To the Simple Google Search, and Beyond!

To the Simple Google Search, and Beyond!
Tell us oh wondrous baseball orb: using a linear reduced form model does the presence or absence of this stadium affect the level of per capita income in the economy? // Courtesy of Wikipedia

Earlier this week I was settling in to some weekly White Sox prospect news by the venerable Larry of South Side Sox when I read this:

Since there still really isn't all that much to discuss, I'll fill some space by commenting on a 2000+ word screed about the Charlotte Knights and stadium subsidies. These are the sorts of things that happen when people have just enough knowledge to be dangerous. I'll save you the effort of wading through the whole thing by telling you that the rant's main point is that stadium subsidies are bad because, contrary to the assertions of sports teams, economic studies overwhelmingly show they don't pay for themselves. This is not exactly a novel argument, which is probably why the blogger wrote "tax subsidy narratives are kind of like formula fiction (i.e. same plot points and stock characters)" and thus thought he could just slap together a post with some lazy research, apply it to Charlotte and call it "Same Shenanigans, Different Affiliate". But the shenanigans aren't quite the same. Because this is minor league baseball. The economics are different from the top level, particularly as one gets further away from it. That would be why the research done on minor league baseball stadium subsidies reaches the opposite conclusion of those done on major league baseball stadium subsidies, as a simple Google search would have revealed.

I wasn’t quite sure at first, but clicking on the link confirmed my worst fears: the dangerous, lazy-researching, nameless blogger with a penchant for screed was me!

On the one hand, this is a welcome development.  As a blogger I’m beginning to ascend in the mind of others from “pay no mind” to “space filler”!  On the other, Larry didn’t seem to like the post very much.

There are a few things on which Larry and I seem to agree.  For one, Larry is right that my argument is not novel, which was part of the point of the post; that "prevailing wisdom" was a contradiction in terms when it came to stadium subsidies.  However, I’m the first to work a SimCity joke into the argument, to my knowledge.

And some of Larry’s critiques are fair, like Larry’s suggestion that you can’t just take what has happened before and assume the same thing is going to happen again under what seem to be superficially a similar set of circumstances.  In my defense, I thought that Coates and Humphreys’ conclusion after reviewing twenty years of research on the impact of professional sports on local economies—“ No matter what cities or geographical areas are examined, no matter what estimators are used, no matter what model specifications are used, and no matter what variables are used, articles published in peer reviewed economics journals contain almost no evidence that professional sports franchises and facilities have a measurable economic impact on the economy”—allowed me the leeway to make the argument.

Larry’s “lazy research” comment I can’t abide though, especially because I’m an academic historian by trade.  The Charlotte post utilized at length one academic paper (which was a study of twenty years of academic papers), 19 local and national media stories, and 2 government services web pages.  12 links were directly material to Charlotte-Mecklenburg budget shortages and the Knights move as it has been covered by the local media, providing a total of about 6500 words of Charlotte-related context to this story.  The reason my screed was 2000 words was because I wanted to get in what in my estimation were the most relevant sources.

I’m not saying that I can't be wrong or that I didn’t miss a source but jeez, Larry has to admit that there’s effort here!

Now to the crux of the matter.  Larry seems to acknowledge the overwhelming body of work out there by academic economists who have found that major league baseball stadiums are poor public investments.  And implicitly, he seems to agree.  But Larry argues that minor league ballparks have a positive effect on local economies.  He cites a dissertation abstract and the Google search by which this truth is revealed.

I’ve studied this subject quite a bit, and I’ve never seen this put forth.  What I have read about minor league stadiums, and admittedly is has not been much because there simply isn’t as much literature out there, suggests that there is no difference in economic impact.  But I'm not a sports economist.  And the possibility certainly exists that I’m wrong on this.

Larry’s link leads me to a 350 word PhD dissertation abstract by an economist named Nola Agha.  The abstract supports Larry’s argument but I need a UMass Amherst login to access the dissertation.  So I go to Larry’s Google search to find out more.  But there’s nothing there except the link to the diss abstract, Nola Agha’s page at U of San Francisco, and a 3300 word excerpt and table of contents from her dissertation.  There is nothing else to support that minor league stadiums are the exception to the subsidy rule.

I was still pretty skeptical so I contacted some people in the know via email, namely Andrew Zimbalist and Neil deMause.  I introduced and linked to my Charlotte Knights post on WSO and then wrote:

" . . . I was criticized by a mainstay on a much larger SB Nation White Sox blog, who claims that 'research done on minor league baseball stadium subsidies reaches the opposite conclusion of those done on major league baseball stadium subsidies.'  I have not been able to find any legitimate research that would lead me to this conclusion . . .”

Professor Zimbalist got back to me first.  His response was pretty concise.  He wrote: "the critique is not accurate."  He referred me to the book he co-authored and co-edited with Roger Noll titled Sports, Jobs and Taxes: The Economic Impact of Sports Teams and Stadiums (Brookings Institution Press) and also to articles in the Journal of Sports Economics.

