Making a hard economic argument for a new sports arena is kind of like being a climate change denier. Just like the overwhelming preponderance of evidence in the scientific literature points to climate change being a real thing, the vast majority of evidence in the economic literature points to new sports facilities having an economic impact that is trivial at best. I’ll outline a few reasons for this in a future post, but the most basic one is this: instead of bringing new wealth into metropolitan regions, sports facilities just redistribute a relatively fixed pie of entertainment dollars.
In this post, however, I want to take up the paradox of why intelligent, rational people support sports arenas in spite of the best economic evidence. I’m especially interested in the local case of the Sacramento Kings. If we accept that there really aren’t any serious economic arguments for public investment in sports arenas, what is the soft, non-economic logic that makes the Kings arena project in Sacramento so compelling to so many people? To answer this question I’d like to present (and actively defend) three arguments.
The first argument I’ll call Let the Man Lead. It runs like this. We elected Kevin Johnson as Mayor of Sacramento. In his first career as an NBA point guard, Johnson was famous for his fearlessness, energy, and guile. As Mayor, Johnson has successfully leveraged these same personal qualities, together with the powerful national connections he established through his second career as an education reformer, to beat long odds and succeed at launching an arena project he cares passionately about. This success, in turn, reflects back on Sacramento. The first soft, non-economic argument I want to propose, then, is that at least on the issue of the Kings arena people’s instinct to line up behind the Mayor may be the right one.
Are there problems with this argument? Yes, absolutely. If I were mayor of Sacramento, and I wanted a sector-based economic development strategy (and investment in a sports arena is clearly a case of local industrial policy whether you want to admit it or not) I would take a different approach. Instead of focusing on professional sports, I would work on turning the region’s deep skill base in the environmental and life sciences more toward the private sector, more toward export markets, and away from the growth-phobic city of Davis.
But, of course, I am not mayor. Besides which, just as a thought experiment, what if I, or what if you dear reader, were, like Mayor Johnson, a charismatic former NBA star? Leadership matters, and every leader brings a particular capacity to make particular kinds of things happen given their own life experiences, interests, and vision. Being mayor is not so much about what you should do, but what you can do given who you are. So, while I don’t support Mayor Johnson on many issues, his successful pursuit of the Kings has made obvious sense. If I were in his sneakers turned dress shoes (dream on right?), I’d like to think I could have pulled off the same thing.
I’ve said enough on the Let the Man Lead argument. The second soft, non-economic argument for public investment in the Kings arena I’d like to highlight is one often proposed by influential Sacramento Bee columnist Marcos Breton. I’ll call this the, It’s Long Past Time to Beat Back the NIMBYs argument. Breton, not one for mincing words, stated this line of thinking best in a May 18, 2014 column. You can read it yourself here. (Breton Article).
In this column Breton first makes an assertion about what he feels the city needs, stating “Sacramento lacks major amenities to make the city and region more attractive to investors.” Then he identifies the bad guys standing in the way of these needs, stating “Prior to this project, the naysayers usually won in this town – either with a lawsuit or by controlling enough trembling politicians.” Mayor Johnson’s success in rescuing the Kings from moving to Seattle and breaking ground on a new downtown arena, Breton concludes, is something of a “miracle” for Sacramento.
This is basically an argument about a flawed, overly cautious local political culture, and is like all cultural arguments difficult to evaluate except by anecdote. But just because the argument is a soft cultural argument, that doesn’t mean it’s wrong. One example that comes to mind just from my personal involvement in neighborhood politics is a group that was (at least at one time about five years ago) named the Save Kit Carson Coalition. Kit Carson, if you don’t live here, is a small, low-performing middle school in the high income East Sacramento neighborhood. While the situation may be slowly changing due a new International Baccalaureate program, practically no-one from East Sacramento at the time sent their kids to Kit Carson.
Given this background, the goal of the Save Kit Carson Coalition was ironic in the extreme. It had nothing to do with improving outcomes at the school, or preventing it from declining into nothingness, or attracting more neighborhood students. Instead, the clear goal of the group was to save Kit Carson from getting larger, and reduce the chance of rowdy students pestering local homeowners.
All of which leads me a long way astray from my central topic of sports arenas, except that the Kit Carson situation is a small anecdotal example of why Breton is right. It really is past time to beat back the NIMBY’s who have for so long dominated our local political culture.
My third and last soft, non-economic argument in favor of the Kings arena project is tied to the second argument. This is the Sports Facilities Make Central Sacramento Safe for New Real Estate Investment argument. Here I’m not talking about kinds of arguments one sees in glossy, privately financed consultant studies about spending at bars and restaurants near an arena and their supposed multiplier effects (such studies always strike me as both trivial and easy to debunk, but that’s another story). Instead, I’m talking about a softer but decidedly non-trivial argument, which is that investment in the Kings arena may have opened the doors to a lot of long-delayed projects in and around central Sacramento.
An extensive literature exists on the importance of “herd” or “imitative” behavior in economics. See as one example this engaging blog post by economist Geoff Riley (Riley Blog). Following from the general theory about imitative behavior, it seems not unreasonable to deduce that there is a reason why lot of long-delayed projects have come on line in and around downtown all at once. Here, see for instance the torrent of recent blog posts by former Bee editor Bob Shallitt (Shallit Blog). While some of the projects Shallitt describes might have happened anyway, given the rising overall economy, I think it’s entirely possible that the Kings project, together with promise of a nearby soccer arena, really has played a role in making the urban core safe for new real estate investment. Who this investment benefits is, of course, another story. As a homeowner near downtown, it almost certainly benefits me. I suspect the story will be decidedly more mixed for those who don’t already own property.
At the end of the day, of course, all three of my arguments – the first about leadership, the second about local political culture, and the third about herd behavior – truly are soft arguments. They need to be balanced against the hard arguments from academic economists I’ll review in a future post. But just because the arguments are soft, that does not necessarily mean they lack validity. People who make a case for public spending on professional sports facilities in Sacramento, just maybe, are not completely akin to climate change deniers after all.