Archive for Gwinnett Braves

Guess Who I Ran into Last Night

I went to the Braves-Phillies game at Turner Field last night. As with all games at the Ted, it was a fun affair. It turns out that it was Gwinnett Braves night, and my seats were right around the corner from a suite reserved for the Gwinnett Braves.

As I waited in line for my $1 hot dog—hot dogs are $1 on Thursdays in September, but I’d prefer a price hike to keep the lines down—I had a direct view into the room full of Gwinnett County power brokers. I saw Commissioner Bert Nasuti. A friend of mine was egging me on to go introduce myself, but I didn’t want to ruin his night nor mine. If he won’t return my e-mail, I suspect he wouldn’t be to keen to have surprise face-to-face meeting. I was there to enjoy the game, and so was he. As I learned from living in Washington, DC, you don’t talk politics when your out to have fun.

After I gave up on the hot dog to go get a beer, I walked right by John Schuerholz. Again, I was encouraged to approach him, but I wasn’t in the mood. I suspect he doesn’t enjoy being accosted by random people at the ballpark.

The person/thing I most wanted to meet was Gwinnett Braves mascot General Gimme. I was hoping for a picture with him for the website. Unfortunately, our paths never crossed, or he was scared of my shadow.

A Tale of Two Counties

This editorial in the Rome News-Tribune is too good not to post the whole thing. I can’t find anything to cut. Please visit the paper’s website to patronize its advertisers. The paper also offers a link to e-mail the article to anyone whom you think might be interested.

Gwinnett strikes out
Email this story to a friend
09/17/08

LUCKY THEY don’t live here … that’s how the commissioners in Gwinnett County should feel. If they had Floyd Countians as constituents instead of suburbanite sheep, they’d already have been tarred, feathered and run out of office.

Rarely does one get to see a tale of two counties that so clearly demonstrates not only the difference in the way they are governed but also a difference in respect for the electorate.

Gwinnett and Floyd will shortly share a major asset: professional baseball of the Braves variety. Gwinnett is going to have the triple-A franchise whereas Floyd for a few years now has had the lower class A franchise. Both require new stadiums holding a playing surface of similar dimensions and seating not all that much different in numbers.

Floyd voters barely approved a special-purpose penny tax with which to build theirs after a very loud, contentious election. Hence, the $15 million structure is bought and fully paid for.

Gwinnett citizens didn’t get to vote on the prospect, instead having a $45 million structure rammed down their throats in a deal cut secretly. Now, the Gwinnett commissioners say an additional $19 million will be needed,

THEY’RE GOING to take it out of the county’s rainy-day reserve fund, so at least it doesn’t mean a property-tax increase … but. Apparently a “rainy day” doesn’t include hiring freezes and other cutbacks due to the general revenue dive as those continue in that county.

Floyd Countians have certainly learned to appreciate the added value to the community, in fun and visibility, of having a Braves team. Those sort of neighboring antics serve to give them new appreciation of having elected leadership that takes even high-risk, possibly unpopular decisions that involve wads of money directly to the people.

Indeed, there was another one on Tuesday in the $88 million SPLOST for continuing construction of new schools and classrooms. In Floyd County the voters have the final say when tons of money are going to be spent, not school board members or commissioners.

Just how beaten down Gwinnett citizens are by their county dictators was reflected in the published response to the latest stunt by one of them. Raising a fuss “wouldn’t make any difference,” he said, calling commissioners a “lost cause.”

WHAT A DIFFERENCE! Gwinnett is now going to get a stadium that costs roughly $59 million ($64 million with the land purchase figured in) and seats 5,500 while Floyd got one for $15 million, including land, that seats 5,100 — and that the voters, not just a handful of commissioners, decided would be of value to the community. Even of more value, which seems not entirely understood in many of suburban Atlanta counties, is the importance of relying on the democratic process to make the final decisions on the really big questions.

When this Gwinnett stadium deal first appeared, this newspaper commented that one could bet the secret spending wasn’t over yet … and it wasn’t. It also concluded, in words that bear repeating:

“Better still, Floyd Countians have local governments that trust their citizens and keep them in the loop. Having baseball is good, but having a leadership that knows how to play the game is even better.”

