Thursday, October 11, 2012

Sports stadiums: Be careful what you wish for

Posted by on Thu, Oct 11, 2012 at 12:00 PM

Mayor Steve Bach Drake Power Plant David Neumann
  • Randomduck's photostream

Sports stadiums aren't always the economic engine some would like you to believe, according to an article in theAtlantic.com that can be found here:

If_You_Build_Ball_Park.pdf

The article, sent to local media by David Neumann, states:

However, according to leading sports economists, stadiums and arenas rarely bring about the promised prosperity, and instead leave cities and states mired in debt that they can't pay back before the franchise comes calling for more.
"The basic idea is that sports stadiums typically aren't a good tool for economic development," said Victor Matheson, an economist at Holy Cross who has studied the economic impact of stadium construction for decades. When cities cite studies (often produced by parties with an interest in building the stadium) touting the impact of such projects, there is a simple rule for determining the actual return on investment, Matheson said: "Take whatever number the sports promoter says, take it and move the decimal one place to the left. Divide it by ten, and that's a pretty good estimate of the actual economic
impact."
Others agree. While "it is inarguable that within a few blocks you'll have an effect," the results are questionable for metro areas as a whole, Stefan Szymanski, a sports economist at the University of Michigan, said.

Neumann is a former Air Force scientist who invented the NeuStream emissions control device that's been tested with success on coal-fired Martin Drake Power Plant downtown, which sits squarely in the area that Mayor Steve Bach would like to vacate to make room for a sports stadium. If that happens any time soon, Neumann's deal with the city would probably be deep-sixed. The city stands to gain 3 percent of the gross sales of the system to other power plant owners, and would pay at least a third less for the NeuStream than for other available technology.

Neumann writes in an e-mail to media:

What is a vision of a sports stadium worth without a strategy and supporting economic analysis? What is the impact on the areas of the city where the investment in a ball park has already been made? What about the potential for negative economic effects on the City as discussed in the attached article? The article would suggest that the Mayor’s vision has the potential to bankrupt the City.

Drake Power Plant sports stadium
  • Bach: Doesn't really have the power.

Bear in mind, Bach has no City Charter authority over Utilities, other than the ministerial duty of signing contracts. However, Bach has already mentioned that he'd like to help "reinvent" Council by pushing certain candidates in the April city election. His supporters could also mount a ballot measure to amend the charter to give the mayor authority over Utilities, sidelining Council's authority.

City Council, sitting as the board of Colorado Springs Utilities, has ordered a study of decommissioning Drake. A committee working on that is chaired by Councilors Lisa Czelatdko and Brandy Williams.

That's separate from a study under way by the Utilities Policy Advisory Committee to sell the electric utility, which has been said to be a chief driver for economic development here because of its low, competitive rates and reliability. Bach's friends, including developer Steve Schuck, have advocated for selling the power division to pay for other city needs, such as drainageways and detention ponds, which we've reported on here and here.

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