Effectively Wild: A FanGraphs Baseball Podcast - Effectively Wild Episode 327: Neil DeMause on the Braves’ New Ballpark and Public Financing for Stadiums

Episode Date: November 12, 2013

Ben and Sam talk to Field of Schemes author Neil DeMause about the Braves’ proposed new park and public financing for sports stadiums.

What's up to my boys in the north? Ross, Will, North, Cross. Cobb County, Mayweather. Heard you getting that nature. Good morning and welcome to episode 327 of Effectively Wild, the daily podcast from Baseball Perspectives. I am Ben Lindberg, joined as always by Sam Miller. And we have a guest today.

We've somehow gotten through our first 326 episodes without ever really talking specifically about stadium financing. And this seems like a pretty good time to do our first episode on that. So we have a guest today, Neil DeMoss, who is a former writer and editor for BP, writes many other places, and also the author of Field of Schemes, which came out originally in 1998 with an updated edition in 2008. And it's all about stadium financing deals and when they do and don't make sense. And so some news broke Monday morning that the Atlanta Braves may be moving after the lease expires.

Their current lease on Turner Field expires after 2016 to a new newly constructed 42,000 seat, 672 million dollar stadium in Cobb County, a northern suburb of Atlanta. So, Neil, people like like me who kind of follow this stuff peripherally or from afar hear a lot about the Rays stadium situation and the A's stadium situation wasn't really aware that the Braves

were unhappy with their situation or that they might be changing locations was this completely unexpected to people who follow this closely? Yeah I mean I've now been writing about stadium issues for longer than the Braves stadium has existed, so it's a little bit of a shocker. There had been a little bit of talk earlier in the spring that the Braves might want some public money to renovate or add amenities to Turner Field, and that didn't really go anywhere. But I don't think anybody had the Atlanta suburbs of Cobb County on their radar until this morning when suddenly it was announced, oh, hey, we've got a deal. We're going to take it.

I assume we're going to get into a lot about the um you know the the county's role in this the government role in this and all that but before we do can i just ask real quick does this look like the sort of thing that makes the braves um a better baseball team in 10 years or is does it make sense to you even from from that perspective um it probably makes them a more profitable baseball team because they're getting more than two-thirds of the stadium paid for by somebody else. I mean, stepping back a little bit here, all that we know so far about this project is the Braves have said

this is where we want to move to, and Cobb, we don't even know if it's Cobb County. Somebody has told the Atlanta Journal-Constitution that it's going to be $450 million from the county and then $200 million from the team. We don't know whether that's the upfront cost. We don't know what the lease is going to look like. We don't know what the revenue sharing between the public and the private is going to look like. We don't know how the land is being paid for. We don't know how highway improvements are going to be paid for.

So it's really hard to know what this is going to mean for the Braves' bottom line. That said, in general, stadiums themselves don't tend to make the teams better or worse. For a little bit of time, you know, you might see something like the Indians in the 90s, right, where they had a new stadium open opening and they thought, oh, geez, we might want to sign some actual players. You know, let's keep Manny Ramirez and Jim Tomey and and those guys around for a few often right around for a few years so we can actually have a decent team. And, you know, if we want to try and sell these expensive seats on luxury box and things like that we can do it um but in the long run you know stadium attendance honeymoons usually don't last more than five to eight years really at the

outside and it tends to be less these days um so i would be surprised if this affects the Braves on the field, if it affects their payroll, if it affects things like that an awful lot. It might, again, affect their profits. But profits isn't what determines whether a team spends money. The ability to make more money based on the money you spend is what determines it. So for people who haven't read the book yet, hopefully they will all buy the book after this interview. Can you kind of summarize very quickly, you know, the history of public stadium financing or why you make the case that it doesn't usually make sense for anyone other than the team? Sure. I mean, really quickly, you know, this latest stadium boom started in the late 80s, early 90s, really, with Sky Dome and then the White Sox Stadium and

then Camden Yards. And after that, it really took off. Not even so much. I mean, it helped that those stadiums were popular. But I think, you know, really the piece that got teams excited was that the, you know, here was a new model, which was rather than the, you know, early 20th century model of the team builds a stadium, you know, builds as much a stadium as they can afford. And then if they sell those seats out, they add another 10,000 seats. And if they sell those seats out, they add another 10,000 seats. And then if they sell those seats out, they add another 10,000 seats. Or the 60s, 70s model, which was, you know, cities build a big concrete donut that baseball and football can both play in. And then teams pay rent to play there. What the new 90s model was, oh, you, the public, are going to build this stadium for us. And then we're not going to share revenues or pay rent to play in it.

