As the Buffalo Bills search for a new owner, state and county officials in New York could be faced with a complicated scenario if the new owner arrives with a demand to build a new stadium. An article published July 28 in The Buffalo News examines the question: do taxpayers get their money’s worth by public dollars helping to build sports stadiums?
Considering the situation in Buffalo, Economics Professor Dennis Coates was interviewed for the story and said teams are increasingly getting money from taxpayers to directly help with operating costs of stadiums.
One of the arguments for a new stadium in Buffalo is that if it keeps the Bills there, it’s good for the community’s sense of pride. In the article, Coates recalled growing up in Western New York when basketball’s Buffalo Braves left in 1978. “I don’t think anybody cared much. But the Bills? People would care.”
Coates lived in the Baltimore area when the Colts football team left for Indianapolis. “I saw firsthand how that made people here feel. … That sort of thing was like losing a loved one.” But, he cautioned, taxpayers should not think a new Bills’ stadium would be an economic boost for the region. In fact, studies have shown that the stadium deals cost more each year to taxpayers – when all the subsidies are factored in – than they return on any sort of dollar basis.
Coates was also interviewed by The Baltimore Sun for a July 28 article looking at the decision to change the name of the University of Maryland’s Comcast Center to the Xfinity Center. Discussing the benefit of naming rights agreements in college sports and looking at what the deal may mean for the Xfinity brand, Coates said, “that doesn’t mean they don’t get some sort of goodwill out of it,” he added, “they must be doing it because they think it generates profit.” Changing the Comcast Center’s name “is kind of an unusual case” because it doesn’t involve a new corporate player, Coates said. “Usually it’s a complete change in the company.”
To read the complete version of both articles, click below:
Teams have upper hand in stadium negotiations (The Buffalo News)
University of Maryland arena is rechristened Xfinity Center (The Baltimore Sun)
Does it make sense to host the 2024 Summer Olympics in Washington, D.C.? Economics Professor Dennis Coates recently shared his thoughts on this question on WAMU’s Metro Connection. The U.S. Olympic Committee has confirmed Washington, D.C. as a finalist to host the Olympics along with San Francisco, Los Angeles and Boston.
Coates shared insight on whether the financial investment in hosting the Olympics in D.C. would be worth the return. “By and large most of the cities that hosted saw a decline relative to what would have happened had they not hosted the event,” he said. And the primary reason, he believes, is the crowds.
“People respond to the possibility of crowds, if they’re locals, by saying one of two things. One is ‘I’m getting out of Dodge,’ which means there is a lot of flight so normal expenditures don’t occur. The other is ‘I am not leaving my house,’” Coates said.
Coates also addressed the argument that hosting the Olympics can lead to investment and improvements in infrastructure. “If you need the infrastructure, build the infrastructure,” he said. “You don’t need to throw a party for the world to justify spending the money to redo highways, pave some roads, work on the subway system or whatever. It’s well justified if it’s worth doing; it doesn’t need a party to justify it.”
To listen to the full, six-minute interview with Coates that aired on Metro Connection, click here.
Economics Professor Dennis Coates was recently a guest on an Econ Journal Watch podcast discussing his research that found economists mostly frown on government subsidies for professional sports franchises, facilities and events. He was a guest on the program with Brad Humphreys, an associate professor of economics at the University of Alberta.
During the interview, Coates commented on claims that sports stadiums bring economic benefits and prosperity to cities and their immediate metropolitan areas.
“The evidence is that they are minimal at best, and may in fact even be negative,” Coates said. “We think of tangible benefits as job creation and income growth, and any benefits that occur, they occur in a form that is not job creation or income growth or tax revenue growth.”
To listen to the full podcast on Econ Journal Watch and for more on the research by Coates and Humphreys, click here.
Douglas Lamdin, Economics, has published a Korean language version of his book, “Consumer Knowledge and Financial Decisions” (Springer-Verlag). Professor Lamdin has also been added to the board of editors of two academic journals related to financial decision-making: Journal of Financial Counseling and Planning, and Journal of Personal Finance.
The economics department is hosting its debate of the semester, “Do Free Markets Promote Overall Social Happiness?” on Wednesday, March 12 from 11:30 a.m.-1:00 p.m in Sondheim 101. The department is bringing in economists from Towson University and the University of Munich to participate in the debate.
Arguing for the affirmative is Howard Baetjer, Jr., lecturer in the department of economics at Towson University. Dr. Baetjer blogs at freeourmarkets.com, and is the author of Free Our Markets: A Citizen’s Guide to Essential Economics. An abstract for his book states: the freer the markets people live in, the better they flourish. Free Our Markets explains why, in terms of foundational economic principles. Dr. Baetjer aims to show readers that liberty, not the force of government, is the means to achieve the goals we all have for humanity: high and rising standards of living, increasing security and abundance for all. In his book, Baetjer presents the principles of spontaneous economic order and explains why, for practical economic reasons, free markets produce better results than even the best intended and most carefully crafted government interventions.
