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Stadium depreciation

This item reports that the owners of the Blue Jays have purchased SkyDome for $25 million. The Jays are now the proud owners of their own ballpark, although the bargain basement price suggests that the facility may need sprucing up.

SkyDome was publicly funded, opening in 1989 at a price tag of $600 million. After 16 seasons of baseball, it thus retains but 4% of its original value. Linear depreciation would imply a cost of about $36 million per season, roughly the equivalent of three studs on the payroll.

With the purchase, incentives and property rights are now properly aligned. And if the Jays stay put for a decade or more, Toronto taxpayers will enjoy an improved return on their investment.

Many thanks to David of VodkaFish for the heads up.

Update: The figures quoted above are from a Canadian paper, and represent Canadian dollars.

Baseball Musings links to this AP story on ESPN that reports a sale price of $21.25 million and a construction price of $375 million. The former figure is clearly a translation of $25 C into US dollars, given today's exchange rate ($1C = $0.85 US).

The discrepancy between the $600m quoted in the Canadian report and the $375m figure in the AP story is trickier to explain. Raymond Keating's "Sports Pork" at Cato discusses the subsidy issue, and provides a comprehensive list of stadiums and their construction costs over the past century (and is hence worth reading in its own right). He reports the cost of Skydome at $442m in nominal dollars, presumably US. Exchange rates from that period are quite similar to those in effect today (see here if you are keeping score). Converting back to Canadian dollars, this yields a cost of $520m, consistent with the figure at the Blue Jays own site and others at sites that google turns up. This post from the late Doug Pappas reports that a 1993 audit pegged SkyDome's cost at over $600m. I am guessing that the audit is the source of the figure relied upon in Canadian reports.

The bottom line? The calculations using $25m and $600m seem to be appropriate. The $375m figure is almost certainly in error. $375m is very close to $442*0.85, which would be a correct calculation if Keating's $442m were Canadian, but I doubt he made that mistake.

Nevertheless, since the dollars in my post above are Canadian, the depreciation costs cited there are not the equivalent of 3 studs on the payroll. Make that 3*0.85, or 2 1/2 studs.

If any student readers are still thinking about becoming an economist, more power to you!