No secret deals and a voter-approved stadium. Looks like the Gwinnett Board of Commissioners’s excuse for secrecy is a farce. For more on the Rome experience, see Frank Stephenson’s post.

Thanks to Frank for the pointer.

The Best Statement I Read Today

“When it comes to professional sports, we become socialists. With everybody else, we’re capitalists.”

That’s New York Assemblyman Richard Brodsky commenting on public subsidies to the new Yankee Stadium.

He continues.

“Critics on both the left and right have decried these taxpayer subsidies as socialism, wasteful, corrupt, anti-free enterprise, and unfair to the average citizen,” Brodsky’s report stated. “Yet the phrases `economic development,’ `job creation,’ `growth,’ etc. retain enormous political clout. A real analysis of these subsidies has yet to be done.”

How is it that these phony economic impact studies get so much play in the media? A quick search of “economic impact stadiums” via Google News finds mostly reporting of stadium proponent propaganda. In terms of Gwinnnett, I don’t think I’ve seen a single critical comment of the County’s economic impact projection since several officials touted it after approving $19 million from the reserve fund.

Thanks to Zach and Cyril for the pointer.

Addendum: Here is the dumbest statement I read today.

“I don’t really favor giving away taxpayer assets for nothing,” Commissioner Mike Beaudreau said.

Yet, he voted for the Gwinnett Braves stadium and its cost increase.

Gwinnett’s $15 Million Myth

A few weeks ago, there was a rumor circulating that a carcass of a Bigfoot creature had been discovered in north Georgia. The only problem was that no one had been allowed to see more than pictures of it frozen in a cooler. Upon further investigation, the mass of skin and fur was revealed to be nothing more than a frozen Halloween costume.

The case of the North Georgia Sasquatch bears a resemblance to Gwinnett County’s economic impact study of the Gwinnett Braves stadium, which boasts a $15 million annual boost in economic activity. The study is often mentioned by a secretive Georgia group as evidence of the stadium’s economic impact, but outsiders are forbidden to examine it. My requests to see this study have received no response. And though the County’s economist Alfie Meek has visited this site, and stated his confidence in his estimate, he has not shared how he estimated that the new stadium would generate a $15 million increase in economic activity.

The study will almost certainly never be released to the public. The reason for this is simple, the economic impact estimate of $15 million is too ridiculous to be believed. Just as a hairdryer revealed Georgia’s Bigfoot to be a fraud, so too will economists quickly spot the holes in the analysis.

Economists have studied the issue of economic impact of sports facilities to death. The findings are clear: there is virtually no positive economic impact from sports facilities, games, or events. (See below for brief summaries of the economic literature on the subject.)

Because county officials refuse to release the study, I thought I would attempt to reverse-engineer it. First, I want to point to the County’s citation of the study on its website.

The County’s economist conservatively estimates the annual impact at approximately $15 million. Economic activity generated by the stadium and the Braves should support an additional 200 jobs countywide and generate $6.5 million in new local personal income.

Recently, Michael Pearson of the AJC talked with the study’s author, who provided a more precise estimate.

County economist Alife Meek has estimated that the 72 home games scheduled for the stadium will produce $14.6 million in new economic activity in the county, a small portion of which the county will capture in the form of tax collections.

The good news is that we have a good place to start in backing out of the $14.6 million projection to determine its parts. The GCVB hired the consulting firm Conventions, Sports & Leisure International (CSL) to conduct an feasibility study of the stadium. (I think it is interesting that CSL does not have a Ph.D. economist on staff despite conducting economic impact analyses all over the country. In fact, only one employee has a graduate degree, an MBA.) Though the projected economic output of the CSL analysis differs from the County’s study—it is lower—a few components are likely comparable.

