- The Washington Times - Wednesday, October 27, 2004

The long-running feud between economists and stadium-happy politicians took another bitter turn yesterday.

The release of a report from the District-based Cato Institute challenged many of the city’s claims that baseball’s return to Washington would spur economic development.

The report, entitled “Caught Stealing: Debunking the Economic Case for D.C. Baseball,” borrows liberally from more than three decades of economic research on the presence of big-time professional sports in urban areas.

Like other studies, the authors of the current report — Dennis Coates from the University of Maryland-Baltimore County and Brad Humphreys from the University of Illinois, Urbana-Champaign — argue any new development and tax revenue generated by the presence of a sports facility is more than offset by losses elsewhere in the region, and is not worthy of major public-sector investments.

“Unless you believe that people pull money out of hiding to spend it on sports, that spending has to come at the expense of spending somewhere else,” Coates said.



The viewpoint, of course, is in direct contrast to that held by city officials. Mayor Anthony A. Williams, in pitching his $435.2 million plan for a new ballpark in Southeast near the Anacostia River waterfront, projects $1.1 billion in total economic benefits over a 30-year period, stemming from job creation, spending at the ballpark and purchases in the city by those directly employed by the return of baseball.

Williams and other city officials also rely heavily on history, most notably the downtown areas of Denver, Cleveland, Pittsburgh, San Francisco and elsewhere. Those cities were visibly transformed through the entry of sports and construction of new stadiums and arenas.

MCI Center in Northwest is also part of that history. City studies estimate more than $80 million in annual tax revenue to the city emanates from the five-block area surrounding the arena and should rise to $156 million by 2007. More than $4.6 billion in total development is estimated to have arrived to the previously underdeveloped neighborhood by 2008.

“Yes, you do have some replacement effect, but our situation is different with the varied jurisdictions,” said Gerry Widdicombe, director of economic development for the Downtown DC Business Improvement District. “We want business to come into the city from the suburbs, the other states. The critics will also say that development in the MCI area was going to happen anyway, and the same for the ballpark, and that well may be true. But it would have happened much slower without the catalyst to get things going.”

The Cato report arrives just before tomorrow’s key hearing on the ballpark bill before both the economic development and finance and revenue committees of the D.C. Council. Nearly 200 individuals and entities are on the witness list, including Williams himself and Mark Tuohey, chairman of the D.C. Sports & Entertainment Commission.

Coates, also seeking to testify tomorrow, and Humphreys have much more than a passing interest in the ongoing District baseball debate. Last week both men signed a letter sent to Williams and signed by nearly 90 other economists, again challenging the claims of economic development and the need for public investment in baseball.

Two sides also are sparring heavily on the matter of hotel occupancy with the return of baseball.

Even as stadium advocates battle the attacks from opponents, they feel particularly strong about the impact upon local hotels, particularly high-end ones catering to ballclubs. A traveling party for a Major League Baseball road trip often exceeds 70 people including players, coaches, team officials and media. And in the case of the Expos, those hotel stays are literally transferring from downtown Montreal to the District.

“Everything we looked at with regard to hotel occupancy simply did not produce a meaningful impact on either hotel employment or wages,” Coates said.

Coates and Humphreys also took aim at the gross receipts tax forming the bulk of the stadium financing plan. The city’s business leaders openly lobbied council members for the reinstatement of the tax, which runs as high as $28,200 a business a year.

“Whether it is in the form of lower wages for workers, lower asset values for corporate owners, or higher prices for consumers of the goods and services those companies provide, this tax increase will touch D.C. residents in some way,” Coates and Humphreys wrote.

There are some points of agreement, however. Both sides concur the return of baseball brings numerous intangible and emotional benefits, and that the stadium deal struck by the city was driven foremost by MLB and its powerful position to demand maximum amounts of public money.

“The protracted decision-making process … was a classic exercise in concession extraction by a monopoly sports league,” wrote Coates and Humphreys in the Cato report.

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