From Robert Whitcomb's "Digital Diary,'' in GoLocal24.com:
’Successful investing is anticipating the anticipations of others.’’
-- Economist John Maynard Keynes
The latest proposal by the Pawtucket Red Sox for a new baseball stadium in that city is considerably better than previous ones. Andrew Zimbalist, a Smith College economics professor who has frequently denounced taxpayer subsidies for stadiums, called the proposal “like a pretty good deal,” reported The Boston Globe. But, he added, he wanted more details before deciding whether to endorse it.
“To have that level of private participation is certainly above the norm in Triple-A baseball,” Mr. Zimbalist told the paper.
But there are very big questions. One of the biggest, to me, is the most difficult to answer: How popular will baseball - and Minor League Baseball at that -- be over the decades of this public-private deal? Will changing demographics make the sport less popular (and soccer more so) in our region? If so, will the PawSox owners face what many big-store retailers face: the sort of existential change in consumer patterns that could lead to few if any stores in, for instance, Providence Place within a few years. (Luckily, Providence Place is much more architecturally attractive and interesting than most malls and could work well for such functions as college classrooms and assembly halls, libraries and medical clinics.)
The state would have to pay about $43 million, the city about $29 million and the PawSox organization about $86 million in an overall cost of $158 million in bond principal andinterest over the 30-year deal.
What’s the opportunity cost of the total $72 million that taxpayers would cover? Would such an investment be better spent on fixing up transportation infrastructure and/or schools and/or parks, etc., etc.? Or on a baseball stadium to be used from April to October?
It would be very useful at this point if the public could be provided with rigorous, plausible projections of what the market for Minor League Baseball games could be over the next few decades of taxpayer exposure. But perhaps that’s impossible.
In any case, we need a rigorous independent study on the frequency of possible nonbaseball uses of the proposed stadium to help pay for the project, especially given the limitations imposed by that annual cool snap called “New England winter’’.
As for self-interested projections by Pawtucket (which, like the PawSox, is salivating for this project) and the team on the sales- and income-tax revenues that might be generated by the new stadium: Most such projections turn out wildly wrong. There are just too many variables. The late British Prime Minister Harold Wilson’s remark about politics increasingly applies to business, too: “A week is an eternity in politics.’’
Another point that I assume that the PawSox, the city and the state have carefully considered: The Pawtucket exits on Route 95 are heavily used by people leaving or entering Providence’s East Side. What sort of plans are being made to handle the traffic on game days? At the same time, the new stadium could be a boon for restaurants in Pawtucket, Central Falls and northern Hope Street on the East Side.
My guess is that the Rhode Island legislature will pass and Governor Raimondo will sign a bill close to the latest proposal. They had better get as much solid information on it ASAP, especially given the high possibility that there will be a national recession starting this year or next, with plunging tax revenues. This will be a big, scary bet.
Back in the recession of the early ‘90s, Gov. Bruce Sundlun bravely pushed through major and expensive improvements at T.F. Green Airport in the face of much opposition. It turned out to be a very good bet for the state’s economy. But transportation infrastructure is essential. A baseball stadium ain’t, as much as I love the PawSox.
Whatever, deciding to have the taxpayers help pay for a baseball stadium for a private company in the end may be based more on romance than on economic rationality. But then, that’s true of many public-policy decisions.
