Good luck to Worcester!

Proposed stadium for the Worcester Red Sox.

Proposed stadium for the Worcester Red Sox.

From Robert Whitcomb's "Digital Diary,'' in

I was driving through Pawtucket the other day over its Third World roads and by its decayed-looking public schools. That made me wonder  again why the State of Rhode Island and Pawtucket  would have wanted to enter into a massive public-borrowing scheme to build a publicly owned stadium that would benefit some very rich businessmen in a sport that seems to be in long-term decline.  Instead, why not borrow for such far more important things as transportation infrastructure? What indeed is the opportunity cost in all this?

Wouldn’t the old mill town of Pawtucket improve its economy a lot more  by fixing infrastructure to be used by a very wide variety of people? Barely paved roads are not exactly an advertisement to lure companies, nor are crumbling schools.

And if a  baseball stadium is such a great economic-development  energizer (which it isn’t) how come, even after some expensive McCoy Stadium upgrades over the years, the neighborhood around McCoy  still looks like, well, the neighborhood around McCoy?

The whole PawSox thing, in Rhode Island and now in Worcester, bespeaks a sort of bread-and-circuses approach, in which appeals to romanticism – in this case baseball fans’ --- trump economic  reality. For that matter, what percentage of the population of Rhode Island and southeastern Massachusetts actually  go to PawSox games?

Meanwhile, there’s starting to be some buyers’ remorse in Worcester about the very generous offer to lure the PawSox that was secretly  (and no wonder!) negotiated over the last few months by the city, the state and the PawSox owners. The deal includes more than $100 million in city borrowing, not including interest.  Some of this is supposed to be repaid by a mix of hoped-for taxes and fees in a new development district around the stadium. Will all that development happen? I doubt it.  Note that interest rates are rising and that history suggests that a recession – perhaps a deep one – will start in the next couple of years. The taxpayers’ stadium is supposed to open in 2021.

Robert Baumann, an economist at the College of the Holy Cross (conveniently situated in Worcester) and a nationally known expert on the economics of publicly financed stadiums, gave a hearty thumb’s down to the Worcester deal. Among his remarks in a Worcester Telegram article:

“The summary of {the} research is simple: public money towards stadium construction is rarely, if ever, worth the investment….”

 “{The} improvement and increased spending in one neighborhood usually comes at the expense of the rest of the area. … In essence, new stadiums typically trade off concentrated gains in the immediate area with diffuse losses everywhere else.’’

 “According to Minor League Baseball, per game attendance at International League games this year is currently about 4.9 percent lower compared to last year and 7.9 percent lower compared to ten years ago. …Usually new stadiums come with a ‘honeymoon’ period of about three years where attendance spikes above its long-run trend…. {W}hat happens after the honeymoon is over?’’

“Simply put, this ownership group has the money  {to build a stadium with its own wealth} but pitted two nearby municipalities against each other in order to get the best deal. Given that same public money also funds teachers, cops, and firefighters, this doesn’t strike me as an ownership group that cares much about Worcester or Pawtucket.’’

"The idea that this is going to serve as a catalyst for economic development, which is the hope – and I emphasize the word hope – is misguided," Robert Baade, an economist at Lake Forest College, in Illinois, told the Worcester Business Journal. John Solow, a Massachusetts native and an economist at the University of Iowa,  told the publication, "There's a great deal of consensus among sports economists of all political stripes that this is not a good thing for local governments to be doing,"

But they may well do it anyway in Worcester because of the romanticism of the small percentage of the population who actually go to Minor League games and that old wishful suspension of disbelief. If it happens, it will be a wealth transfer from the middle class to the rich. But it will raise the spirits of local baseball fans, if not necessarily most football, hockey, soccer or tennis fans. Money isn’t everything! The owners are, well, hard-working capitalists seeking to maximize their profit by cultivating the romanticism of their fans and the politicians who seek their support.

Rhode Island Public Radio has a useful discussion on the pros and cons of publicly financed baseball stadiums. To read and hear it, please hit this link.