Archive for Gwinnett Braves

Two Topics I Like to Write About

Cal Warlick continues his excellent cartoon work in the AJC.


Warlick Cartoon

Wow, the Gwinnett stadium and steroids. How could I not link to this? ;-)

Summing Up the Gwinnett Stadium Mess


Warlick Cartoon

If You Keep Saying It, Maybe It Will Come True

I’m as tired of writing about this as you are reading about it. But, I want to record every instance when the Gwinnett Commissioners declare that their stadium will generate economic benefits.

From today’s AJC:

“Our board was completely unanimous on baseball Jan. 15 of last year, and I think our board will be completely unanimous on baseball today,” said Commissioner Bert Nasuti, the project’s chief proponent.

Nasuti is betting the ballpark will help boost Gwinnett’s economy. Conventions, Sports & Leisure International, the consulting company hired to study the feasibility of bringing baseball to the county, said a $38 million ballpark would generate $6.3 million to $8 million in net new spending each year, create 130 to 170 jobs and generate between $267,000 and $342,000 a year in taxes.

“You don’t shut down economic development opportunities when times are bad,” Nasuti said. “That is when you look at economic development opportunities.”

I have demonstrated why these estimates are faulty.

A Challenge from the Commissioner

Gwinnett Board of Commissioners Chair Charles Bannister issued the following statement during his State of the County address yesterday.

The stadium is progressing nicely and is going to be a jewel in all of minor league baseball as well as a fun place to take the family close to home.

It would have been great to have sold the naming rights to the stadium by now, but corporations are doing the same thing we’re all doing – tightening our belts.

We’ve taken some hits from critics over our stadium, but that’s OK. I know I speak for my fellow commissioners when I say we’ll gladly take those hits and invite those critics to check back in a few years.

Let me be as clear as I can be about this: The Braves moving their Triple-A team to Gwinnett is good business for our county. The stadium is an economic development project that is a wise investment in our future, one that will benefit us tremendously over the long haul.

Don’t worry, I will check back. The question is will you be around, or sitting on a dock in Hall County? Again, I ask the County to find even one academic economist—more would be preferable given the overwhelming consensus among economists on my side—who is not being paid by the County or other affiliates with a stake in the project to state that this will boost the County’s economy, just one.

Instead, I guess we’ll just have to settle for Nigel Tufnel’s rhetorical strategy.

Atlanta Business Chronicle on the Gwinnett Stadium

This week’s issue of the Atlanta Business Chronicle contains its “Gwinnett Market Report”. The lead article is about the stadium, and I serve the role of critic. Here are some highlights from the article (subscription only).

“The general belief among economists is that there is no economic impact of these publicly financed stadiums,” Bradbury said. “We keep seeing that this will generate $15 million and that is a completely made up number. They are clearly going to have to raise taxes. They are not going to make their first bond payment [without the help of taxes] ; and it is not going to get any easier. ”

“This is a great deal for the Braves and the Gwinnett commissioners should be embarrassed,” Bradbury added. “I think if you called every economist in the state of Georgia at academic institutions, you would find it hard to find a single one that would say this is going to have economic benefits.”

I added the statement in brackets, because my implication wasn’t clear. The County has already made its first bond payment.

Stadium project manager Preston Williams defends the stadium.

“Sometimes I question whether building stadiums is about economic impact or keeping up with the Joneses, but in the minor league side of it you are not laying out $300 million or $400 million to try and get some benefit out of that,” he said. “In the case of minor league sports, there is just as much importance to have quality-of-life issues that people are proud of and enjoy going to.”

“It will more than pay its way before this is over.”

Could a stadium supporter provide at least one academic economist who is not being payed by the County to back up the claim that the stadium will generate net pecuniary benefits? Apparently the stadium is going to pay for itself because it’s going to pay for itself. I’m tired of hearing “these go to eleven” answers.

“Paying for Itself” from Day One

Amazing! The Gwinnett Braves Stadium is paying for itself before it even opens. By “paying for itself”, I mean—and I guess Jock Connell meant it too—that tax revenues from Gwinnett citizens are already being diverted to Liberty Media shareholders to pay for the stadium that will generate revenue for them.

The first payment on bonds sold to build Gwinnett’s minor-league stadium is due in January, but officials said the money is already in.

Gwinnett Budget Director Chad Teague said officials thought the money would be due by the end of the year, but instead, the $1,587,067 will be paid in January. The money will be carried over from 2008 to 2009′s budget, he said….

The car rental tax is the only revenue that began collecting in 2008, and Teague said the money has been coming in faster than officials expected.

Through November, the county collected $513,057.43, nearly 50 percent higher than the $350,000 officials had forecasted for the time period.