Economic impact studies of this type typically focus on two types of spending: direct and indirect spending. Direct spending is the first round of spending on activities related to a facility or event. Direct spending includes spending at the event, complementary consumption such as hotel stays, other local entertainment before or after the event, and incidental expenses (gas, snacks, etc.). Indirect spending captures the second round effects of re-spending these dollars in the local economy. Sometimes “induced spending” is considered separate from indirect spending, but I see little reason to make the distinction here.

To go from direct to indirect spending, we need a multiplier. The idea behind a multiplier is that every dollar spent in the community is recirculated within the community in successive rounds with diminishing impact. (There is little reason to expect a multiplier greater than one.) I determine the multiplier used to generate the total impact of the project by looking at the impact direct spending on total output. According to the CSL study, they anticipate the stadium will cause annual net new spending to be a minimum of $6.3 million, which will lead to a minimal total output increase of $10.2 million. Thus, $6.3 * m = $10.2; and m = 1.62. We’ve got our multiplier, which indicates that every new dollar spent in the community will translate into a $1.62 increase in total spending. I don’t put much stock in multipliers, but I’m not going to criticize this aspect of the report.

Next, I apply the multiplier to the County’s estimated total impact of $14.6 million. Direct spending = $14.6 million/1.62 = $9 million. Thus, the County anticipates $9 million in new direct spending every year from the stadium. We can use this number to estimate how much the County anticipates visitors will spend when they attend a minor league game in Gwinnnett.

Before I go any further, I want to explain why net new direct spending is important. New spending is spending in the county that would not be taking place without the stadium. You cannot simply take all stadium revenue and count it as an increase in spending, because it is likely that many individuals who attend games would have spent their money within Gwinnett anyway. Right now, people in Gwinnett may go to movies, go bowling, or visit restaurants for entertainment. When the team comes, we should not count the transfer of spending from these other Gwinnett businesses (who will suffer losses) to the Braves as new windfall of spending. Therefore, this net new spending is mostly going to come from people who live outside the county who come to Gwinnett for the sole purpose of seeing the Braves, and otherwise would not have spent any money within Gwinnett’s borders.

So, let’s take the $9 million and divide it by the number of home games: $9 million/72 = $125,000. The CSL study anticipates the Gwinnett Braves will draw 6,500 fans a game. If 100% if the fans come from outside the county, then each fan would have to spend $19, or $76 per family of four (family calculations will come in handy a bit later). Theses expenditure numbers seem reasonable; but, the initial assumption is absurd, because many people who attend the event—I would argue the vast majority, but the CSL authors disagree—will be Gwinnett County residents.

CSL estimates that 54% of the gross direct spending will come from net new spending ($6.3 million/$11.7 million). How much revenue would the ballpark have to generate per visiting fan if 3,5000 of them (approximately 54%) came from outside the county? The answer is $36 per visitor or $144 per family of four. If a more-reasonable 1,625 fans (25%) came from outside the county, then it would take $80 per visitor, or $320 per family of four, which is outrageous.

Though, I believe the latter estimate of visitor attendance is more reasonable—there is no way that a majority of gross spending is new—I will stick with the calculation from the CSL report just to make a point. Even with their own number, the revenue expectation per fan is too high to be believable.

Every year, Team Marketing Report releases its Fan Cost Index (FCI). The FCI uses a consistent basket of goods across different teams and over time to measure the cost of going to a baseball game for a family of four.

The Fan Cost Index™ comprises the prices of two (2) adult average-price tickets, two (2) child average-price tickets, two (2) small draft beers, four (4) small soft drinks, four (4) regular-size hot dogs, parking for one (1) car, two (2) game programs and two (2) least expensive, adult-size adjustable caps.

I believe the basket is a bit on the high side—do you buy hats and programs (2!) at a game?—however, it serves the purpose of comparing costs of attendance across teams and time. In 2008, the FCI was calculated for a few minor league baseball teams. The Minor League FCI indicates that the average expenditure by a family of four attending minor-league game is $99. The most-expensive Triple-A club on the list (Indianapolis Indians) has an FCI of $112. This means that in order to generate $9 million in net new direct spending, the team would have to generate revenue 45% higher than the minor-league average or 29% more than the Triple-A maximum. This is certainly an unrealistic expectation, but that is not my main concern.

