might not notice the difference at all).
If done well a stadium can be a civic good. If you were ever in the Chinatown/Penn Quarter area of DC before the Capital One Arena was built, it was about as dead as could be and the entire neighborhood revived in the subsequent years. Nationals Park was the impetus for a lot of positive change in the Navy Yard neighborhood as well. With that said, the new RFK isn't coming into a completely dilapidated, crime ridden area like those two were, so the idea that it will be the anchor for lots of business and residential growth is likely specious.
You learn something new every day. I had no idea that Kraft Group CEO Mayra Kraft was responsible for ponying up the dough necessary to make a soccer-specific stadium in Everett, Massachusetts possible. Mayra’s the spitting image of Robert Kraft and bears a name remarkably similar to that of Robert’s late wife, Myra. She must be their daughter… which will be news to their sons when Bob eventually passes and his estate is settled.
I have a master’s in history, and although that isn’t my profession, I still read a ton of history. Here’s my question. Why are historians better at economics than economists? And why do economists suck so much at economics? More seriously, we have an MMT thread in the politics forum. I invite you to contribute. It’s been dormant for a while.
For those of us not well versed in the Kraft dynasty, and also unwilling to click on a video with literally no hints as to what it’s about…. a quick explainer would be appreciated here. I have no idea what’s going on or who Mayra is or is not.