“We should be fine,” assuming the parking revenues and ticket surcharges meet expectations, Teague said of the inability to sell the naming rights. “We’re ahead of the game on the car rental (tax). Right now, we’re in pretty good shape.”

The article is confusing. Does this mean that county officials thought the first payment was due in December 2008 when it was really due in January 2009? If so, these guys are really on ball. It reminds me of the county official who didn’t know what type of bonds were being used to fund the stadium.

And so much for the notion that car-rental taxes are covered by stadium visitors: this tax is payed by Gwinnett citizens with car trouble.

Gwinnett Chickens Coming Home to Roost

Per Gwinnett Daily Post:

The elimination of emergency medical services and closing of the county prison are possibilities in Gwinnett’s financial crisis.

They were among 152 recommendations in the draft report of the Service-Value-Responsibility study, and could cut as much as $79 million in the county’s budget.

From the cutting of small programs such as the annual lighting of the Christmas tree and Fourth of July celebration and providing lights on Interstate 85 to cutting staff, furloughs and possibly implementing a four-day work week, those recommendations and the county’s finances in a time of tight revenues will be the main topics of discussion during a three-day county government retreat beginning today in Young Harris. …

The cost-cutting recommendations were formulated over the past three months by 70 employees working in nine teams, investigating county spending by functions, such as public safety efficiency, rates and fees, administrative departments review, back office functions such as human resources and purchasing and supplies and inventory.

The goal of the study was to find $35 million in savings in the county’s operating expenses, which was roughly the same amount of spending of the county reserve fund expected in 2008. In 2009, though, that could increase to $43 million, according to a proposed budget released earlier this week.

One measure, the cutting of more than 100 positions in the Planning and Development and Water Resources departments, was announced last month.

But more cuts could include the elimination of funding for the Gwinnett Public Library, community schools, Parternship Gwinnett, the hospital, revitalization efforts and more.

It’s too bad that the needed $35 million is almost exactly what the County will be spending on the new Braves stadium next year.

But don’t worry, the County is hard at work finding new revenue.

Revenues could be found from increasing business license fees, ambulance transport fees and the cost to adopt a pet from the animal shelter. Officials could even consider selling advertisement space on county water towers.

Why not just raise taxes on Tiny Tim? And if the County can’t even sell naming rights to the Braves stadium, then who’s going want to buy the rights to paint over “Gwinnett Is Great” and “Success Lives Here”.

Water Towers

Or maybe the county is hoping for more recycling violations to balance the books (thanks to Frank Stephenson for the pointer).

While neighboring counties encourage recycling, Gwinnett County’s new solid waste management ordinance puts teeth into it. The ordinance provides for a civil fine of $500 for violations, which includes those who fail to “source separate residential recovered materials.”

No Naming Rights for the G-Braves

AJC:

The take-no-prisoners economy is threatening to take down yet another target: the naming rights deal for Gwinnett County’s new baseball stadium.

“The expectation of doing a naming rights deal right now is not as good as it was eight or 10 months ago,” project manager Preston Williams said Friday….

While Williams believes a deal will get done eventually, the lack of an early deal could pose at least a short-term headache for county officials. The county built the sale of naming rights into its financing package for the stadium, counting on the deal to provide $500,000 a year to help repay money borrowed to build the ballpark.

The county projected selling naming rights for $800,000, but a portion of the proceeds would go to the Braves. If the county can’t make a deal by September, the Braves get to sell the rights and keep more of the money.

If naming rights don’t bring in enough to cover the debt, the county might have to cover the cost even as it is cutting staff and expenses amid an effort to trim $35 million from its annual budget, said County Administrator Jock Connell.

While the poor economy isn’t helping, the expected revenue stream from naming rights was too high to begin with.

More taxes and shedding employees, this stadium continues to be an engine of economic development. I should drop a “pay for itself from day one” jab, but it’s just so played.

An Economics Lesson for Commissioner Nasuti

The AJC runs a piece this morning that looks at the role of stadium construction on economic development. Dennis Coates explains the findings from the economics literature.

But economists almost unanimously agree such stadium deals are bad for taxpayers. A 2005 survey found 90 percent of economists agreeing that governments should not subsidize sports teams.

“The only ones who think they’re going to create development and jobs aren’t economists,” said Dennis Coates, a University of Maryland-Baltimore County economics professor who has been studying stadium financing deals for 13 years.

Coates said economists find that spending on hotels, meals and similar side fare to a baseball game represents leisure money that probably would have been spent on another recreational activity anyway. Development around stadiums would have been built elsewhere, they argue. And to top it all off, studies show that per-person income in communities with professional sports teams is sometimes lower than in those without because of all the money that gets siphoned off to the places where players live and the team’s corporate ownership is located.

