A worthy endeavor?

August 06, 2008|By Dennis Coates

City and state officials recently announced their selection of the location for a new arena in Baltimore. Their preferred site is where 1st Mariner Arena sits now, and it seems the rationale for this choice is to "anchor the revitalization of downtown's west side." The price tag for the facility is put at more than $300 million, with an as-yet-unknown amount of it coming from the state and city.

Supporters of building the facility, which could open as early as 2012 with 18,500 seats - an increase of 4,500 over the 46-year-old facility it would replace - call on the citizens of Baltimore to dream big. They tell us that Baltimore deserves a major-league arena and that the city should have a shot at a third major-league sports franchise. But the people who are making these claims don't have the facts on their side.

All the evidence is that stadiums and arenas have little or no effect on the number of jobs or on the level of income in the community. There is virtually no independent, disinterested researcher who has found otherwise. In fact, even many proponents of using a stadium or arena to anchor development accept the evidence that the facilities will have no effect over a broad geographic area. Experts such as Mark Rosentraub of Cleveland State University and Charles Santo of the University of Memphis argue instead that building a facility in a particular area is justified because that area is somehow special. To them, it doesn't matter that all the facility is likely to do is move economic activity from one area in the city or region to another. It is surprising that such a shell game seems justified to city and state elected officials.

Even if the proposed facility would do all the things that the proponents claim, it cannot be concluded that the use of public funds in such an endeavor is good public policy. Before writing the check for the arena, sensible and effective policy would consider the benefits to the city and state, and even the west side of Baltimore, of using the money in alternative ways. Good and effective government would choose to invest first in projects whose return is greatest - perhaps things such as repairing streets and highways, modernizing sewer and water infrastructure, investing in expanded mass transit and modernizing school facilities.

Critics of the plan are accused of being negative and of lacking a vision of the bright future the city could have, but they seem to grasp the reality of the situation. One critic of building a facility as big as proposed is John Moag, an instrumental player in the building of M&T Bank Stadium and former chairman of the Maryland Stadium Authority. Mr. Moag, whose business is helping teams get cities to build them stadiums, has said he doesn't see how Baltimore could have use for such a large arena, and because of the saturation of the Baltimore-Washington market with sports franchises, he considers it unlikely that a new franchise would come to Baltimore.

Another critic is Edwin F. Hale Sr., whose 1st Mariner Bank holds the naming rights to the current facility and whose indoor soccer club is its primary tenant. Mr. Hale, whose company has invested substantially in the existing facility, would be without a place for his Baltimore Blast to play during the three years of construction. Mr. Hale is reportedly considering building a private facility outside the city limits. How would driving such an important tenant out of the area affect west-side revitalization?

But just because the economic development rationale is wrong, we cannot conclude that building the arena is a bad idea. There are good arguments to be made for doing so, but to make them requires estimating benefits that are difficult to measure. Estimates of these benefits exist for other cities and teams, but they are not necessarily transferable to Baltimore. If those benefits exceed the public's costs of building the facility, the public expenditure might be warranted. However, one would still have to assess the alternative uses of the money to determine which use is best.

The debate over the arena will heat up. Proposals for financing it will come out. Designs will be solicited. In all of that, as you decide how you feel about the project, focus not on the economic development benefits or what Baltimore deserves, but on whether this is the best use of public money. Ask that public decision-makers do the same. Baltimore deserves no less.

Dennis Coates is a professor of economics at University of Maryland, Baltimore County and president of the North American Association of Sports Economists. His e-mail is coates@umbc.edu.

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