When we compare this cost to the cost of attending an Atlanta Braves game, 30 miles south, we see that the Braves offer a better experience at a similar price. The MLB FCI indicates that the average expenditure at Atlanta games is $157–a mere $13 more than the the Gwinnett club anticipates. Why would all these fans travel to see the Gwinnett Braves, when they could see the Atlanta Braves for a similar price? They won’t. The point here is that these direct spending impacts defy reality, and were calculated deliberately to boost the economic impact of the stadium. Even when I factor in visiting team hotel and meal money as economic benefits, the required cost per fan falls only about $2.

Another consideration is that even the direct spending at the stadium won’t stay in the county for long. The majority of the labor expenditures will go to players and coaches; groups who have higher than average saving rates and are likely to have homes outside Gwinnett. Profits to the team will be distributed to Liberty Media shareholders who are dispersed around the world and spent elsewhere.

The fact that stadium proponents succeed at trumpeting such ridiculous numbers is disturbing. Villanova sociologist Rick Eckstein has studied stadium proposals and finds a common factor in succesful stadium campaigns.

In a just-released article in the Journal of Sport and Social Issues, my colleagues and I studied media coverage of 23 publicly financed stadium initiatives in 16 different cities, including Philadelphia. We found that the mainstream media in most of these cities is noticeably biased toward supporting publicly financed stadiums, which has a significant impact on the initiatives’ success.

This bias usually takes the form of uncritically parroting stadium proponents’ economic and social promises, quoting stadium supporters far more frequently than stadium opponents, overlooking the numerous objective academic studies on the topic, and failing to independently examine the multitude of failed stadium-centered promises throughout the country, especially those in oft-cited “success cities” such as Denver and Cleveland.

This isn’t the first instance of justifying expenditures based on numbers that were generated to serve a political function rather than provide objective cost analysis. The problem is that often times local media pick up stadium proponents talking points without viewing them critically.

The following papers provide summaries of the economic literature on the impact of sports facilities on economic development. I hope they are instructive.

Coates and Humphreys (2008)

There now exists almost twenty years of research on the economic impact of professional sports franchises and facilities on the local economy. The results in this literature are strikingly consistent. No matter what cities or geographical areas are examined, no matter what estimators are used, no matter what model specifications are used, and no matter what variables are used, articles published in peer reviewed economics journals contain almost no evidence that professional sports franchises and facilities have a measurable economic impact on the economy.

Feng (2008), Volume 2, Chapter 6

A growing body of independent empirical research has shown that professional sports facilities and teams have little or no significant positive impacts or even negative effects on the metropolitan economy. Different from the promotional economic impact studies from consulting firms, these independent studies usually employ a pooled time-series and cross-section regression model to examine the impact of sports facilities and teams on local economic development in terms of aggregate or per capita personal income and employment growth. These retrospective studies provide no significant evidence of positive effects when comparing metropolitan areas with a professional sports team to the ones without a team.

Whaples (2006)

This survey of a sample of Ph.D. economists in the American Economic Association reports that 85% agree that government subsidies to professional sports franchises ought to be eliminated. 10% are neutral, and only 5% disagree.


AEA Survey
Figure created from numbers reported in paper.

Coates and Humphreys (2003)

Local political and community leaders and the owners of professional sports teams frequently claim that professional sports facilities and franchises are important engines of economic development in urban areas. These structures and teams allegedly contribute millions of dollars of net new spending annually and create hundreds of new jobs, and provide justification for hundreds of millions of dollars of public subsidies for the construction of many new professional sports facilities in the United Sates over the past decade. Despite these claims, economists have found no evidence of positive economic impact of professional sports teams and facilities on urban economies. We critically review the debate on the economic effects of professional sports and their role as an engine of urban economic redevelopment, with an emphasis on recent economic research.

Siegfried and Zimbalist (2000)

Few fields of empirical economic research offer virtual unanimity of findings. Yet, independent work on the economic impact of stadiums and arenas has uniformly found that there is no statistically significant positive correlation between sports facility construction and economic development (Baade and Dye, 1990; Baim, 1992; Rosentraub, 1994; Baade, 1996; Noll and Zimbalist, 1997; Waldon, 1997; Coates and Humphreys, 1999).

