Charlotte Observer: Doubts Raised About Boost From
Fri March 9, 2012
Charlotte Observer: Doubts Raised About Boost From Baseball
The planned stadium, shown in a rendering, would seat 10,000. Courtesy: Charlotte Observer
Four years ago, Durham tourism officials released a study saying the economic impact of minor-league baseball statewide amounted to tens of millions of dollars.
But the report had a disclaimer: "If minor league baseball did not exist in North Carolina, residents would likely use their discretionary income on other entertainment in the state."
Today, as the Charlotte Knights make a renewed push to leave Fort Mill, S.C., for a new stadium uptown, one argument in favor of a new public subsidy is that it would provide an economic boost for Charlotte.
Charlotte City Council member James Mitchell said he believes moving the AAA baseball team would create new jobs and tax revenue. Mitchell cites a recent study by UNC Charlotte professor John Connaughton, who suggested a new Knights stadium would support 490 jobs in Mecklenburg County.
Knights job fair 03.08.12
The Charlotte City Council recently reviewed a study by UNC-Charlotte professor John Connaughton about the economic impact of a new uptown stadium for the Charlotte Knights.
The study didn't include detailed information on the team's current economic impact today, though Connaughton said it's about $20 million. He said it would rise to $38 million in a new ballpark.
Over three years, construction of the stadium would support 233 jobs, according to the report.
Each year, spending inside the stadium would support 309 jobs. Many of those jobs are part-time.
Outside the stadium, fans purchases of food, drinks, gasoline and other items would support 181 jobs. Steve Harrison
But some other economists are skeptical about whether an uptown stadium for the Knights would translate into a significant number of new jobs, apart from an increase in part-time ticket-takers, ushers and restaurant workers.
In addition, they question whether the city would be creating new economic development. A skeptical view - supported by Durham tourism officials - is that the Knights would simply be taking other entertainment dollars from movies, restaurants or other sports.
"Is a new stadium beneficial to the metro area? No. But it's beneficial to your side of the state line," said Dennis Coates, a professor of economics at the University of Maryland Baltimore County, who has studied the impact of new stadiums.
Connaughton said his study accounted for many of those factors, and that his study is a reasonable projection of economic impact with a new stadium.
He said there is a bigger picture, as well.
"My guess is, and this is pure speculation, if there isn't a new stadium, the Knights won't exist here long-term," Connaughton said.
The Knights are scheduled to make a public request to the City Council's economic development committee on Thursday. Mecklenburg County already has pledged $8 million toward the $55 million stadium, and it's believed the baseball team may ask the city for between $7 million and $11 million.
The Durham Convention and Visitors Bureau released its study in 2008, which coincided with efforts to renovate the Durham Athletic Park, the old home of the city's minor-league team, the Bulls.
How many new jobs?
Connaughton's study projected that a new stadium would create 309 jobs tied to the ballpark. That includes the players and front-office staff, as well as people who depend on the team for work, such as hot-dog suppliers.
But a closer look suggests that most of those new jobs, if they materialized, would be part time.
The Charlotte Knights today employ 25 full-time staff and 30 players and coaches. During the team's 72 home games, there are, on average, an additional 135 part-time workers at the stadium. They work about six hours for each home game.
Two minor-league teams - Tulsa and Winston-Salem - that recently moved into downtown stadiums said they hired about 25 new front-office staff between them. Most of their new hires were part-time workers to handle larger crowds.
Connaughton said part-time work is important.
"To some people, it's really the difference in the quality of their life," he said.
Dan Rajkowski, the Knights' general manager, said it's too early to know how many people the team would hire for a new stadium.
The Knights believe that an uptown stadium would help it double its annual attendance, to 600,000 people. In addition, the team believes stadium revenue would grow from $3.5-$4 million to $10-$12 million.
The higher revenue is expected to come not only from more fans, but also higher prices, more advertising and stadium naming rights.
Connaughton's study, however, assumed a far greater increase in revenue, to $13.5 million. That would mean the team would be growing revenue by 3.5 times what it makes today.
If that new money does materialize, it's unclear how much of it would be reinvested into new jobs. For one thing, a sizable amount of that new revenue is believed to pay for construction debt.
Connaughton said his economic-impact software doesn't differentiate money spent on construction debt and money spent on local salaries.
But he said, "All the revenue that is generated by the team is respent by someone."
However, that money could be reinvested in other projects across the country.
In addition, the money paid to players isn't necessarily respent in the local economy.
"The salaries paid to players and coaches will also flow out of the city," said J.C. Bradbury, a Kennesaw State University professor who has written about the economics of baseball. "Most of those players do not reside in Charlotte."
The team hopes a new stadium will rejuvenate Third Ward. The projection is that Knights fans also will spend money outside the stadium on bars, restaurants and other stores, creating more jobs.
The study was part of a larger study Connaughton did for the Charlotte Sports Commission that examined the impact of sports in the region. The Knights helped pay for it.
It projects fans will spend $7.8 million outside the new stadium. That translates to $13 per fan, per game. A family of four would spend about $50 for each game, not including the money spent on tickets, food and drink inside the ballpark.
That spending would ultimately create 181 jobs, according to the study.
Would that spending be new money - or just dollars taken from other parts of the city?
Connaughton said his study accounted for that possibility, and that he lowered the spending estimates for local residents to account for what he called "substitution effect." He projects 40 percent of Knights fans in a new stadium would come from outside Mecklenburg.
Bradbury, the Kennesaw State economist, disagrees.
"There is a faulty assumption that there is a creation of wealth," he said. "It's a transfer of wealth."
Coates of the University of Maryland said he's skeptical whether the team will make as much money as projected.
"But even if they are right, the overall impact on the Charlotte metro area would be imperceptible," he said. "And they are asking for the city or the county to spend not an imperceptibly small amount of money."
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