And that worked out, not surprisingly, pretty well for teams. As far as it worked out for cities, no matter how you slice it, I mean, there are, at this point, dozens and dozens of economic studies trying to find any benefit from stadiums to cities, whether it's in terms of increase in per capita income, increase in sales tax receipts, really anything, and finding either no significant impact or no impact at all. It's just as if you build a new stadium for a team, whether it's an existing team or a

new team you bring to town, and just nothing happens to your local economy, which the explanation is that people who are going to spend money on entertainment are going to spend money on entertainment. And if you've got a baseball team or if you've got a baseball team with more expensive tickets, that's great and people will spend more on that, but they're going to spend less on something else. So when this new homeofthebraves.com website went up and says the economic benefits from the new stadium will ripple throughout the region, will create over 5,000 jobs and $235 million in payroll, those are, how would you say they arrive at numbers like that? Is it just the

rosiest possible projection for everything with no taking into account all the cost overruns that happen and all the unanticipated charges and all the things that people aren't spending money on instead? Yeah, I think those are numbers are what economists technically know as a load of crap. There are plenty of economic consultants out there who, if you give them your assumptions, um, and say, hey, here's what we're going to do, you know, show how this will create an economic benefit. We'll happily write up a nice report for, woohoo, there's economic activity going on in your county. That's lovely, but unless it's actually employing significantly more people or the county is getting more sales taxes from it or anything else like that, it doesn't really matter where the money is being spent, whether it's in Cobb County, whether it's in Fulton County, whether it's in some other state.

Then other things are oftentimes these things will overlook what we were talking about before, what's called the substitution effect, which is that spending at a Braves game, say, will substitute for money that would have been spent somewhere else. Raves game say will substitute for money that would have been spent somewhere else. So, you know, there's a whole bunch of different different reasons why these numbers are excessively rosy. But, you know, they do it every single time. And again, there are plenty of economists out there who will sit there and and pour over the numbers and say, yeah, no, that's wrong. That's wrong. That's wrong. Here's why. Here's why it hasn't worked in the past. But it's one of the arguments in the stadium playbook.

You know, this will create jobs because you're spending $450 million and, you know, residents are going to want to have a reason for that beyond, oh, look, shiny. So, I mean, it seems like the economic argument against these deals has been laid out so well. It feels like there's a lot of momentum away from these types of deals. And just politically, Cobb County seems like a sort of strange place to expect $450 million in government subsidies. It's a conservative part of the state, right? Oh, yeah. So why Cobb County?

of the state, right? Oh, yeah. So so why Cobb County? I mean, what is it about Cobb County? Or I guess, is there anything about Cobb County that we're overlooking that actually makes it like a perfect place to convince a government to do this? Well, I mean, from the Braves perspective, it's great, right? I mean, from the Braves perspective, well, obviously, it's great because they're giving them lots of money. But it's also a fine site because, you know, it's up to the north of the city. It's closer to the suburbs where more Braves fans live. Again, it's not like Braves fans can't drive another 10 minutes on the same highway to get to the existing field. But, you know, it's a fine solution to if the Braves want a new stadium, oh, hey, here, know this is this is a good spot for it arm

in terms of it being conservative and then you know conservatives really is is understating the matter I mean it really is a tea party County arm you know newt gingrich represented when he was last in Congress arm and a it yeah its going to be interesting to see how they justify this $450 million. But really, when I've looked and when urban studies folks have looked at mayors and local bodies that have supported stadiums or not supported stadiums, it's not a blue or red or left or right thing at all. blue or red or left or right thing at all. Local governments tend to see their role as encouraging development by whatever means necessary. And if they are more to the left, they tend to talk about it in terms of, oh, this will create jobs and here's all the wonderful

