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.”
As Baltimore anticipates the start of the 2013 Grand Prix, a well-known 2011 economic impact analysis by UMBC economics professor Dennis Coates is again making news. The Press Box Online article “What Is Best Way To Measure Grand Prix’s Economic Impact?” notes that race organizers believe the 2012 Grand Prix generated $42.3 million in economic impact for Baltimore and the 2011 event generated $48 million. Coates, however, contested the 2011 figure in a assessment following that year’s Grand Prix, which indicated the impact was approximately $20 million less than the race organizers claimed. The article notes, “Coates’ argument centered on the $10 million that his study found would have occurred in Baltimore anyway, without the race.”
SB Nation also recently referenced research by Coates and Brad Humphreys, now at the University of Alberta, on “The Novelty Effects of New Facilities on Attendance at Sporting Events” in an online story about stadium construction.
Towson University’s new Tiger Arena opens tonight. The arena cost $70 million, funded through $20 million in Towson’s reserve funds, combined with bonds paid back through a student fee set aside for construction projects. UMBC economics professor Dennis Coates told the Baltimore Sun that although new arenas generally succeed in increasing the owner’s ability to generate revenue, whether that benefits those who pay for construction is less clear. “It creates a nice buzz,” said Coates, “but otherwise, the impact is spread out.”
Coates also commented in a recent Wall Street Journal article on how Brooklyn’s Barclays Center impacts local retailers, particularly food vendors.
Economics professor Scott Farrow is co-author and co-editor, with Richard Zerbe, Jr., of the new book, Principles and Standards for Benefit-Cost Analysis (Edward Elgar Publishing 2013). The book website notes:
Benefit–cost analysis informs which policies or programs most benefit society when implemented by governments and institutions around the world. This volume brings together leading researchers and practitioners to recommend strategies and standards to improve the consistency and credibility of such analyses, assisting analysts of all types in achieving a greater uniformity of practice.
Reviewer John D. Graham of Indiana University writes, “This book is a superb textbook treatment of benefit-cost analysis. It is well designed for students in public policy, public administration, public health, social work, environmental affairs, law and business.”
NBC Chicago’s politics blog “The Ward Room” recently posted an opinion piece affirming Mayor Rahm Emanuel’s decision to refuse to provide public money for a $500 million renovation of Wrigley Field. The writer, Edward McClelland, cited research by UMBC economics professor Dennis Coates that found pro sports reduce a city’s per capita income by putting entertainment dollars into the hands of athletes and team owners who live outside the area rather than local businesses around the stadium.
Coates wrote, “money paid to players does not circulate as widely or abundantly as it would were it paid to people with less wealth and more attachment to the city.” Read the article to learn more.
“How much do the Tampa Bay Rays boost their local economy?” asks the Tampa Bay Times. In arguments for building a new stadium, St. Petersburg mayor Bill Foster estimates the team’s local economic impact at $100 million a year, but experts, including UMBC economics professor Dennis Coates, question the assumption that stadiums have a notable economic benefit to their home cities.
Coates explains that when a couple spends $100 for dinner and a movie, much of that money goes to waiters, ticket takers and other local workers and suppliers, who in turn spend their paychecks on rent and food, creating a positive ripple effect in the local economy. In contrast, argues Coates, “Spending that goes on inside a stadium tends to flow into the pockets of a relatively few, high-income individuals who live a large portion of the year outside the city,” so much of the money spent inside stadiums actually flows out of the cities where they are located.
Dean Edward Montgomery of the Georgetown Public Policy Institute at Georgetown University will present the talk “Mr. Chips Goes to Detroit: Participating in the Auto Industry Rescue” at UMBC on Tuesday, April 2, as part of the Spring 2013 Social Sciences Forum Lecture series.
Dr. Montgomery served as a member of President Obama’s Auto Task Force and as Director of Recovery for Auto Communities and Workers. He will use his talk to discuss the economics and political considerations involved in the rescue of General Motors and Chrysler and efforts to rebuild communities reliant upon the auto industry.
This event is co-sponsored by the departments of public policy and economics. It will be held in the Albin O. Kuhn Library, 7th floor, at 4:00 p.m. on April 2. All are welcome to attend!
A new Governing magazine article examines a recent study by UMBC professors T.H. Gindling (economics) and Marvin Mandell (public policy) on the economic impact of Maryland’s Dream Act, which extended in-county/in-state tuition at local community colleges and public universities to undocumented immigrants who graduate from Maryland high schools and meet other requirements.
The article notes that 13 states have similar “tuition equity” laws in place and more than a dozen additional states are considering proposals for them. “As state lawmakers think about offering in-state tuition to undocumented immigrants,” suggests J.B. Wogan, “the UMBC study could offer a model for weighing long-term net benefits and costs.”
Summarizing Gindling and Mandell’s report, Wogan writes, “For government at all levels, the total impact would be a net gain of $39.6 million. For society as a whole, they estimate a total economic benefit of $63.6 million.”
See the website of UMBC’s Maryland Institute for Policy Analysis and Research (MIPAR) for the original working paper: “Private and Government Fiscal Costs and Benefits of the Maryland Dream Act.” Coverage of the study has previously appeared on NPR, Inside Higher Ed, The Chronicle of Higher Education, Baltimore Sun and other news outlets.
Following the Ravens’ Super Bowl win, the team will increase ticket prices at M&T Bank Stadium, reports the Baltimore Sun. Season ticket holders will see an average price increase of 10%, plus a $5 parking rate increase.
UMBC sports economist Dennis Coates notes, “In the grand scheme of ticket price changes, I’m not sure that a 10 percent is particularly a big one. But it doesn’t make it any easier for the average fan to pay an extra 10 percent. We’re still in a relatively sluggish economy and there are a lot of people whose income hasn’t changed a whole lot.” However, Coates suggests, compared with 20-30% ticket price increases that some franchises have tried, particularly after building new stadiums, the 10% raise is more modest, and fans might be more willing to accept it following the Super Bowl victory.