These results stand in distinct contrast to the promotional studies that are typically done by consulting firms under the hire of teams or local chambers of commerce supporting facility development. Typically, such promotional studies project future impact and almost inevitably adopt unrealistic assumptions regarding local value added, new spending, and associated multipliers. They often use a regional input-output model that depends on outdated technical coefficients which are treated as invariant to shifts in supply and demand (Center for Economic and Management Research, 1991; Deloitte & Touche, 1994, 1996; KPMG, 1996; Economic Research Associates, 1996; KPMG, 1998; C.H. Johnson Consulting, 1999).

If Gwinnett County officials want to claim the stadium as an economic stimulus, the burden of proof is on them to prove it. It’s time for these numbers to be challenged.

UPDATE: I just ran across this interview of Brad Humphreys by Keith Law.

BP: How is it that owners and politicians manage to fudge the data so easily?

BH: Because nobody ever calls them on it. The media read these economic impact studies and take them at face value. They report the results as if they are facts and not wild guesses or outright overstatements.

Part of the problem is that the impact studies use methodologies that might appear reasonable to a layperson. It’s sort of like using batting average as the ultimate measure of a baseball player’s offensive output.

Also, nobody ever goes back and looks at how many jobs were actually created, or how much additional tax revenue was generated. There’s just no assessment. Except in the academic literature to which not many people pay attention.

Gwinnett DA Calls Stadium Spending Irresponsible

Per Patrick Fox for AJC:

Gwinnett County District Attorney Danny Porter called it irresponsible when Gwinnett County commissioners voted to fund $19 million in cost overruns and upgrades for the new Gwinnett Braves stadium project last week.

The decision left Porter flabbergasted.

“I think the commissioners are going to have to stand up and start making some real choices instead of just bread and circuses,” he said.

Although the $19 million outlay will come from the county’s reserve fund — not the general fund, which pays for the operation of county departments — the district attorney draws little distinction.

He enumerated a list of unfunded requests he had made for his office in the 2008 budget:

• two victim assistance positions;

• one prosecutor for juvenile court;

• two assistant district attorneys for drug task force;

• one criminal investigator for white-collar and computer crime; and

• three additional investigators.

Likewise, the county sheriff’s and police departments made requests for some new positions that went unfunded.

Bert Nasuti defended the decision.

County Commissioner Bert Nasuti, who has helped lead the drive for baseball in Gwinnett, said the stadium had no influence on the 2008 budgeting process.

“Whatever shortfalls he (Porter) felt, they weren’t related to baseball,” Nasuti said, adding that serious arrangements to move the Braves’ minor league team to Gwinnett did not occur until well after the budget process for 2008 was completeted. “It wasn’t a budget influenced by baseball.”

Opportunity costs are opportunity costs. The stadium isn’t free and necessitates trade-offs in the budget. Whether the DA’s requests were next in line for the stadium funds is an open question. But, I think few voters would prefer a stadium to the above forgone positions.

UPDATE: DA Porter responds to Commissioner Nasuti.

“That’s just…that’s just not right. That’s just incorrect. The budget process in Gwinnett County begins in June. The final budget for each department is submitted in June and the baseball decisions were made in the spring.”

Addendum: I should have caught Porter’s comments in a Gwinnett Daily Post article that I linked to last week. More kudos to GDP.

At a time when the county has instituted a hiring freeze in every department other than public safety and asked firefighters and police officers to conserve fuel, District Attorney Danny Porter said he could not believe commissioners voted for the increase.

“We can’t put enough cops on the streets, we can’t put enough deputies in pods and I can’t put enough prosecutors in courtrooms, but we can play baseball. It’s absurd,” he said. “It’s an unbelievable squandering of taxpayers’ money and to pull it out of reserves is just irresponsible.”

