Worst Economic Impact Projection Ever

Yesterday, I received a call from a reporter working on a story regarding the economic impact of a minor league baseball team. These calls have become rather routine, but yesterday’s call was a bit more interesting.

The reporter, Louis Llovio, was checking into a claim made by Richmond Flying Squirrels executives that the team would generate as much as $40 million a year in economic impact to the community. I’m accustomed to exaggerated claims of non-existent benefits, but $40 million is outrageous. To put this in perspective, that’s more than double the $15 million that Gwinnett County officials claimed the Gwinnett Braves would generate, and I’ve been quite clear about that number being a farce.

Here is my response.

“That is so laughable I don’t know what to do,” he said of the prediction of $40 million in annual economic impact.

Bradbury said economic-impact studies are based on faulty assumptions.

Those projections “assume people are spending money they wouldn’t otherwise be spending” on movies, dinner or other forms of entertainment, he said.

“What the fans are doing is relocating money from other entertainment” to the baseball team, he said.

That means the money is already in the local economy and would have stayed there regardless of a sports team.

He also said that most minor-league players don’t live in the area and their salaries are relatively low, so they don’t pump much into a local economy.

No sweat. Almost as if it came from a can, time to say good-byes and move on. But, I couldn’t hang up without asking how the executives justified this estimate, and I heard the following.

That figure, he said, is based on a Minor League Baseball formula that takes the amount of revenue generated by the organization and multiplies it by five.

At which point I literally bent over double laughing. Count gross spending as net new spending and multiply it by five! I asked for clarification, “Did you say ‘five?'” No wonder. $8 million is ridiculous enough without a multiplier of five. I’ve seen a lot of PR studies that use multipliers greater than one (for which there is no empirical justification) and most are less than two—even Gwinnett used 1.7—but five? Wow! As the kids would say, ROTFLMAO.

If the Flying Squirrels are angling for a new publicly-funded stadium, such claims aren’t going to build much trust with the public. They wouldn’t stand for it with the Braves, and I don’t expect them to start now.

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