Pinellas County and St. Petersburg commissioned an economic impact study of a new Rays stadium. Here’s what it said.

Thanks to Tampa Bay Times reporters Colleen Wright and Jack Evans, we have learned that St. Petersburg and Pinellas County governments contracted with a firm called Victus to study the economic impact of a new stadium for the Tampa Bay Rays.

This report looks at both economic and social impacts, and is no doubt intended to help city and county elected officials make more informed decisions about anticipated requests from the Rays for public financial support. The reporters were kind enough to share the original report, which they obtained through a public records request, and below I’ll provide a few thoughts about it, and about the value of economic impact analyses generally.

Link to the Report: VictusAdvisors_RaysBallparkImpactStudy_02.06.23.pdf

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Victus Economic Impact Study Conclusions

The report provides analysis of the potential economic impact of the construction of the ballpark, the operations of the ballpark (they project a 30 year use period), and the overall Gas Plant district development.

Because the firm used proprietary numbers provided by the Rays it’s hard to look under the hood of their math. For example, they indicate that the stadium will be used for 81 baseball games plus other events, but they don’t (as far as I could see) indicate how many people they think will be attending any of these events. They do estimate a figure for total spending at the new stadium, however; to do that they must have had some working assumptions about attendance.

Here are some of their topline conclusions.

1. Economic activity generated by stadium construction:

Nearly $443 million in total economic output (e.g. direct and indirect spending)

Over 4,500 construction-related jobs

More than $417 million in wages (average wage of $92,658)

Over $665,000 in County sales taxes

No, they do not explain how they determine the average wage. Since the median annual wage for construction workers, according to the Bureau of Labor Statistics, is a little over $40,000, I’m assuming that the $92K would be wages earned over the entire construction period, which is likely to be two to three years.

2. Annual economic activity generated by stadium operations:

Over $465 million in total annual direct, indirect, and induced spending

More than 15,200 annual jobs (primarily in the sports, entertainment, food/beverage, retail, hospitality, and transportation industries)

Nearly $387 million in annual wages

$3.5 million in county sales and hotel taxes

More than 31,000 annual hotel room nights

Note that in this case they do not provide average salaries, but if you do the math (annual wages divided by number of jobs) it looks like the annual salary of these jobs would be just $25,460.

Also, the $3.5 million in increased county taxes, even over 30 years, would mean about $105 million in increased county revenue, far less then what the county will no doubt contribute to the stadium. (Of course, there are likely to be other revenue streams coming back to the city and county in any final deal, but those are not estimated here.)

Keep in mind that all these economic benefits from stadium operations are in theory already present in Pinellas County, which is home to an operating baseball stadium right now.

So unless the working assumption here is that the new stadium would generate revenue not currently realized at the Trop, we are talking about simply holding on to economic activity already present!

If this study is assuming that the new stadium will generate more revenue (or more jobs) than the current stadium, they have not made their reasoning public.

3. A large portion of this report focuses on what they call “social impact.”

The report notes the charitable and community efforts of the team and its employees, and summarizes interviews with community stakeholders as a means of social impact. They highlight both positive feelings these respondents have about the Rays and some of their misgivings about using public funds to support the team. Since many of these interviewees have also been involved in various Rays community committees and public sessions, frankly, there is not a lot of new information here, so let’s stick with the numbers.

What do the numbers mean? Should the county and city help pay for a stadium?

This is probably a good moment to remember: most economic impact studies are not particularly enlightening.

There are many reasons such studies are of limited value. They are only as good as the numbers that are loaded into the models; they can’t predict disrupters like COVID or a bad hurricane. Finally, while they seem to provide nice solid numbers that would inform sensible policy decisions, in fact they tell us very little about the right way to use public resources like land and tax revenues.

Impact studies don’t tell us how to spend public funds

First, these studies are value neutral, but making public policy decisions is all about values. Pretty much ALL activity has an economic impact. A neighborhood McDonald’s can have a surprisingly high impact. A prison has an enormous impact. The strip clubs along Dale Mabry? Probably a pretty significant impact. Studies can calculate that impact, and we can publicize the findings, but learning that they generate a few thousand jobs a year is hardly a reason to use prime land and tax dollars to pay for those things.

Impact studies usually don’t compare this project to other projects

Most of these studies ignore the idea of opportunity cost. Opportunity cost seeks to quantify the economic costs of the road not taken (see here for a longish but very accessible explanation). So this economic impact statement provides us with an analysis of the benefits derived from using the Tropicana Field site and some mix of public and private dollars to build a stadium.

The question these studies will not answer is, “What if that land, and those dollars, were used for something else? And what economic impact would that something else have, and how does that compare to the benefits of the stadium?”

The planned stadium will cost about a billion dollars to build, and the Rays/Hines team is hoping some substantial portion of that will come from a variety of public funding sources.

An economic impact study is basically asking, “what will the community get out of its investment” in terms of jobs, additional spending, and tax revenues. But the conclusions in a report like this one would imply that if not for the stadium, that money would simply not be invested in the community, and that the stadium land would not be put to productive use.

In the absence of a new stadium, would the private and public investors just put a billion dollar bills in a big pile and set it on fire?

No, of course not. Some portion of that — certainly a portion of the public funds — would be spent on something else at the site.

So the site meant for a stadium just be left empty?

This is what’s important to remember. The land would be used for something else.

So the economic impact question that leaders should really be asking is, “What else could that land be used for, and what else could public revenues be invested in? What would be the economic impact of THAT activity, and how does that compare to building a baseball stadium?“

The authors of this economic impact study are not alone in omitting this kind of comparison; these sorts of reports almost never have alterative scenario analysis. But if we are going to play the economic impact game, then we should be comparing potential uses of public resources and the different ways they benefit the community, and not simply adding up the benefits of a single alternative.

To be clear, this column is not intended to argue for or against public support for a Rays stadium — that is a topic for another day. Instead, here’s your takeaway:

When you see a headline about how a shiny new development deserves support because of its eye-popping economic impact, just remember that such analyses may not provide as much guidance as their champions imply.