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Re-development in San Diego .... and the Bronx

Mark Rosentraub had a piece in the WSJ ($) on the DC stadium, which brought some sharp comment from Frank Stephenson at the Division of Labour. Frank criticizes Rosentraub for his claim on tax incidence, but I think Rosentraub is correct in his main, larger point: DC had no legitimate competition for the team, hence they overpaid in the stadium deal.

The latest theme being played in the stadium game is that stadiums are useful tools in re-development projects. Rosentraub appears to have bought this argument:

Five years from now people will point with pride to the stadium and mention the District in the same breath as San Francisco, San Diego, St. Louis, Indianapolis and Cleveland. These are some of the cities where a sports facility anchored private-sector development and where the ballpark or arena was appropriately integrated into an urban landscape to create a sense of community and excitement, while attracting needed economic development. Each of these cities can point with pride to new housing, new retail and new commercial development in areas that previously languished or went begging for development deals.

I'm all for pride, but not at any price. So I asked my friend Ron Johnson - who lives in San Diego and enjoys watching the Padres at Petco Field - for his view of the matter. Is the result there as positive as portrayed by Rosentraub? Here is Ron's reply:

I had the same reaction when I read Rosentraub's piece last week. Where is his evidence? I don't know of a single ex-post study on the impact of Petco Field. The San Diego Union Tribune ran an article a while back and it was fairly balanced, but the type of analysis that would convince economists was absent. Essentially, Petco has added to an already booming downtown, but whether it could possibly yield a positive return on taxpayer dollars is a big stretch. The area where Petco was built was considered blighted when Petco was proposed, but by the time construction started the surrounding area was already seeing new hotels and huge expensive condos going up. In my opinion this had little or nothing to do with Petco. People like living down near the bay, close to work, shops, etc. Moreover, there is a growing group of relatively well off people whose kids are gone, dog is dead, and they like urban living and are attracted to downtown San Diego. Of course, the stadium supporters will claim that Petco generated all the growth, while a lot of restaurant owners in the Gas Lamp District next to Petco will bitch about baseball fans who are cheap and just want beers and nachos, while taking valuable parking spaces away from their regular clientele who stay away on game day because of the crowds.

But having said that Rosentraub's underlying premise is obvious and thus, correct: Put stadiums where the opportunity cost of the site is low and the potential benefits high. That tends to be in blighted neighborhoods, but these must be areas that have other intrinsic attributes with the potential to expand. Note that the area around Yankee Stadium (I grew up there) is blighted, and it's been going down hill since the early 1950s. The Yankees wining or losing or even being there had nothing to do with it.

The urban developers and consultants are advancing the claim that re-development plans anchored by stadiums somehow "work." It's time for the skeptical eye of an economist to give this issue a careful examination.