Breaking the Rules

A fool's guide to stadium economics

The economic impact has begun.

Just as they promised, the St. Louis Cardinals are creating jobs and stimulating the local economy with their proposed $346 million downtown baseball stadium and the mythical Ballpark Village next door. They've done it without even turning a shovel.

Yes, as we speak, dozens of silk-stocking attorneys have generously been provided gainful employment by the team and its "public participants" (that's you, the taxpayers) as they "flush out" the "memorandum of agreement" signed June 19 by the team, Mayor Francis Slay, County Executive George "Buzz" Westfall and Gov. Bob Holden.

As the RFT reported two weeks ago, the parties haven't worked out such silly little details as what is actually meant by the Cardinals' "guarantees" to the public should the team be sold after receiving the mother of all corporate-welfare handouts (more than $400 million over 30 years from taxpayers).

But don't despair. The only stumbling blocks are what the team is giving -- not what it's getting -- so they're at least halfway home.

As with all matters stadium-related, the details of these "public-private" transactions are private to the public, which is all for the best, seeing as how we the people are -- how shall we say this? -- too dense to understand. One proposal under negotiation, for example, calls for politicians to receive free use of a luxury suite in perpetuity -- all in the name of economic development, mind you.

See, I told you we're too dense to understand, didn't I?

Ah, but back to the lawyers. Just think about the economic benefit to the community of their involvement today, all made possible by the public's "investment" in a stadium.

Of course, it's not the public's business to know how much is actually being spent by taxpayers on these stadium lawyers, only that it is a fraction of the economic stimulation accruing to the St. Louis region and thus to the state of Missouri. But just to take a wild guess, let's assume that the attorneys will be handsomely compensated.

Think of what that means. You've got big-time fees, all subject to state income taxes (and maybe even city earnings taxes). You've got fancy lunches and dinners and drinks, all subject to state and city sales taxes. You've got the same for hundreds of lower-level attorneys, secretaries and couriers. You've got long-distance bills, copy expenses, pens, legal pads -- the list seems endless.

It might be worth commissioning a study just to learn how much benefit we're reaping from the lawyers' activities. You realize what that would mean, don't you?

If you guessed more stimulation of the local economy, thanks to the cost of the study -- and the sales and income taxes those costs generate -- then you're not so dense after all.

More important, you're on the road to understanding what the Cardinals mean when they make the claim that the project will provide the state and the city of St. Louis "a very good return on their investment of tax dollars" (cardinals.mlb.com). It's all about pain-free tax dollars' putting a chicken in everybody's pot -- even you, the taxpayer.

The way the team's logic works is simple: Take the total spent now at the ancient ruin of Busch Stadium and subtract it from the spending that the team projects for the new stadium. Then factor in the jobs created by the projected increases and multiply it all by income and sales tax rates, and you have something called "net economic benefit."

Hence the Cardinals can keep a straight face when they claim that there are "no new taxes" associated with the stadium and that the "incremental revenues" to governments will more than cover the hundreds of millions they would lay out. It is the cornerstone of their sales pitch to the taxpayers: You're getting it all back on the other end.

Only one tiny detail is left out of this equation, something once known in faraway and denser times as "opportunity cost." That's the common-sense notion that if people spend more money, say, at a sports venue, they have less money to spend elsewhere.

Being dense, I asked state economic-development director Joe Driskill. An able and experienced veteran of these wars, Driskill says the state's numbers are solid and based on a study it commissioned. The study is unavailable to the public, of course, because it contains proprietary information about the public's private "partner."

What about opportunity cost?

"It's not something that's possible to know with 100 percent accuracy," Driskill says. "There's no way to know with certainty whether a company [adding to its stadium spending] would not spend somewhere else in the state. We believe there would be a net increase in spending to the state."

This is stunning. Opportunity cost doesn't exist anymore in Missouri. Spending more at a new stadium doesn't make you spend less anywhere else. There's no alternative use for those millions of taxpayer dollars that could possibly be as rewarding as giving it to a group of guys based in Cincinnati with a combined net worth of more than $4 billion.

You needn't be an economist to see through this. If improved concession stands encouraged a family to spend more on food at the stadium, wouldn't there be a reduction in its spending on food outside the stadium? Aren't the state and city already receiving taxes on that outside food spending, and all the jobs that spending creates?

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