I'm Reverting Back To My 'No New Arena' Position Again

I've always preferred a conservative sort of thinking on these matters, recently proffered yet again by one of my Curtis Park neighbors, Patrick Soluri. Of course, stories like this don't help me change my mind either:

A group of 25 Sacramento business people will send a letter to the NBA today asking it to consider new ownership for the Sacramento Kings.

They're firing off their letter on the same day that the Maloofs, who own the Kings, plan to appear before the league's board of governors to argue that the NBA's deal with the city to build a new arena needs more negotiating.

Are the Maloofs trying to sabotage the new arena? I don't know, but it doesn't create confidence.

Here is what Patrick Soluri writes:

Reports prepared by arena backers predict that a second arena will generate approximately $7 billion in economic activity over 30 years. The problem with these prospective economic impact reports is that “sports economists nearly unanimously dismiss them as hogwash.” (deMause, Neil, “Why Do Mayors Love Sports Stadiums?” The Nation, July 27, 2011.) Unlike the biased reports prepared on behalf of those hoping to profit from development of publicly-subsidized arenas, the vast majority of retrospective studies published in peerreviewed academic journals finds no economic benefit whatsoever. (Ibid.) One such article concluded: “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 geographic areas are examined, no matter what estimators are used, no matter what model specification 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.” (Coates, D., and B. Humphreys, “Do Economists Reach a Conclusion on Subsidies for Sports Franchises, Stadiums and Mega-Events?” International Association of Sports Economists Working Paper Series, Paper No. 08-18 (2008).)

The case for catalyzed economic growth appears even more remote in Sacramento because it has a sports arena. While the city’s staff report states conclusively that this arena has “outdated design and condition,” it is well known that this characterization is largely based on the fact that it does not provide the “luxury box” and “premiere” services that generate higher revenue for NBA franchises. Moreover, prior claims that the existing arena was inadequate for NCAA tournaments have been recently refuted. In other words, a new arena appears necessary simply because it would allow greater profits to the Kings franchise. Does this justify a public subsidy of more than $255 million?