A Simple Way to Frame the Gwinnett Stadium Tax Burden

If you are a Gwinnett taxpayer, how much will the stadium cost your family? Here is the simple answer: $110 this year plus $3 per year for the next 30 years, for a grand total of $200 per household.

What percentage of the construction costs will be borne by taxpayers? 76%

Here is where these numbers come from.

Expenditures
Taxes Revenue: $31,000,000 ($12 million initial commitment + $19 million from reserve fund)
Amount Borrowed: $33,000,000
Total: $64,000,000

Annual Debt Service on $33,000,000: $2,438,240 (30-year mortgage at 6.25%)

Annual Stadium Revenue
Rent: $250,000
Ticket Fee: $479,000 (variable with $400,000 minimum)
Parking: $284,000 (50% share of net receipts)
Naming Rights: $100,000 (assumes $450,000 deal with $350,000 remitted to Braves/Liberty Media)
Total: $1,130,000

Annual County Subsidy: $1,325,240 ($2,438,240 — $1,130,000)

Estimated Gwinnett County Households in 2008: 279,820 (based on population and current 2.88 persons per household)
Population Growth: 3.8% (based on previous five years of growth)

Initial Tax Burden per Household: $31,000,000/279,820: $110
Annual Tax Burden to Cover Debt Service per Household: $3 (mean burden, based on population growth)
Sum of Tax Burden over 30 years per Household: $200 ($110 + $90)

% Public Contribution
Initial Contribution from Tax Revenue: 48% ($31,000,000/$64,000,000)
Contribution to Debt Service: 54% ($1,325,240/$2,438,240 = 54%; .54*$33,000,000 = $18,000,000 )
% Stadium paid by taxpayers: 76% ([($31,000,000+$18,000,000)/$64,000,000 = 76%)

What about the reported economic impact?

Few fields of empirical economic research offer virtual unanimity of findings. Yet, independent work on the economic impact of stadiums and arenas has uniformly found that there is no statistically significant positive correlation between sports facility construction and economic development (Baade and Dye, 1990; Baim, 1992; Rosentraub, 1994; Baade, 1996; Noll and Zimbalist, 1997; Waldon, 1997; Coates and Humphreys, 1999).

These results stand in distinct contrast to the promotional studies that are typically done by consulting firms under the hire of teams or local chambers of commerce supporting facility development. Typically, such promotional studies project future impact and almost inevitably adopt unrealistic assumptions regarding local value added, new spending, and associated multipliers. They often use a regional input-output model that depends on outdated technical coefficients which are treated as invariant to shifts in supply and demand (Center for Economic and Management Research, 1991; Deloitte & Touche, 1994, 1996; KPMG, 1996; Economic Research Associates, 1996; KPMG, 1998; C.H. Johnson Consulting, 1999).

Siegfried and Zimbalist, “The Economics of Sports Facilities and Their Communities,” Journal of Economic Perspectives, 2000.

Until the touted study is made public, I think it is safe to assume that the expected impact will be zero, at best.

Kudos to Gwinnett Daily Post

I’ve been critical of Gwinnett Daily Post’s coverage of the Braves stadium, because it has been slanted towards the pro-stadium position. I was happy to see the editors criticize the Board of Commissioners’s handling of the recent budget increase.

We expect more due diligence from our County Commission. Richard Tucker, board chairman of the Gwinnett Convention and Visitors Bureau, says “this happens every day in the real estate business” but it seems to happen much more in the public sector.

Because of the need to increase the budget, the commissioners are drawing from the reserve fund at a time when the county is tightening its belt. The county has implemented a hiring freeze, has asked police officers to not leave their cars idling and has switched schedules at some offices to make for four-day work weeks.

We don’t believe the commissioners care more about baseball than they do the county government, but with the way they’ve gone about getting this stadium it’s justifiable that some residents feel hoodwinked. The commissioners have turned a baseball stadium into a political football.

Though there have been bumps in the road on the way to getting the stadium built, we still believe the stadium and the Gwinnett Braves are an important addition to the county. Bert Nasuti, the commissioner who was the major impetus behind Gwinnett landing the team, insists the investment is worth it.