things that it will do for our city. And if they're more towards the right, they'll talk about as, oh, this will encourage business and here's all the wonderful things they'll do for our city. And if they're more towards the right, they'll talk about as, oh, this will encourage business and here's all the wonderful things they'll do for our city. So we have not heard from Cobb County yet. We may not hear from Cobb County for a while until we get closer to this vote. They're going to be holding in,

I think, two weeks. So it'll be interesting to hear how they justify it. I expect it won't be a tax increase in part because as some information started coming out tonight, if they tried to levy a new tax, they would have to go to I believe either do this just with a county vote of the county legislative body, then they're going to have to find some way of either increasing an existing tax, like hotel tax or something like that, or doing something like tax increment financing, which is this deal where you basically say, OK, all the taxes you would have been paying to the public, instead you keep that and use that to pay off your stadium. Again, total speculation at this point. We don't know how they're going to be paying for it. But, you know, I like I said, I'm a little surprised at Cobb County being the ones to throw 450 million at them. But I have seen people from all over the political spectrum with all sorts of different ideas about sports and corporate funding and things like that, do this very thing.

So I'm not surprised from anybody. And this is a place where there have been other budget cutbacks pretty recently, right? In areas that some might consider more essential, I suppose, like education. They just lashed schools funding last year. I think last I saw they were looking at a 60 million dollar uh budget hole for schools again next year um they're they're desperately short of money and i was actually just there last year to write an article about uh poverty in the atlanta area and you know visited some areas in cobb county that are just desperately poor um and you know are surviving based on you know private charities that are trying to gather food and clothing

and things like that for people who have been hit by the economy. Not the part of Cobb County, needless to say, that the Braves are looking to move to, but other parts. So, yeah, I mean, it's going to be tough to justify spending all this money on a baseball stadium, but it looks like they're going to try and do it in a way that they don't have to justify it to anyone except to themselves. It's not going to be a public vote, you know, not going to have to go to the state legislature. So if they can pull that off, then it looks like there's a good chance they're going to be able to do this. So go ahead. Oh, go ahead. OK.

No, you go back. Okay. So does this kind of work the way that it works when say like Scott Boris will go to Mike Illich and say, hey, do you want to sign Prince Fielder to a nine-year deal? It'll really help your team and it'll make you look great. Whereas a front office kind of knows what an aging curve looks like and knows what the research says and might not want to sign that contract. But if you go to someone who isn't aware of the research or has something to gain from sort of the legacy part of it that you can kind of convince them to do it, is that kind of what teams do, where they'll just go to someone who, you know, stands to gain in some way from bringing a baseball team to their place and either doesn't know about the research or is willing to overlook it?

Yeah, I mean, that's not a bad analogy. I mean, certainly, you know, the degree to which math and data have, you know, started to spread throughout baseball hasn't really hit, you know, local elected officials yet. And I think another piece to it is, you know, imagine that it's like Scott Boros, like, doesn't just have 30 teams to shop himself around to. But, you know, there may only be 30 major league cities, but there's the city governments, there's the county governments, there's the state governments, there's the next county government over, right, that we're seeing here. So really you only have to find one elected body that is supportive and that, you know, is not looking at the figures and get them on your side and you have a win. I mean that's how the Twins got their stadium. You know, they beat their head against the wall of both the Minneapolis City Council and the Minnesota State Legislature for years and years and years,

and then finally found a time when the Hennepin County Commission, which only has seven people on it, four people on it were willing to vote for a twin stadium. And those four people are the ones who got it done, and everybody else didn't matter. So correct me if I'm wrong, but my impression is that over the last few years, there have been a lot of cities that have rejected these sorts of stadiums that will under no circumstances, it seems, be willing to support a stadium like this. I'm guessing based on my experience with democracy, that this isn't because a majority of the people read the economics research and weighed the data. So what is the playbook for defeating these things?

