Last Series title
Economics professor questions feasibility of Red Sox plan
By Christopher A. Szechenyi, Boston.com Staff, 05/19/00
BOSTON -Even as the Red Sox moved today to unveil their proposal, one of the nation’s leading sports economists said that similar deals in other cities often turn out to be a bad deal for local taxpayers.
"Economically speaking, these deals never turn out well for taxpayers,” said Andrew Zimbalist, an economics professor at Smith College and co-author of "Sports, Jobs and Taxes."
In an interview with Boston.com this morning, Zimbalist said the public should ask some key questions about the Sox plan when the team outlines it today for the first time.
“Who’s supposed to cover the cost overruns?” he asked, noting that most new stadiums run 20 to 40 percent over budget.
“How much of the revenue will go back to the city?” he asked. “Will the stadium be publicly or privately owned? Who’s responsible for its upkeep?”
While Zimbalist said he's not opposed to public funding for ball parks, he also said, "it’s not a good investment for the purposes of economic development.”
He said, for example, that much of the money spent on a baseball team leaves the area through what he calls "leakage."
“The players don’t live in Boston,” Zimbalist said. “ They spend their salaries elsewhere."
In addition to that, cities have debt costs that add to their contribution to such projects, he said.
"If you have a big component of public financing, the city issues bonds and has to pay debt service off," Zimbalist said. "The city is going to run a deficit because of those payments. At the end of the day, there’s a net negative budget effect.”
In his book, which was co-authored with Roger Noll, an economics professor at Stanford, Zimbalist found that “America is in the midst of a sports construction boom” with plans across the country to spend more than $7 billion on new facilities for professional teams before 2006.
“Most of this $7 billion will come from public sources,” according to a Brookings Institute summary of the findings contained in Zimbalist's book. “Sports facilities now typically cost the host city more than $10 million a year.
"Perhaps the most successful new baseball stadium, Oriole Park at Camden Yards, costs Maryland residents $14 million a year.”
Zimbalist’s book also criticizes those who argue that new stadiums spur so much economic growth through job creation and a multiplier affect that they are self-financing. That argument often relies on faulty economic assumptions, he asserted.
Information about what Zimbalist and Noll found is available online from the Brookings Institute.