But at what cost? That’s what Gwinnett taxpayers are asking. And the answer, for now, is $59 million, or $19 million more than expected.

The commissioners should have a better grasp of those numbers. Like the players who are coming to Gwinnett next year, we expect them to keep their eyes on the ball.

In other words, if you want to model yourself after a Gwinnett County ballplayer, be more like Brian McCann—be patient and wait for a good pitch to drive—than Jeff Francouer—be aggressive and swing at everything.

Tradeoffs


AJC Cartoon

Even More on the Gwinnett Stadium Cost Increase

Last week, the Gwinnett Board of Commissioners approved a $19 million budget increase to fund the new Gwinnett Braves stadium. It turns out that though the Board didn’t mention a word of the cost increase until the Friday before Labor Day, and voted on it the following Tuesday without discussion, county officials were aware of the cost increase well before this time. From the AJC’s Jeremy Redmon:

The cost for Gwinnett County’s taxpayer-funded minor league Braves stadium started to exceed the county’s $40 million estimate as early as March — less than two months after the project was announced — and reached as high as $62.4 million at one point, according to internal budget documents obtained Friday under Georgia’s Open Records Act.

A small group of Gwinnett Convention and Visitors Bureau and county officials ultimately decided to make $19 million in changes and upgrades, much of which aren’t required for the Braves to play ball.

By March 31, the Triple-A ballpark had grown to 196,370 square feet, with a $45 million price tag, the records show. A month later, it grew by more than 14,000 square feet and its cost ballooned to $55.1 million.

Why didn’t the county disclose the cost increase until now?

“Anything we let out would have been a hypothetical number,” GCVB Chairman Richard Tucker said. “You wouldn’t call a press conference or issue a press release to say, ‘We have some preliminary bids in and it is tracking higher’ because all the time we were still looking at, ‘What can we eliminate that is in the design?’ And, in fact, all of the design had not even been done. It just doesn’t work that way.”

That is exactly what should have been said at a press conference. A degree of uncertainty about the exact increase is no excuse for withholding that the price tag would rise by a significant amount. As of March 31, the day before the Board voted to approve the stadium project, the stadium’s projected cost had increased by 12 percent to $45 million. One month later, the cost was nearly 40-percent higher at $55.1 million. There was ample opportunity to reveal that the price tag would rise significantly and that those funds would have to come from taxpayers. At the minimum, the anticipated cost increase should have been revealed before the July 15 primary and August 5 run-off elections.

A large chuck of the new expenditures are not necessary, and county officials concede that costs could go higher despite previously denying the potential for further cost increases last week.

But GCVB officials concede the stadium could be built without many of the additions, including the $7.5 million plan to build a concourse surrounding the stadium, erect canopies over some of the seating and the entrance and upgrade finishes. The GCVB is also considering spending more for a high-definition scoreboard, though that amount is not finalized, a convention and visitors bureau official said.

Commissioner Bert Nasuti claims to have been surprised by the cost increase, but feels the expenditures are worth it.

County Commissioner Bert Nasuti said he was “stunned” when he first learned of the additional $19 million cost from GCVB officials last month. Still, Nasuti, who also serves on the GCVB board, said he voted along with fellow Gwinnett commissioners last week to cover that amount with county reserve funds so the ballpark would be “first class.”

“We set a standard here of doing things correctly, doing things upscale, nice, family-friendly, user-friendly, good fan experience,” Nasuti said, adding county officials decided to “stick with that philosophy and build a first-class, state-of-the-art baseball stadium.”

Nasuti’s enthusiastic support is largely based on an economic impact study by the County’s economist. (per AJC’sMichael Pearson).

But Nasuti said the stadium is an economic development project that eventually will bring the county more in revenues than it costs to build.

“If you stop all economic development activity when there’s a downturn, then you’re going to punish yourself in the long term,” he said.

It’s unclear exactly how much money the stadium will bring into the county.

County economist Alife Meek has estimated that the 72 home games scheduled for the stadium will produce $14.6 million in new economic activity in the county, a small portion of which the county will capture in the form of tax collections.