But, Commissioner Bert Nasuti doesn’t get it.

Such arguments are nonsense to Gwinnett County Commissioner Bert Nasuti, who came up with the idea of bringing pro ball to the county and has been an unwavering defender of the deal to build the stadium for the top minor-league affiliate of the Atlanta Braves.

Nasuti said he doesn’t understand how the county won’t gain with an estimated 400,000 people spending money at the stadium each baseball season, not to mention all the people who will live, work or shop year-round at developments now under review around the stadium site.

“I really don’t believe that without the anchor amenity of a baseball stadium there that Brand Morgan or any other developer would do the level of development that’s going to be there,” he said.

Nasuti, who claims to have majored in economics as an undergraduate commits a major fallacy in his analysis—the type of gaffe that shouldn’t be made by someone who holds the power to tax. He focuses on the seen benefits and ignores the difficult-to-see costs. 19th-Century economist Frederic Bastiat eloquently pointed out the deficiency in this type of argument in his classic essay “What Is Seen and What Is Not Seen.”

In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.

There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.

Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil.

It is easy to envision a stadium full of fans watching a Triple-A baseball team in Gwinnett County: fans paying for parking, buying tickets, purchasing concessions. How could anyone argue that this isn’t an economic benefit? It’s all very simple to a “good economist.” The money that fans spend on the game has to come from somewhere; and that somewhere is likely other entertainment options within the community. Professor Coates details this quite clearly in his preceding statement.

It is incorrect to claim that such expenditures are net beneficial to the community. Instead, we are seeing dollars shuffled around the community from one area to another. These effects are possibly quite difficult to see. If every restaurant in the area lost a waiter as a result restaurant patrons choosing to attend Braves games, the opportunity cost is not immediately visible for those who are not trained at where to look. Professor Coates’s work with economist Brad Humphreys have looked the aggregate effect on communities and their findings are unambiguous that sports teams convey zero economic benefits to their hosts. If Gwinnett is going to be an exception, we need to hear an explanation as to why.

There is no doubt that Brad Morgan and other nearby land owners will gain from being close to the new stadium, but other local merchants will be worse off as consumers shift their purchases to the stadium. The estimated 400,000 people’s expenditures represent a wealth transfer, not new wealth.

Another argument made in the article is that there exist non-monetary benefits to the stadium, and that the added taxes borne by citizens is low enough that citizens would tolerate it.

Rodney Fort, a sports economist at the University of Michigan, said the intangible value of having a new recreational opportunity, team to root for and all that goes along with it can produce quality-of-life benefits that can help justify public spending on a project.

The dollar figures are often fairly small spread out across a community’s population, Fort argues.

Seattle officials used a similar argument in seeking to publicly finance a new stadium years ago, Fort said. Backers produced ads comparing the cost to that of a Big Mac sandwich every month.

“A lot of people are going to say, ‘No, it’s not worth a Big Mac a month,’ ” Fort said. “But a lot of people are going to say, ‘Yeah, that’s worth it.’ “

I agree. In fact, I have told numerous individuals that I might be willing to support the Gwinnett plan if it had been sold to the voters differently. Instead, the deal was cut in a back room and without any opportunity for public feedback. Despite what community leaders claim, I have never seen a project pushed through in secret. The public was told that the stadium would pay for itself from day one, which is untrue and deliberately misleading. Furthermore, the stadium proponents have done nothing but tout the economic benefits of the plan. If you are going to take people’s money, just take it. Don’t couple it with a lecture on how your taking it is good for everyone, especially when you are wrong.

So, how much will the new stadium cost? I broke it down to the household level here: $110 now, with an additional $90 spread out over the next 30 years. If the stadium generated $15 million in economic stimulus every year, this would be a good deal, but it won’t do so. And the fact that government officials with the power to tax have taken so little care to research the facts ought be embarrass them.

A Lesson in Opportunity Cost: This Is Too Easy

Per AJC.

“We need to demonstrate to our citizens that we are doing everything we possibly can,” County Administrator Jock Connell said Wednesday after announcing the initiative.

The groups will seek to find $35 million in reduced expenses or increased revenues, and should make their recommendations by November, in time to be included in the 2009 budget.

“There will be some aggressive recommendations,” Deputy County Administrator Michael Comer predicted.

The $35 million figure roughly matches the amount of money county officials have budgeted to spend from the county’s reserve fund this year due to stagnant or declining revenues and rising costs.

The figure also roughly matches the tax revenue ($31 million) and first-year bond payment($2.4 million) devoted to the new Gwinnett Braves stadium. But, don’t worry, Gwinnett government officials are looking out for their citizens.

Connell said he told department heads to remember that their jobs are to serve residents.

Just like the stadium is already paying for itself.