Is there a playbook that has worked sort of consistently? Yeah, I mean, I think that going back to even the early days of the 90s, you typically saw that when a team proposes, hey, we'd like $200, $300, $400, $600 million for a stadium, the initial reaction is, heck no, why should we do that for you? And early polls are almost always against using public money for sports stadiums, you know, again, regardless of what part of the country, regardless of, of, you know, what the political bent is of the public. So, yeah, they cycle through. There is a playbook that, you know, we actually included in the first edition of Field of Schemes,

and we didn't have to update very much for the second edition because it's pretty much consistent. Obviously claiming, oh, there's going to be economic benefits is one. Saying that the team is going to move if you can't do this is another, Um, saying that the team is going to move if you can't do this is another, um, which clearly didn't come into play here because, you know, you weren't, uh, you weren't going to risk losing the Braves to some other city if this didn't happen. It was just about, you know, Cobb County saying, oh, okay, we want them for ourselves. Um, the notion that you talked about before that it'll help, uh, improve the team, you know, that there'll be more competitive, whether it's economically competitive or competitive on the field. Not necessarily true, but it's an argument

that is made. And, you know, there's sort of this idea that teams like to use to hook mayors to saying, you know, it'll put you on the map. Again, is this really going to make Cobb County on the map or more attractive to anyone there's still going to be the Atlanta Braves it's not necessarily going to going to you know put I don't even know what the towns are in Cobb County Marietta or somebody you know isn't going to be the shot they show from the blimp right before the game of the week but you know again it's something that is used to sort of hook in local elected officials and you cycle through them you know if people start saying oh the economic

benefits aren't that great then you say oh but think of what it'll mean for the team or think of what the amenities will mean for the fans to have a brand new stadium unlike that 14 year old one that they've been suffering through right um And you just keep going around and around and around. And if this really happens this month, it will be incredibly fast. But it doesn't necessarily have to happen this month. If for some reason it doesn't get passed in this November, then they can come back next November and there might be different people in elected office or they might find different ways of funding it. Again, look at a team like the Twins or the Marlins,

right, who each took over a decade to get their new stadiums, but they got them eventually. Is there some way to quantify sort of the, I don't know, the civic pride aspect of all this? I don't know if it comes down, I don't know if it applies in this situation because it's really Atlanta in either case, but if someone were to say, well, you know, everyone's walking around with a spring in their step now because we have a baseball team and we're a big real city with real professional sporting teams and you can't calculate the economic impact of that. Is there an attempt to quantify that somehow? Yeah, there actually have been attempts, you know, because there's sort of this, there is, you know, right, it's not all just about money, right? So there is a value to having a team in your city. And there are economic formulas that people have come up with to try to quantify what

those sort of intangibles mean for other goods that aren't money related, say, you know, clean air or clean water, you know, environmental goods. And there was a guy at, I forget what the college was, it was one of the colleges in Kentucky who actually went around and, you know, tried to do surveys to try and figure out about how much new, you know, the presence of a stadium and a team was worth to taxpayers in an average city. And I forget what the number was exactly. It was 40 million, 60 million, somewhere around there, which is far, far less than invariably

the public is asked to put up for these things. And, you know, the easy way of determining this really is put it up for a vote. You know, I mean, if you say to people, would you rather spend $450 million on a baseball stadium or have $450 million left to spend on schools or roads or whatever it is, and people vote for it, then you know, OK, fine. People think that having a team is worth that much. But again, I have never seen that sort of vote go in favor of the stadium. And what's an example you give if you're asked, like, what's the gold standard in responsible stadium deals? And then what's the other end of the spectrum? What's the worst case for the local population? And if we know enough even to say, can you kind of pinpoint where this one would fall on that spectrum?