This study has not been released to the public. Nasuti has not responded to my request to supply the study. Meek, though he has challenged my criticism of his study’s conclusions, has also not provided me with the study. Until I see the this document and I am convinced that it has been done properly, I’m going to have to side with the vast economic literature that finds no economic impacts from stadium projects. No one should take this number at face value, any more than you should take up smoking because a tobacco industry study shows smoking isn’t related to lung cancer incidence.

At least Nasuti and I agree on one thing.

“The business model in my mind is as sound as it ever was,” said Commissioner Bert Nasuti, who came up with the idea of bringing baseball to Gwinnett County.

The Relevance of Kenerly’s Ownership Stake

As I mentioned in my previous post, the AJC claims to have viewed records that show that Gwinnett County Commissioner Kevin Kenerly did not purchase a tract of land near the new Gwinnet Braves stadium in October 2007. Even if this is the case, I think the AJC is missing the big story and not properly acknowledging the readers who discovered it.

AJC reporters Michael Pearson and Patrick Fox have run down the claims posted to this blog that Gwinnett County Commissioner Kevin Kenerly purchased land near the stadium three months before the deal was revealed to the public. They have found that the claims are incorrect.

Posts at this blog and at baseball economic J.C. Bradbury’s blog claim that Kenerly purchased the land in October 2007 – after county officials began secretly scouting for land for a new stadium but three months before the decision became public.

First, at least get the name of my blog right. Second, how about giving a little credit for tracking down the fact that a sitting commissioner holds a financial stake in the property? I didn’t do this, a few AJC readers did, I just put it in an easy-to-read format. I commend them for their investigative prowess.

The available records clearly indicate that the land was purchased on 10/18/2007 and that Kenerly’s company owns the land. AJC readers and I reported exactly what the Gwinnett County Tax Assessor indicated. While we may be technically incorrect, the confusion over the sale is understandable considering that it was based on faulty information provided by Gwinnett County. I think we deserve a little credit for noticing that Kenerly owns this land and may have purchased it under suspicious circumstances rather than just being told one aspect is incorrect.

But more importantly, does this fact kill the relevance of the story that Kenerly owns the land? The AJC seems to think so, for two reasons. First, Kenerly influence didn’t appear to be strong enough to land the stadium adjacent to his land.

Incidentally, the land is closer to another stadium site considered – and ultimately rejected – by Gwinnett County. That site is a 65-acre parcel at Buford Drive and I-85 owned by the Orkin family.

Kenerly’s land is adjacent to that property.

So what? The fact that he didn’t get the best possible deal doesn’t prevent him from benefiting from this deal. He clearly will benefit from game traffic or improvements to roads that will raise his property value. In fact, I’m not sure if there is much additional benefit to being directly next to the stadium. When the stadium went over budget, Kenerly voted for allocating $19 million of the county’s budget in a way that would use tax dollars to his personal benefit. It is a clear conflict of interest that he should have made public.

Second, Kenerly says he’s trying to sell his land.

Kenerly, who works as a real estate investor, told the Atlanta Journal-Constititution Thursday that he’s not interested in buying any land along the Ga. 20 corridor, including any near the stadium.

“With the way the economy is right now, I don’t think anybody is looking to purchase land,” he said.

He sold half of his ownership of the land in October to raise cash, and said he would like to sell the rest of it as well.

“I’m trying to unload everything,” he said.

This increases his incentive to improve the value of the land. He’s looking for cash now and wants to sell. What better way to make his property more attractive to potential investors than to get a shiny new stadium built within walking distance of his property?

The big issue here is the ownership of nearby property; the fact that he might have acquired it at an inappropriate time only would have added to the story. This fact needs to be published in the city’s largest newspaper. The story isn’t dead, and I think Gwinnett residents ought to know about Kenerly’s stake in nearby property.

Just today, I told a friend of mine who lives in Gwinnett County, “Kenerly owns land just down the street from the stadium.” I didn’t say a word about the timing of the sale. He responded, “I knew there was something dirty going on.” Maybe there is, maybe there isn’t, but this certainly deserves further scrutiny.