NEW ORLEANS (AP) _ Publicly financed stadiums and sports arenas do not provide the benefits that putting the money into other projects would return, according to a study by a Federal Reserve economist. The New Orleans Saints are pushing for a new $450 million stadium by 2006 as the NFL team negotiates with the state over a new package to keep the team from moving.
So far, the idea has gotten a chilly reception from state officials who have agreed only to study the idea while renovating the Superdome. In an article in the Regional Economist, economist Adam M. Zaretsky said more than $8.7 billion, including $5 billion in public money, was spent between 1987 and 1999 to build or refurbish 55 stadiums and arenas.
Saints owner Tom Benson has put up $100 million and wants public money to finance the rest of the project. Zaretsky, quoting a variety of studies, said the overall economic benefits of building a stadium are minimal, while taking public money that could be used for purposes that could boost an economy, such as roads, police protection and schools. ``Sports are emotional,'' Zaretsky said in a telephone interview Wednesday. ``There's civic pride and that's something as an economist we can't quantify and put into the model.
Does that civic pride translate into additional jobs and additional tax revenues that were promised with the original proposal? By and large, the answer is 'no.''' Some estimates of the Saints' annual economic effect on Louisiana have run over $400 million. In February, economist Tim Ryan of the University of New Orleans placed the impact at $257 million, saying he backed out money that would have been spent on other segments of the economy.
Without dealing with the Saints' proposal directly, Zaretsky said economic impact studies often ignore the fact that the facilities do not bring new money in, instead redirecting it from other activities. For example, families have only a fixed amount of money to spend on entertainment. ``If the family chooses to spend the money at the ballpark, for example, then those funds cannot be spent on other activities. Thus, no new revenues are actually being generated,'' Zaretsky said.
Tourists attending sporting events also are not bringing in new money, instead diverting it from other activities, Zaretsky said. The team owner generally stands to make the most out of a publicly financed deal, Zaretsky said. For example, Eli Jacobs bought the Baltimore Orioles for $70 million in 1989 just after the team got Maryland to build a $200 million stadium from lottery revenue. Jacobs sold the team in 1993, a year after the stadium opened, for $173 million.
In the meantime, a study by economists Roger Noll and Andrew Zimbalist of the Orioles, who draw about a third of their crowd from outside the Baltimore area, showed the net gain to Baltimore's economy is only about $3 million a year, compared with the $200 million cost of the ballpark. Zaretsky's study also said the cost of each job saved by keeping a franchise from moving ``is usually out of the ballpark.''
Studying stadium proposals for baseball's Cincinnati Reds and the city's NFL Bengals, economists John Blair and David Swindell concluded that the cost-per-job was around $147,000, compared with Ohio state economic development programs that spend about $6,250 per job. Many of those jobs will wind up being only part-time, seasonal employment at low wages, Zaretsky said. Publicly financed stadiums also are meeting with resistance in other states.
Baseball's Florida Marlins recently were turned down by that state's legislators in a bid for a new stadium. The study did not cover special events, such as the Super Bowl, which go along with having professional teams.