Saturday, December 29, 2007

New Winnipeg stadium: city boon or public bilk?

Photo: Montreal's Olympic Stadium

Quite interesting is the recently reported poll on whether Manitobans would support public funding for a new Winnipeg Blue Bombers stadium.

The proposal, as it now stands, calls for the provincial and federal governments together to put up $40 million, which would match the $40 million being put up by private investors. According to the Probe/Jory Capital poll reported in today’s Free Press, 50% oppose (32% strongly, 18% somewhat) while 43% support (20% strongly, 23% somewhat) the use of government monies for the new stadium.

The poll comes only days after yet more evidence questioning the value that public funding of such projects have for the city in which they are built. Academics Dennis Coates and Brad R. Humphreys report in their recent
article (kudos to Richard Florida for his blog's link and discussion) that, “in stark contrast to the results claimed by most prospective economic impact studies commissioned by teams or stadium advocates, the consensus in the academic literature has been that the overall sports environment has no measurable effect on the level of real income in metropolitan areas. Our own research suggests that professional sports may be a drain on local economies rather than an engine of economic growth.”

An economic impact study of the Winnipeg stadium project apparently projects $17 million dollars in tax revenue for the province from the construction alone. Being no stranger to economic impact studies, I find that figure to be suspiciously high for an $80 million project. Coates and Humphreys would probably agree: they note in their article that “the results of these studies invariably reflect the desires of those who commission them, and advocates of stadiums and franchises typically produce impact studies that find large economic impacts, translated as benefits, from building a stadium or enticing a team to enter the city.” They go on to describe a number of flaws typically associated with such studies.

The debate is similar to the one that followed the demise of the Winnipeg Jets team and the subsequent True North/MTS Centre arena construction. Some of this is chronicled in
Thin Ice, a book by Jim Silver, who took the position that no public money should go to fund luxuries such as professional sports when our society faces far more pressing needs. Personally, I think the MTS Centre is a beautiful, amazing and highly successful arena, though I wonder whether the economic and civic pride spin-offs of that project even come close to balancing against the $40.5 million contributed by taxpayers.

In the case of the current proposed stadium project, it will of course be incumbent upon the promoters of the stadium to prove that the project is worth the input of public funds. We should be open to an investment of public money into an asset that will be cherished and used by the province’s citizens, but certainly not to corporate welfare for the Asper clan. In other words, let’s not rely on a questionable economic impact study funded by the very folks who stand to gain from the development.

There should certainly also be a cap on the public’s contribution, a lesson learned most harshly by Montreal in the construction of their Olympic Stadium: built for the 1972 Olympics for a projected public contribution of $120 million, the project was finally only fully paid for in 2006, for a total tab of $1.47 billion.

The public debate over this project should be far more than just about the money invested, too. As our Premier noted in his response to the poll, a critical piece of the public debate is about whether the provincial government should enter into a public-private partnership with Asper, an issue the poll questions didn’t even touch upon. We certainly don’t want an arrangement whereby the private owners who run the stadium reap the bulk of the project’s rewards while the public sector bears the bulk of the project’s risks.

3 comments: said...

And that is what would happen. The public is taking big risk with the Asper deal , and he owns the team and makes all the money

jamie said...

I recently, in passing, labeled the $40 million dollars of NATIONAL tax payer money to the stadium as corporate welfare - to the disgust of my drinking buddies. They saw it as an investment - which is a nice whitewash, a glazing over details for the "free bread and circus" ala Rome.

let me be clear am not opposed to public funding of the stadium however to label it an investment may not be the most apt of monikers.

lets call a spade as spade.

Personally it is much easier to accept ordinary welfare as an investment. Free market capitalism as commonly understood suggests that if a business is failing it is because it is not benefiting the publics best interest. Ergo, if a business cannot afford a Stadium they should consider a loan - not a hand out(I pay my mortgage). The argument proceeds - the money raised will give a return in taxes.
This of course is an absurd argument if you think it over.
The ends justifying the means.

That is not an investment. The tax revenue is due to the public vis a vie the government collection regardless. To suggest that the government is an investor one ought to envision stake holders digging their heals privately reaping returns.

Any way you slice it the government is (perhaps altruistically) handing out 40 million dollars - it is not a loan, and a proper business ought to raise funds for the stadium or take out a loan.

Truth be told in 10 - 25 years a new stadium will need to be built and as is the standard they will likely need government subsidies AGAIN(another term objected to).

Personally I would rather "throw money" at a welfare recipient whom has nothing rather than a multimillionaire who pays and facilitates the often excessive lifestyles of professional athletes.

On the other hand the "bread and circuses" shouldnt be taken for guarnted. Look at the olympics how many world class contenders struggle because of "poor marketing." What a pang of bullshit. The achievement of greatness ought to be celebrated, not the spectacle. It is a subsidy. No strings attached - not to be paid back. - If the business would fail (after a admittedly meager 40 million dollar national subsidy) there is no accountability. We cannot sell our shares. This is not an investment per say.

At best it is an altruistic government handout.

sorry for being long winded - hope it made a lick of sense.

jamie said...

it would also be a good moment to mention Ralph Nader's Cutting Corporate Welfare book at this point. In which he itemizes how on both sides of the boarder we are selling off national assets, granting tax subsidies/cuts, with measurably and documented, minimal gains in which the majority of the public - seldom benefit in any substantial way. As well as, how this process works its way back towards campaign donations.
It clearly (almost too dry and clear) schematicizes the mechanisms that undercut the tax payer and collective ownership our nations and national assets. A must for said topic.