J. Byron Fleck and Karen Hardy have produced a series of reports that thoughtfully and critically review the proposal. They will be posting full copies of these reports on their own website, but they have given permission to publish their findings here. This report is their own analysis of the evidence, and we encourage you to go to the sources and review the evidence for yourself. In the interest of space, I have not included the footnotes, but I've included several links to the evidence they've used.
SINCE THERE IS NO ECONOMIC BENEFIT TO SANTA CLARA, WHY DOES ITS CITY COUNCIL STILL CONSIDER GIVING A BILLIONAIRE $200 MILLION?
By J. Byron Fleck and Karen Hardy
On Monday, April 9, 2007, we published our first in a series of reports about Santa Clara City Council’s continuing study to provide the 49ers billionaire owner, John York, a subsidy from Santa Clara City residents of $180 million- $200 million. The funds sought from Santa Clara residents would replace a like amount, which, presumably, otherwise could and would come from Mr. York’s own pockets, to build a $850 million football stadium which would host 17 events annually.
We conclude in this report, there is absolutely no reason whatsoever that the Santa Clara City Council waste any further City Staff or consultant ($200,000 budgeted) resources on a project which will produce no (if not negative) economic benefit to residents of Santa Clara. The reasons for our conclusion follow.
First, in our April 9 report, we provided the following facts. None were refuted by Jed York (son of John York, owner of his family’s football operations), John York nor Conventions, Sports & Leisure (“CSL”), the consultant paid by the Yorks to prepare an “independent” study of the benefits of a Stadium , with subsidy, to Santa Clara City and regional residents:
* CSL was previously retained by Al Davis, Managing Partner, Oakland Raiders, to prepare and present a similar “independent” economic assessment of economic benefits to the residents of Oakland and Alameda County in support for the expansion of the Oakland - Alameda Coliseum.
* CSL has never, in any “independent” economic impact analysis commissioned, as here, by an NFL owner, concluded that the detriment to residents exceeded any benefit to the residents, of hosting a new stadium.
* Neither York nor CSL challenged our April 9 report where we cited leading economists who said, “[I]ndependent work on the economic impact of stadiums...has uniformly found that there is no statistically significant positive correlation between sports facility construction and economic development.”
* Neither the Yorks nor CSL took issue, with an important conclusion of the authors report. While there is absolutely no economic benefit to Santa Clara residents subsidizing a billionaire NFL owner to fund his dream stadium, on the backs of residents of decidedly more modest means, billionaire Mr. York will pocket an extra $30 million annually as the result of a new stadium.
Second, after publication of Mr. York’s self styled “independent” economic impact report, a real independent source conducted its own survey of experts.
“Four prominent sports-finance experts say a report outlining the benefits of a San Francisco 49ers football stadium in Santa Clara is riddled with inaccurate assumptions and incomplete information - casting doubt on many of its projections.”
Dennis Howard, a professor at the University of Oregon’s Lundquist College of Business summed up CSL’s report, and its underlying methodology, succinctly. “When you start peeling away the layers you realize how fragile this analysis is. It just doesn’t stand up.”
Specifically, we found the following observations particularly troubling:
* Omitted from the CSL report is the fact that a new stadium creates no new construction jobs. Some workers filling those jobs would probably have been working on another construction project elsewhere. Conversely, the CSL report contends that 1,350 construction jobs would be created.
* Of the 900 jobs to be created within Santa Clara City, CSL cannot identify how many of these would be full time, part time or seasonal. Intuitively, these jobs appear to be low skill temporary or seasonal positions. Stadium vendors, parking attendants and souvenir sellers immediately come to mind. Jobs which pay low wages, provide no healthcare benefits and unlikely to be staffed by many Santa Clara residents. More likely, these positions will be more likely than not staffed by the same people providing these services now. The only difference is that their place of business shifts to Santa Clara from San Francisco. Hence, “technically” these are the “new jobs created in Santa Clara.”
Third, on April 10, Jed York and CSL presented their “independent “ economic report to the Santa Clara City Council. Minutes into the presentation, it became apparent that the logic of York’s report was in trouble.
Jed York introduced the report enthusiastically announcing to Council that “billions in new economic activity” would be generated by a new stadium. When CSL’s representative rose to present its findings moments later, the “billions in new economic activity” pronounced by Mr. York, suddenly, and without explanation, shrunk to $246 million.