Andrew Zimbalist’s bio is extensive and impressive; he is a professor at Smith College and one of the more notable figures in the field of sports economics, and among a ton of other things, a recognized expert in the economics of minor league baseball.  In 1993, he testified before the N.Y. State Senate on public policy toward minor league baseball.  In July 1999, he testified before the Springfield (MA) City Council on public subsidies for the construction of a minor league stadium.  When Zimbalist published Sports, Jobs, and Taxes in 1997 the argument against stadium subsidies was novel, and the work precipitated what is now a large literature on the impacts of sports teams on local economies.

In Sports, Jobs, and Taxes, Robert A. Baade and Alan R. Sanderson write that: "Scholarly evidence would dispute the claim that professional sports contribute much to local economies at the major or minor league levels.  In the final analysis, the beneficiaries of the stadium subsidies throughout baseball are owners and players."  Elsewhere the authors cite a study contending that a minor league baseball stadium “has an economic impact equivalent to a large pet shop.”

Neil deMause is a journalist concerned with social justice issues who devotes much of his time to the fight against stadium subsidies.  He is the co-author (with Joanna Cagan) of Field of Schemes: How the Great Stadium Swindle Turns Public Money into Private Profit (revised edition U of Nebraska Press 2008), editor of the Field of Schemes blog, contributor to Baseball Prospectus, and a lot more.

deMause was more loquacious than Zimbalist in his response to Larry’s position on subsidies for minor league baseball teams:

"I don't know what the SB Nation guy [i.e. Larry] is talking about either. The one effect he may be referring to is that the substitution effect (consumer spending on sports mostly cannibalizes from consumer spending on other entertainment options) disappears as you draw smaller and smaller circles, so if you're only concerned about a small region, you can see a positive economic effect. Or in simpler terms: If you're building a minor-league stadium to steal business from the next town over, it'll probably do that. But that's not the same thing as saying 'minor-league stadiums have a positive economic impact.'"

deMause went on to refer me to some other economists to contact, which was good because by that time I had discovered a recent article by Nola Agha in the Journal of Economics titled "The Economic Impact of Stadiums and Teams: The Case of Minor League Baseball" published online Oct 4, 2011.  Agha’s study finds “that AAA teams, A+ teams, AA stadiums, and rookie stadiums are all associated with significant positive effects on the change in local per capita income.”

Neither deMause or Zimbalist mentioned the work of Nola Agha to me.  In Zimbalist’s case this is especially curious because he is on the Journal of Sports Economics editorial board.  Moreover, he is listed among the “commenters” on Agha’s article.  “This article has benefited from comments by [a bunch of economists including…] Andy Zimbalist,” read Agha’s “Acknowledgements,” and then the caveat, “although they are neither in agreement with the contents nor responsible for any errors herein.”  I can only speculate but it seems that Zimbalist was aware of Agha’s work on minor league baseball but didn’t think enough of it to mention it to me.

Next I contacted economist Robert Baade of Lake Forest College, author of the Sports, Jobs, and Taxes chapter quoted above and deliverer of the “The Economic Impact of Minor League Sports Facilities" talk in front of the National Council for Urban Economic Development in Scottsdale, Arizona, February 1, 1996, among lots of other stuff.  I asked Professor Baade directly about Professor Agha's article:

"First read Nola’s paper carefully. . . . the positive economic impact was only true in certain cases.  There is a context. . . ."

I have not read Agha’s paper carefully yet.  And I’m not going to right now.  The WSO editor is on me about a story on hot dogs.  But I will give it some time in the near future.  And then I’ll talk again with Dr. Baade, who has invited me to do so, and report back.

Really, I do appreciate Larry bringing Agha’s work to my attention (although I'd have preferred that he'd done so more respectfully).  Her study could be a game changer.  But at this point, it doesn’t seem like those in the field of sports economics have had time to digest and react to it in print.

It is also worth considering that the level of agreement among economists is overwhelming on this subject but not universal.  Coates and Humphreys write that there is “almost no evidence” that points to the positive effects of professional baseball on local economies.  And even though American Economic Association members polled in 2005 showed an "exceptional consensus" on the subject of stadium subsidies, there were still 5% in disagreement with the majority and 10% who were neutral.  Agha could end up being among the 1 in 20 naysayers.

As I gather directly from a few of the most respected names in the field, consensus among economists remains that public subsidies are not justified for major or minor league teams.

Baseball is a great game.  No, it's the best of games.  But the business of baseball is not a public good that requires or deserves taxpayer subsidies.  And I stand by my research and my position on the Knights uptown stadium.

 

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  • Interesting post. I very much enjoyed your screed.

    - Nola

  • In reply to Nola:

    Goodness. If you are who you imply you are then suddenly I feel like a very small fish in a big pond. Thanks for the comment.

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