Wednesday, July 18, 2018
News Roundup

How much do the Tampa Bay Rays boost the local economy?

ST. PETERSBURG — Tampa Bay Rays fans spent 100 million hours last year going to games or watching them on television. For many, baseball adds to quality of life just as surely as weather, water and sand.

Whether baseball adds to the economy is less clear.

In the region's ongoing stadium debate, St. Petersburg Mayor Bill Foster frequently estimates baseball's economic impact at $100 million a year. He suggests that the Rays should ante up that much if they want to move to Tampa.

But economists who study professional sports say such claims are overblown. Professional sports bolster an economy in some ways, but sap it in others.

"If someone says (a team) is a great amenity for local people and something that makes us happy, fine,'' said Victor Matheson, a sports economist at Holy Cross College in Massachusetts. "We do have flat out evidence that sports make people happy. Just don't claim it's going to make us rich.''

In 2008, Matheson studied sports projects from across the country to see if taxable sales rose after stadiums were built. The study also examined whether tax collections dipped when sports leagues shut down for strikes or lockouts.

"There was simply not any bump at all,'' Matheson said.

Tax collections were as likely to drop as rise when a team started play in a new city. And collections dropped during some strikes, but rose during others.

The main reason relates to how spending ripples through an economy, said Dennis Coates, an economist at the University of Maryland, Baltimore County.

When a couple spends $100 for dinner and a movie, much of that money goes to waiters, ticket takers and other local workers and suppliers. Those people, in turn, spend their paychecks on rent, food and other sectors of the local economy.

Each dollar of original spending can contribute $3 to $4 to economic activity and job creation.

Professional sports mute this ripple effect.

"Spending that goes on inside a stadium tends to flow into the pockets of a relatively few, high-income individuals who live a large portion of the year outside the city,'' Coates said. "Much of that money flows out.''

Documents leaked by Deadspin.com a few years ago showed that the Rays spent about $90 million in 2008 on player salaries, minor league operations and team expenses, line items most likely to send dollars out of Pinellas County.

Marketing, administration and stadium operation costs — payments more likely to stay within the county — totaled $50 million.

Sports franchises also drain an economy by soaking up taxpayer money that could go to other city services or tax relief — both of which stimulate economic activity.

In her 2005 study, the "Full Count,'' Harvard University professor Judith Grant Long pegged Tropicana Field's public subsidy at 130 percent of its construction cost, one of the highest public shares in the country.

"The real cost of public subsidies for sports facilities is significantly higher than commonly reported,'' Long wrote. "Public costs associated with the operation of the facility and foregone property taxes are routinely ignored.''

The best face on Rays economic impact came from two 2008 studies that indicated that baseball bolsters tourism revenues to the tune of $100 million to $200 million a year.

Tourism analysis is an optimistic approach because it focuses only on dollars flowing into the area without examining how baseball might sap local spending levels.

In addition, both studies had flaws.

One, commissioned by the Rays, noted that 160,000 tickets were bought via credit cards with out-of-state addresses — presumably tourists. Since the average Florida tourist spent $775 on their visit, the study estimated that the Rays added $122 million to the economy. The actual impact could be higher, the study suggested, because the credit card count did not capture cash-paying tourists.

However, this methodology failed to distinguish between tourists coming specifically for Rays games and tourists who came for other reasons and just happened to take in a ball game.

"A person in town to visit relatives or attend a business meeting or conference is already in town,'' said Matheson, the Holy Cross professor. "That visitor would have stayed in a hotel room, gone out to dinner, even if the Rays had not had a game.''

In a different study, Tampa-based Research Data Services interviewed 1,714 fans during 10 summer games against the Cubs, Astros and Red Sox, asking people where they stayed, how much they spent and whether they came to town explicitly to see the ball game.

About one-third were Pinellas residents. About half were "day trippers'' who lived in other counties but did not spend the night. One-tenth were tourists staying in commercial lodging. The rest were tourists bunking with friends or relatives.

Projecting this breakdown across the entire season, the study estimated that about 250,000 fans that year were tourists — with 135,000 coming specifically for Rays games. They spent an average of $518 on their stay, yielding an immediate economic impact of $70 million.

The "day trippers,'' such as Hillsborough residents, pumped another $37 million into the economy by spending $43.50 apiece — about the cost of a ticket, hot dog, beer and parking.

Combining day tripper and tourist spending comes to a $107 million in immediate economic impact — the figure that Mayor Foster often quotes.

At first glance, that appears to be a conservative estimate. Some tourists attracted by baseball will be new to the area, like what they see and come back to spend more money.

Research Data Services, which analyzes statistics for the Pinellas Tourist Development Council, estimates that about 60 percent of first-time visitors return.

"This is not specific to Rays games,'' said Research Data Services president Walter Klages. "But when you have them exposed to the destination and see that they are enjoying it, they are very likely to be return visitors.''

But Matheson noted that neither study adjusted for tourists taking in more than one game during their stay — a critical flaw. Red Sox fans, for example, often take mini-vacations and attend three or four games.

So the 135,000 tourists counted in that study may not have been 135,000 individuals.

If the average tourist attended two games, they would actually represent 67,500 individuals, cutting their economic impact roughly in half. If they averaged three games, they would represent 45,000 individuals, with a corresponding drop in impact.

The study "implies that a person … is staying an average of five days or so but going to only one game,'' Matheson said. "If that is so, then it is crazy to presume that the entire stay is completely the result of baseball.''

Under the model, a family of four that stays in a hotel and attends three games of a series would be treated more or less like 12 individual fans, spending a total of $6,768. The actual family of four would be hard-pressed to spend that much even if they lolled at a swanky beach resort for a week, feasted on steak tartare and creme brulee and rode to games in a limo.

Neither study accounted for time-switching, Matheson said. Detroit fans who plan to visit Pinellas relatives or take a beach vacation deliberately choose a week when the Tigers are in town. Yes, they come explicitly to see baseball, but they might have come anyway — just at a different time.

Adding $37 million of impact for day trippers is a stretch, Matheson says. That money is almost all spent inside the stadium, without much ripple into the broader economy.

He also questioned whether the sampled summer games against the Cubs and Red Sox might have drawn more tourists than games against other opponents during other times of the year, leading to an overstatement of the season-long impact.

"All things put together,'' Matheson said, "I think you would be lucky to get $10 million'' of impact "for the surrounding community outside the stadium.''

Rays officials, as is their practice, declined to comment.

Foster said he still believes the Rays bring positive economic activity into the community. New studies should quantify that impact, he said, before any tax money is spent on a new stadium, whether in Pinellas or Hillsborough county.

He also said that spending on baseball helped transform the city.

"St. Petersburg is by far a different city, with mixed uses and vibrancy, post-Rays,'' he said. "Once Major League Baseball invested in the community a lot of things happened.''

 
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