In 2018, the city council of Worcester, Massachusetts, agreed to finance a substantial portion of taxpayer money to build a brand-new ballpark. Although the city would be borrowing around $100.8 million for this project (making it the 4th most expensive minor league ballpark to be built), city leaders justified this expense by stating how the ballpark would fund itself, if not make the city money in the long term. At the press conference announcing the deal, the city manager told everyone outright that “in essence, the project pays for itself”. What if there are cost issues after the ballpark is built? We got that covered…
“Worcester officials say increased tax payments generated from the project, including additional development, will cover the difference” – BallparkDigest, 09/13/18
Even better, the private development from around the ballpark would “generate a profit of $22 million over 30 years”. No wonder the mayor called it one of the “biggest and most important economic development projects” in the city’s history. Considering that the team kept virtually all revenues from the ballpark (along with advertising and concession revenue) and kept money made from a naming rights deal, I struggled at the time to see where or how this deal could come out good for taxpayers.
Then I remembered a Deadspin article that was written right after this deal was announced. In it, they go over how the Worcester Business Journal polled nine economists about the finances of this deal. The only one who said that it was a good move by Worcester to fund this ballpark was, Andrew Zimbalist, the professor HIRED BY THE CITY to evaluate the economics of the deal.
Let’s see what the actually impartial economists said:
- “It virtually never works” – Nola Agha, Professor, University of San Francisco
- “There’s just mountains now of economic evidence that the payoff that’s promised and what actually happens is far different … If it were a private person, you would never take such a nonsensical bargain” – Joel Maxcy, Economist, Drexel University
- “The idea that this is going to serve as a catalyst for economic development … is misguided” – Robert Baade, Economist, Lake Forest College
- “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” – John Solow, Economist, University of Iowa
- “I really, really don’t see it … You’re counting on something that’s not very likely to happen, and you better have a Plan B in place” – Michael Leeds, Economist, Temple University
- “There’s not much evidence about the effectiveness of these targeted redevelopment projects that go along with mixed-use retail/residential projects … But whether the ancillary stuff is going to pay for the subsidy, that’s a pie in the sky claim that has no evidence to back it up” – Brad Humphreys, Sports Economist, West Virginia University
Speaking of Zimbalist, he has quite the history. But Worcester hired him and his results showed “the city paying off its debts and even turning a small surplus”. Which sounds good until one realizes that Zimbalist’s history with new sports arenas, ballparks and stadiums….is not good.
- In 2006, Anaheim hired Zimbalist to determine whether or how much the city would lose if the Anaheim Angels, the local MLB team, changed its name to the Los Angeles Angels. He determined in a report that if the team was not in the city and that the ballpark land was used for a different purpose, Anaheim would be at roughly a $138.5 million loss. His analysis was so skewed and so bad that the Judge would not allow him to testify on behalf of the city of Anaheim. As the judge wrote, any damages calculated must “reflect the value of the actual benefits lost by the city”. Thank goodness Zimbalist got paid $73,276.60 up front.
- In 2008, Zimbalist, hired by the city of Seattle, wrote a report stating that Sonics created “intangible benefits, such as civic pride, that are impossible to quantify and could not be replaced by a cash payment to the city”. In Court, the Sonics attorney noticed that large parts of the Seattle report done by Zimbalist looked similar to the report done years earlier in Anaheim by Zimbalist. The Sonics attorney also wondered how Zimbalist could assign the Anaheim Angels intangible benefits a cash value of $7.5 million while also claiming that “the cash value of the Sonics’ intangible benefits could not be calculated”.
- Zimbalist told the Tampa Bay Times that taxpayers should pay for a new Rays stadium, and forgot to mention his side-work as an MLB consultant.
- Zimbalist was not worried about the city of New York spending over $200 million on the new Yankees stadium. Then went quiet as the price of this ballpark skyrocketed to around $700 million. How anyone could think that the Yankees deal would be anything but a train wreck for the city is beyond me when considering that the Yankees are “not required to pay rent, property taxes, mortgage recording taxes, or sales tax on construction materials”.
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So let us fast-forward to today. The new ballpark was built and opened in 2021. How much money has the ballpark made the city? Well, the city should keep its checkbook out.
“When being pitched to residents, the city said the park would pay for itself, and they would not need to dip into the general fund. Baumann looked at the promised returns for 2024 and found instead of a forecast $4 million surplus, the park will actually come up $1 million short” – SpectrumNews1, 05/12/23
Over the next 30 years, the new ballpark is expected to lose the city between $40-$60 million, according to a new paper written by Robert Baumann (College of the Holy Cross) and co-author J.C. Bradbury (Economist, Kennesaw State University). To be fair to the ballpark and Worcester, the special tax district is, in fact, making payments that cover the city’s part. But as Baumann explains, even if that is happening, the city continues to make spending decisions based on incorrect financial reports that the city commissioned before the ballpark was built. In those reports, nothing was done to account for development that would have occurred in the area anyway, nor did it “sufficiently take into account that money spent at a ballpark tends to crowd out spending that would otherwise go to other local businesses”.
Oh, and guess who now thinks the deal stinks?
“In response to the report, Andrew Zimbalist, the sports economist, who the City of Worcester paid $80,000 as a consultant in 2018 … and developed the model to prove its economic viability, now says it’s possible the stadium deal won’t work out economically for the City, since much of the stadium-related residential and commercial development .. has been delayed and reduced in size … As a consequence, I would not be surprised if the financial outcome, at least so far, is worse than my model projected” – WBJournal.com, 05/11/23
Another reason to worry? Few things are happening outside the ballpark. When the ballpark agreement was reached in 2008, even supporters admitted that outside development was critical to this project being financially successful.
But as WBJournal writes in an article, the initial signs of development are not good. The first residential building was supposed to open in 2021, but is delayed until later this summer. Proposed hotels have been reduced from two to one. Also, construction on the life science building has been delayed multiple years. It is never a good sign when local officials are using benefits that can’t be counted, like people seeing the city name on the news, as a reason to say that a project is successful.
Instead, city officials should point out just how many women and minority people were hired to build Polar Park.
“The company in charge of constructing Polar Park has agreed to pay $1.9 million for allegedly falsifying its efforts to hire women- and minority-owned businesses as subcontractors on the multimillion-dollar ballpark project” – Telegram & Gazette, 12/22/22
Nevermind.