While CSL’s tone was upbeat and confident, especially in their repeated emphasis that the head spinning benefits to Santa Clara were calculated “conservatively,” fine print not appearing in their power point presentation, gave us pause. Specifically, at page 23 of CSL’s report, we found a series of qualifications and disclaimers which, in themselves, can reasonably give rise to a conclusion that CSL’s report was a sales job as opposed to a serious examination of economic impacts, both positive and negative. For instance:
* “CSL International does not make any representations or warranties as to the accuracy or completeness of the information provided to us. Information provided to us has not been audited or verified and has been assumed to be correct.” [ed. Huh?!?] [ed. Given this disclaimer, we are baffled that CSL’s report can be fairly described by anyone as “conservative” let alone “accurate.]”
* “Some assumptions inevitably will not materialize, and unanticipated events and circumstances may occur therefore, actual results achieved during the analysis period may vary from those described in the report, and the variations may be material.” [ed. Although the introductory clause suggests that CSL knows, in fact, that things won’t turn out as rosy as stated in their report, nowhere in their report does CSL identify which assumptions “inevitably will not materialize.” CSL does tell us, however, that “the variations may be material.” In the authors’ understanding, if a material fact turns out to be error, it must be a fact of such significance that a reasonable person would not go forward with the transaction. If CSL has not confidence in their own report, why should Santa Clara residents?]
* “The report has been prepared to assist the 49ers in the assessment of the economic impacts and community benefits associated with the franchise and proposed new Santa Clara stadium and should not be relied upon for any other purpose, or by any other person or entity.” [ed. So, CSL’s report is not “independent” as they expressly state at Page 1 of their report, after all. No one, like a city resident who experiences any adverse consequences (utility rate hike, perhaps?) or the City itself may rely (e.g., seek redress in court) on CSL’s fantastic enumeration of benefits to Santa Clara residents.]
To the extent one may be tempted to characterize CSL’s qualifications and disclaimers above as mere “boilerplate,” he / she is well advised to remember that the halls of justice are strewn with victims of “boilerplate.” Whether it be a credit card application, insurance policy or promissory note, words matter. In the case of the CSL report, those qualifications and disclaimers must be given great weight, especially since so much is at stake for Santa Clara residents, for no economic benefit.
Finally, we direct your attention to an Op-Ed piece in The San Jose Mercury News Perspective section of April 15, 2007, authored by the leading authority on the subject of the true economic impacts of new stadium development, Professor Roger Noll at Stanford. We think this piece is so important, we have decided not to summarize its many key findings regarding the CSL report. Unlike CSL’s report, Noll’s study is truly independent. We hope that by dangling this tease, you will spend a few minutes reading and digesting Professor Noll’s article for yourself. It is that important.
http://www.mercurynews.com/opinion/ci_5672692?nclick_check=1
Bottom line, Professor Noll concludes that CSL’s report, coupled with billionaire York’s anticipated subsidy request, poses significant financial risk, while generating little if any benefit, to Santa Clara residents.
CONCLUSION
There is no dispute among independent authorities. Providing public subsidies for new stadium construction is uniformly a loser to the effected community and its residents. Given that fact and given that CSL’s economic impact report is discredited, it begs the question why the Santa Clara City Council would continue to waste hundreds of thousands in staff and consultant time, and your money, to investigate the idea of providing a subsidy of your money to a billionaire, where there is no benefit to Santa Clara residents.
Many of the sources they have cited are available online:
San Jose Mercury News, “Economists call 49ers stadium forecast overly optimistic” Sec. 1B, April 10, 2007
CSL’s full report
Op-Ed piece in The San Jose Mercury News Perspective section of April 15, 2007, authored by onr of the leading authorities on the subject of the economic impacts of new stadium development, Professor Roger Noll of Stanford University.
Rappaport, Jordan, and Chad Wilkerson. "What Are the Benefits of Hosting a Major League Sports Franchise?" Economic Review (Federal Reserve Bank of Kansas City), First Quarter 2001.
Noll, Roger G., and Andrew Zimbalist."Sports, Jobs, and Taxes: Are New Stadiums Worth the Cost?" The Brookings Review, Summer 1997
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