Building Ballpark Could Cost County 3 Billion Every Year
Written by Michael Lewis on November 20, 2008
By Michael Lewis
Stadium talks between governments and the Florida Marlins are in extra innings. Contract deadlines have passed. Now dealings come up against a recession unanticipated during ballpark euphoria.
When tax revenue seemed endless, using a half billion dollars to help a team owner boost profits was rationalized as the price for keeping us Major League. But now, with taxes constricted and needs soaring, governments must exercise greater care with scarce resources.
Key criteria must be how spending can add jobs, buttress the economy and prepare us to overcome the doldrums. Under such criteria, baseball ranks dead last.
Set aside a deal Miami and Miami-Dade County have outlined with the Marlins that’s equivalent to trading the world champion Philadelphia Phillies’ starting lineup for Billy, the Marlins’ mascot.
The only defense of this well-documented giveaway is to claim it would give the community a huge economic boost even while it enriches Jeffrey Loria and his unnamed Marlins partners.
Unfortunately, it wouldn’t give any such jolt. Worse, it would rob us of alternate uses of funds to leverage our way out of the economic vice that’s squeezing us.
Baseball fans love trade talk and statistics. They’ll debate recent Marlins trades of two stars for a man with exactly 169 Major League at bats, a .240 batting average and no home runs, and their closing pitcher for a low-level minor leaguer who weighs 275 pounds. Net gain to the Marlins: dumping three large salaries and adding about $8 million to the bottom line.
Similarly, tradeoffs and statistics dominate the economics of community resources.
Building a stadium for $515 million, garages for $94 million to $156 million (depending on whom you believe) and infrastructure at untold costs (because nobody has totaled them) could yield four short-run public benefits.
One: construction jobs. They are vital, but any construction spending would create them. Costs per job would be similar.
Two: stadium jobs. They are also real, but they’re just shifted. They guy selling you a hot dog at Dolphin Stadium would either move to the new ballpark or lose his role to some new vendor. Shifting jobs is no gain.
Three: sales of tickets, advertising, sponsorships, concessions, parking and more. All those benefits would flow to Jeffrey Loria and Co. But again, the ones the Marlins don’t get today would just shift from the account of H. Wayne Huizenga, Dolphin Stadium owner. Shifting dollars is no gain.
Benefit Four is all a stadium could really boast: luring cash-spending visitors. That’s the only rationale for using Convention Development Tax receipts for the stadium and garages, because those funds by law must be used to spur visitor spending.
So it is in luring visitors that we’ll play the tradeoff and statistical game that baseball fans like me love. And those Convention Development Taxes could be spent far, far more effectively to boost our economy than by building a ballpark.
Convention Development Taxes here last year generated $33.6 million, all earmarked to aid the visitor industry. It is through bonding future collections that the county and city would generate cash for a stadium and garages.
Because this area has been booming, governments have relied on those taxes expanding forever. Last year collections were up 9.3%, the year before 8.9% and before that 17.9% following 18.1%.
But days of straight-up growth may not last. The first eight months of 2008 collections rose just 2% — and that was before the economy crumbled. We can’t bet on bigger forever, even with a Sept. 1 projection of 43 tax-generating hotels with 9,975 rooms scheduled to open in Miami-Dade.
Suppose that instead of baseball those taxes were traded to the visitor industry, where they belong. For just one example, put some into expanding and upgrading the Miami Beach Convention Center and suddenly we get a far bigger bang for far fewer bucks.
Like a stadium, hundreds of thousands of area residents use that center every year. But unlike a stadium, it also has a broad reach elsewhere.
That convention center competes nationally for meetings that attract both businesses and consumers. To compete in the future, however, it needs a ballroom that could serve banquets, better parking and high-tech electronic and audio-visual capabilities. A study soon will detail those needs.
Orlando and other communities have captured the biggest meetings. But, combined with Miami-Dade’s other advantages, an upgraded center still could lure hundreds of thousands more visitors a year. That’s statistically a far better use of the taxes than baseball.
By the numbers: The Marlins this year averaged 16,888 ticket sales a game (far fewer actually attended). That’s lowest in baseball by more than 3,000.
The Marlins play 81 games here a year. At most 1% of all Major League Baseball fans visit an area primarily to see a game, so the Marlins lured at most 13,689 out-of-town visitors this year. Compare that with Art Basel at the convention center, which in just three days next month will draw 10,000.
Even if the Marlins were to get the 37,000-seat stadium they seek, however, and even if they could sell every seat instead of the 45.9% they do now (worst in baseball), they’d lure just 29,970 out-of-town visitors a year.
Meetings and conventions, however, now attract hundreds of thousands a year more than that, and they face no ceiling other than community capacity. Adding 9,975 hotel rooms plus filling all present rooms would add far more. Hotels in Miami Beach, where 40.9% of all visitors stay, used only 76.9% of capacity in 2007, so growth can be huge. With billions invested in the new hotels, they deserve community support from a convention center enhancement.
The Greater Miami Convention & Visitors Bureau lent staffing last year to 421 meetings and conventions that had 243,000 attendees — and, unlike baseball, which lasts six months, they came here year-round.
That doesn’t include the large meetings that didn’t need bureau aid. Think of 8,500 people due in January at the Jewelers International Showcase, or 20,000 from around the hemisphere in February for the Printing Association of Florida, or 5,000 in April for the International and American Association of Dental Research. The list runs on.
With better facilities, we’d lure far more conventions bringing big spenders. Without upgrades, we could lose some of what we have.
And those meetings are vital to every county resident. Last year, according to the convention bureau, an average overnight visitor spent $244.54 daily, stayed 5.85 days and spent $1,430.56 while here, not including air fare. And he or she didn’t come alone: parties averaged 2.09 persons.
Add 100,000 visitors annually at an upgraded convention center and we add $1.43 billion in outside spending in restaurants, hotels, taxis, stores and more. Most workers in those industries live in Miami, Hialeah and throughout this county, so visitor spending in Miami Beach benefits all.
And each visitor dollar multiplies as it’s spent again, perhaps doubling. So we could easily add $3 billion a year spending impact by upgrading our convention center — or lose $3 billion of current impact by building a ballpark instead.
We could get that $3 billion annual bang for our buck for a $100 million one-time upgrade. Who’d want to trade that impact for spending half a billion dollars on a stadium to add just 16,000 out-of-town baseball fans per year?
These are days for smart spending to target economic growth. A ballpark just shifts dollars from H. Wayne Huizenga to Jeffrey Loria. A convention center upgrade brings billions a year to our community. The choice is obvious. A stadium strikes out.