On Liberty

Hunter introduced an interesting issue in his previous post. My thoughts on the subject are too long for a typical "comment," so I'll share them here.

As many of you know, I’ve spent a good amount of time studying and researching municipal investment in sports facilities. I tend to be less skeptical of stadium subsidies than most academics who study the issue; in part because I’m a sports fan, and in part because I believe that sports teams can produce some community benefits (mostly the intangible quality of life kind). That being said, I’m having a hard time finding the merit in the idea of building a new Liberty Bowl.

Generally, the findings of empirical research on the subject can be summarized in three words: not worth it. Most of this research has focused on the ability of professional sports facilities to serve as economic catalysts. A slew of studies that compare cities with new stadiums to those without, or examine the economic performance of cities before and after they build a new stadium, have shown that sports facilities have little or no effect on local jobs or income levels. There are several reasons for this, but the main one is that sports venues do not bring much in the way of “new money” to the local economy. While a lot of money changes hands at a sporting event, the vast majority of the wallets in the stadium belong to local residents. A sports venue gives these resident another leisure option, but it does not increase their leisure budget, which means that most of the spending that occurs at the game is substituting for spending that would have occurred elsewhere in the local economy in the absence of the sporting event (the movie theatre, the bowling alley, etc.).

For these reasons and others, I’m glad to see that, so far, the Liberty Bowl rebuild/repair debate has been addressed as a quality of life issue, not an economic development one. But in the case for new Liberty Bowl, the quality of life argument doesn’t seem to hold much weight either. Compare the development of a new Liberty Bowl to that of the FedEx forum. The Forum was a requirement for luring an NBA team to Memphis. The simple fact that Memphis is home to an NBA team improves the welfare of some residents – it makes them happier and better off than they were without the Forum. Even if they don’t attend a single game at the Forum, fans might enjoy reading about the home team in the paper, listening to sports talk radio, and discussing draft picks around the water cooler. Even non-fans benefit if they feel that having an NBA team is good for the city’s image or civic pride. (In economic terms, then, sports teams create positive externalities and possess the characteristics of a public good.) These public consumption benefits are worth something, and are not captured by ticket prices.

So, to some extent, I buy the quality of life argument for the FedEx forum investment. By contrast, a replacement Liberty Bowl would not bring anything new to the city of Memphis. And there is certainly no concern that the city is going to lose the main user of the current facility; it’s not like the Memphis Tigers are threatening to move to Little Rock. (A new stadium might help the U of M with recruiting, and a team that wins more could increase the welfare of some Memphians, but I think the magnitude of such benefits would be quite small in comparison to the cost of a new stadium.) Factor in recent reports that the organizer of the Southern Heritage Classic seems quite content with the current facility, and building a new Liberty Bowl seems even more frivolous.

A couple of years ago I conducted a study to project the potential quality of life benefits that would be associated with attracting a Major League Baseball team to Portland. The analysis was based on a survey that asked residents about their willingness to support a referendum for increased taxes of various levels to fund construction of a required stadium. In that survey, 85 percent of respondents somewhat or strongly agreed with the statement, “Portland has more pressing social issues that should be addressed before public money is spent on a sports stadium.” My analysis showed that this belief had a large and significant negative impact of the tax level that respondents were willing to support. The results of the Portland survey are not transferable to the Memphis population, but I think it’s safe to say that if there are more pressing social issues than professional baseball in Portland, there are more pressing social issues than college football in Memphis. Perhaps my feelings will change when (if?) detailed building and financing plans are unveiled, but for now I believe that allocating significant time and resources to this project sends the wrong message.

Quick fix or new stadium: Can we afford either?

This post will concern itself with the City of Memphis' (Mayor Willie Herenton) call for a new stadium to replace the Liberty Bowl Memorial stadium which was originally built as Memphis Memorial Stadium in 1965 for $3 million. According to recent reports, the Liberty Bowl is in violation of the Americans with Disabilities Act and has been reported to cost $50 million to become within compliance. The other suggestion has been put forth to replace the aging stadium with a new state-of-the-art stadium to the tune of over $200+ million. I have a few questions regarding this proposal/suggestion as put forth by our mayor. First, and no offense intended to anyone with disabilities, but I cannot fathom that it should cost the estimated/reported amount of $50 million to provide adequate compliance with the Americans with Disabilities Act. How do you justify that amount? Persons with disabilities should and do have the right not to be impeded from attending a stadium event due to their handicap. I would like to see the itemization list for the purported cost of $50 million. Secondly, if a new stadium were to be built, how would it be paid for and how would it be used to maximize its costs versus benefits. The FedEx Forum, which is an incredible facility, has had it share of problems when dealing with the overall cost of the project and not following federal guidelines, which has cost the city a few million dollars. One suggestion would revolve around corporate naming rights. However, to attract a suitable corporate sponsor, it might be prudent to think outside the box. For example, instead of having the naming rights for a 20-year contract, if the corporation put up a sizeable amount of the overall projected costs, then the naming rights would be granted for as long as the stadium is standing (i.e. 30, 40 or 50 years). Also, the stadium could be used for more activities to maximize its profit potential. The University of Memphis Tigers football program is the largest user of the facility and could stand to maximum its ticket sales if it were to schedule teams that typically draw large crowds (i.e. University of Tennessee, Ole Miss, etc.). Also the annual Tennessee State versus Jackson State football game (which typically draws a large crowd) would continue to contribute to the stadium's success. The city could use the stadium to host high school football and soccer playoffs. Also, the city could host an abundance of other activities such as an annual track and field event for high schools &/or colleges. The stadium could play host to more larger crowds of concert veterans such as The Rolling Stones or U2 or other bands that could bring the crowd potential. The stadium could host soccer tournaments much like the 70s were host to the NASL Memphis Rogues professional outdoor soccer team. I went to many of their games and loved it! The stadium could host outdoor X-Games (such as motocross or BMX) or truck and tractor pulls, you know GraveDigger and Bigfoot. I see the biggest beneficiaries of a new stadium being the University of Memphis football program, since they are the main users of the current stadium and stand to improve theie recruiting by offering a state-of-the-art facility to practice and play in, much like the FedEx Forum has done for the University of Memphis' basketball team. Could the immense cost of a new stadium be a curse or a cure for a city that is very sportsminded but not likely to support another stadium while two sit empty and one is still a way off from being paid off. The debate will rage on. More to come.....