Arguing for the negative is John Komlos, professor emeritus of economics at the University of Munich. In addition to Munich, Komlos has taught at other institutions such as Harvard, Duke and the University of Vienna. He received his Ph.D. from the University of Chicago where he studied under the Nobel-Prize winning economic historian Robert Fogel. Komlos’ work has been cited in the New York Times, where Paul Krugman wrote about it, and has been featured in The New Yorker magazine in 2004. The trauma of 2008 and the Great Recession induced Komlos to write about the need for a paradigm switch in economics which culminated in the publication of What Every Economics Student needs to Know and Doesn’t Get in the Usual Principles Text.
From 11:30 a.m. until noon, free pizza will be available and there will be an opportunity to speak informally with the participants. The debate will begin at noon. RSVP’s are not required, but would be appreciated just to keep a head count for pizza. RSVP to David Mitch (firstname.lastname@example.org).
The Daily Iowan’s editorial board recently published a column arguing that the Iowa Senate should reject a $9 million tax break for a motor racing track in Newton, Iowa purchased by NASCAR. The authors contend that accepting tax breaks and appropriating public funds to build and maintain complexes for organizations such as NASCAR can harm the local economy.
A study by economics professor Dennis Coates was referenced in the article in which he argued sports welfare negatively impacts local residents because most money generated by sports stadiums ends up going to the owners.
“The professional sports environment in the 37 metropolitan areas in our sample had no measurable impact on the growth rate of real per capita income in those areas. The professional sports environment has a statistically significant impact on the level of real per income in our sample of metropolitan areas, and the overall impact is negative,” the Coates study noted.
You can read the full column published February 17 here.
Professor Ehrenberg will explain why the financial models under which both private and public higher education institutions are operating are breaking down and the actions they will have to take in the future to remain financially solvent and deliver high quality education to their students.
Thursday, March 6 at 4 p.m./Albin O. Kuhn Library, 7th Floor
Sponsored by the Department of Economics.
Ronald Ehrenberg, Irving M. Ives Professor, Stephen H. Weiss Presidential Fellow, and Director, Cornell Higher Education Research Institute (CHERI), Cornell University
A proposed NBA arena in downtown Sacramento would have an $11.5 billion economic impact, according to a study commissioned by the mayor’s political action committee. The group is designed to make the case for the city’s proposed $258 million subsidy for the arena.
Economics professor Dennis Coates was interviewed for an article in The Sacramento Bee about the report. He argued against studies such as the one in Sacramento, saying sports stadiums simply move money from one part of the city to another as consumers spend money on tickets for sporting events rather than other forms of entertainment.
“Basically they are just PR documents,” Coates said. “I’m pretty sure people eat and drink even if they don’t have a team in town that night,” he added.
You can read the full article in The Sacramento Bee here.
The Nassau County Legislature unanimously approved a $229 million bid by Forest City Ratner to restore and update the Nassau Coliseum on Monday. Naussau County voters turned down a plan to borrow $400 million to build a new arena two years ago and this deal is intended to save taxpayers the expense of the renovation, but critics wonder if the Coliseum can be successful without the New York Islanders, as the team will move to the Barclays Center after the 2014-15 hockey season.
UMBC economics professor Dennis Coates tells The New York Times that he doubts the arena can generate the revenue it needs without the draw of a big sports team. He suggests the arena could be forced to rely on concerts for revenue, competing against Barclays, Madison Square Garden and the Izod Center.
“The bottom line is,” Coates says, “are they going to have to back out of the deal at some point and come back to the county and say we need more money, and the county will be on the hook.”
In Newsday coverage of the deal Coates notes, “There does not seem to be any corporate welfare in this plan. And that makes me wonder — where is the corporate welfare? At what point are they going to say: ‘We need a handout to pull off what we promised but never in a million years could have delivered’?”
Read the full articles in The New York Times and Newsday.
The U.S. Olympic Committee is expected to decide on a site to propose for the 2024 Summer Games in September 2015. Under the plans DC 2024 — the group exploring a Washington, D.C. bid — Baltimore-area venues would stage Olympic events and Baltimore would support the games with transit and hotel infrastructure. Critics are asking what benefit this would bring to the city and region, and if the costs could outweigh the revenue.
Econimcs professor Dennis Coates told The Baltimore Sun that the Olympics are a financial boon to the International Olympic Committee, but not necessarily to the host cities. “The question is: How much do we have to pay?” Coates said. “Just putting together a bid is an expensive proposition. It’s not an easy thing to do.”
Even with his misgivings, however, Coates, shared, “This could generate an enormous amount of pride and an enormous amount of happiness among the population, particularly if you pull it off well.”