The easy poster child for good stadium deals is obviously the Giants stadium in San Francisco. They four times had referendums where they tried to get public money, got shot down every single time. They four times had referendums where they tried to get public money, got shot down every single time. Bob Lurie tried to take the team to Tampa Bay, got shot down by MLB, which then had to give the raise to Tampa Bay in order to prevent an antitrust lawsuit. But meanwhile, you had the Giants back in San Francisco and they wound up building a stadium with not entirely private money but a good 90 percent or so. It was built for a reasonable price. And I think they got a stadium that everybody is happy with. It was in a good location. It worked well with an already gentrifying district south of the market.

And everyone seems pretty happy with it. And the Giants are paying it off and can afford to pay it off and are successful. And San Francisco doesn't have to worry about that debt. There's a couple others. The new 49ers stadium, Santa Clara took on an awful lot of risk for that, but it looks like that's going to be paid off. but it looks like that's going to be paid off. The proposal for a basketball arena in Seattle, which doesn't have a team yet,

but if they ever get a team, seems like it's better done than some. But, you know, there are not an awful lot. I mean, typically these deals do not get done unless there's a lot of public money in them for the simple reason that, you know, if you look at the Braves, it would not make sense for them to spend $650 million on a new stadium for themselves. At that point, they would be by far better off staying put in their current stadium,

even if it's 15, 20 years old, even if, you know, they're not crazy about whatever it is, the parking or the location or whatever. And then in terms of bad stadium deals, I mean, for baseball, it's easy at the Marlins, you know, I mean, that that was an insane amount of money for Miami to put into that. And all they got out of it was a stadium that still nobody goes to and they still have a terrible team. So, you know, that's going to be the – what's the opposite of a gold standard? The opposite of a gold standard would be the lead standard. So I think the Marlins are going to be that for baseball stadium deals for a while.

And do we know enough to say where this one falls between those two opposite poles, or are there too many details that we don't know yet? I think there are too many details we don't know yet. I think I would tentatively put it on the crappier end of the spectrum just because we're talking about more than two-thirds of the money being public, it looks like, for a stadium for a team that already plays in town and is not threatening to go anywhere and has a stadium that is only 14 years old. Or sorry, 16 years old? What year years old or sorry, 16 years old.

What year is this? Yeah, 16 years old. Right. Um, so, uh, the, you know, it's, it's not the worst deal. Um, it's worst stadium deal ever. Um, but given how bad some of the truly atrocious stadium deal are not worst deal ever is not really something to be proud of. Right. Uh, and last question, I guess, and this is not really something we've talked about right uh and last question i guess and this is another one where we don't don't really know everything yet

but would you would you expect the the braves to be playing in this this new uh stadium on opening day 2017 or are there so many hurdles left to clear that that it's still likely for this either not to happen or to happen later than that? You know, if you'd asked me that, like, I don't know, like a while back, if you asked me that when I first heard this news, right, then I would have said, you know, I think this is probably a shot in the dark and they're, you know, hoping to, you know, strike gold with this thing. But in all likelihood, you know, they're not going to be able to come up with the money. Now that we're talking about, oh, it's just going to have to go before the county legislature and, you know, it seems like it's possible they have this all worked out already.

I think it's more likely. I still think that there's a big question mark in terms of where the money is going to come from. But, you know, as we've seen before, you know, the Minnesota Vikings football stadium deal is a perfect example. If the legislature votes for it, even if they don't know where the money is going to come from, it's then the legislature's problem. It's not the team's problem. So let me put it this way. I think there's a pretty good chance that the Braves are going to be playing in this new stadium come 2017. I think there's also a pretty good chance that we will still be wondering how it's going to be paid for by then. All right. Well, thank you for coming on and continuing to rail against these deals that you've been saying the same thing about

for the last 15 years or so. People apparently aren't listening to you, or at least the local politicians aren't. But they should, and they should read your book. Again, it's called Field of Schemes. It is not the novel about soccer moms or the mystery story about a minor league baseball who takes steroids. Uh, it is, it is the one about baseball stadiums, field of schemes.

You can also follow Neil's updates about, uh, stadium news at field of schemes on Twitter and his own work at Neil DeMoss, uh, also on Twitter. That's D E M A U S E. Thanks,

Neil. Anytime.