Tuesday, May 15, 2012

Sportswriter as economist

Bryan Burwell of the St. Louis Post-Dispatch is a terrific and intelligent sportswriter, but a terrible economist. I don’t doubt that he adds more to day-to-day well-being of St. Louisans than the average economist would, but that’s because he usually sticks to sports. Today, however, he ventured out of his area of expertise into the realm of economic policy. His column asks us to “Look at the big picture” when discussing the stadium counterproposal that the Rams have submitted to the Convention and Visitors Commission (CVC).

Burwell is absolutely correct that we need to look at the big picture, but he’s only looking at half the picture himself. Although he goes on at length about some real and imagined benefits of the Rams’ plan, he has nary a word to say about the costs until the third-to-last paragraph when he says we should ignore them for the time being. The big picture certainly includes both the benefits and the costs, don’t you think?

The Rams agree with Burwell in that they didn’t attach any cost estimates to their proposal and were silent on who they expect to pay for the renovation. Perhaps the Rams intend to pay for it all themselves, but I suspect that they aren’t really thinking along those lines. In fact, it might even be possible that they don’t want to pay for any of it.

There are a some of other bits of nonsense in the column will probably come up again many times during the long debate ahead:

1. “We now have undisputed evidence that Stan Kroenke really wants to keep the Rams in St. Louis.”

We have nothing of the sort. What we have is undisputed evidence that the Rams will stay if taxpayers spend $700 million dollars on the renovation and perhaps another $500 million in lost convention revenue while the renovation takes place.

2. “So this doesn't sound like the plan of a man trying to get out of a deal. It's more like the plan of someone who is trying to invest in the city.”

Given that the Rams’ plan doesn’t seem to have them paying for any of the renovations, how is it the plan of someone who is trying to invest in the city? So far the plan doesn’t have the Rams investing anything in the city. It only has the city investing in the Rams, but with minimal return.

3. “All the usual anti-stadium forces will try to convince people that no matter what we decide to do with this renovation, we're just aiding and abetting another rich man getting richer.”

Speaking for myself, I have no qualms with a rich man getting richer, as long as he is providing the region with something greater in return. But if the costs to us (which basically go directly into the pockets of the Rams’ owners) do not exceed the benefits to everyone else, any sensible person should be anti-stadium.

4. “But a far more accurate assessment of this situation is that the renovation of the Dome will help us as much, if not more, than it will help Kroenke. It will attract better conventions. It will attract Super Bowls. It will transform the Dome from an NCAA regional site and turn it into the sort of building that goes into the Final Four's regular rotation. It will attract bigger and better concerts.”

Burwell is probably right about being better able to attract bigger and better events, but he’s pulling his first sentence out of thin air. The economic impact of these events, if they actually occur, are nothing like what is usually claimed. Are we to take seriously Burwell’s entirely invented and ephemeral calculation of relative benefits? He seems to be satisfied enough that, despite the actual evidence, the Rams would actually be doing the rest of us a great favor allowing us to fork over hundreds of millions of dollars to them.

Along with the nonsense in the column are some very useful observations that get to the root of the situation we find ourselves in:

5. “Look very carefully at the plan. It is not an over-the-top, ostentatious, football-only counteroffer that attempts to thrust the Dome to the very top of the National Football League's most extravagant stadiums. It's not an outrageous plan that feels like the sort of crazy counteroffer whose sole intent is to blow up the entire process, thus allowing Kroenke to scoot off to Los Angeles as quickly as possible.”

In terms of the non-financial aspects of the plan, it is certainly the cheapest of recent NFL stadium plans, as long as you ignore the initial $300+ million, which we’re still paying off to the tune of millions of dollars per year.

6. “If Kroenke was trying to force the Convention and Visitors Commission to storm away from the negotiating table, then this was a horrible attempt at doing that. What he did was submit a plan that fulfills its primary objective, which is to get the Dome into the NFL's "top-tier" facilities. By definition, the "top-tier" would have to be one of the best eight stadiums in the NFL. And if you scrutinize the Rams' plans and compare it to other current or planned stadiums around the league, the best estimate is that a rehabbed Edward Jones Dome would most likely be right around the sixth- or seventh-best facility.”

Burwell has probably visited all of the NFL stadiums, so let’s trust his judgment that the renovation the Rams have proposed is roughly the minimum of what is necessary to place the Dome in the top eight. This is exactly the problem. To keep the Rams, we need a stadium that will cost taxpayers far more than can be justified in terms of the benefits of having an NFL team.