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Cluck believes the Cowboys stadium will complete a year-round cycle of sports and attract businesses to the area. (photo by Jerry W. Hoefer)
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Zimbalist: ‘... there is never much economic development associated with a sports stadium.’
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Bruner: ‘I asked them to explain the difference in the numbers, and they could not explain them.’ (photo by Jerry W. Hoefer)
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‘It’s one of the silliest studies\r\nI’ve ever seen.’
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Eastland: ‘If the city says we need this to help the economy, we have experience that says it doesn’t work.’ (photo by Jerry W. Hoefer)
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‘At times, there is no great\r\nadvantage to covering this issue.\r\nIt all boils down to money.’
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A D V E R T I S E M E N T
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A D V E R T I S E M E N T
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Double Reverse
Who really benefits from a new Cowboys Stadium? You guessed it.
By DAN MCGRAW
What are the Dallas Cowboys Cheerleaders really worth? To Jerry Jones, they’re invaluable as “goodwill ambassadors” for his team. For teen-age boys, likewise, the squad’s worth may be far beyond the $15.99 it costs to put their calendar up on a bedroom wall.
But what are they worth to the City of Arlington? Well, $25.5 million per year, if you believe a consultant’s report on the benefits of a proposed new Cowboys stadium there. That’s what’s projected in a category listed as “Out-of Stadium Miscellaneous ... attributable primarily to merchandise sales, via Cowboy cheerleader special events and appearances.”
The Cowboys want Arlington taxpayers to put up about $325 million over the next 30 years to bring pro football to their city. That’s half the cost of the stadium, or about $21 million per year, to be provided mostly by a half-cent sales tax, plus new taxes on hotel rooms and rental cars. For that investment, according to the study by California-based Economic Research Associates, Arlington would get a whopping $238 million out of this deal every year for 30 years, in actual shared profits and much-needed economic development. The deal — or at least the tax increases — will be on the ballot Nov. 2, and with numbers like that, who wouldn’t vote for a new football stadium in Arlington?
But could the cheerleaders really be good for almost a tenth of that total, as the study seems to suggest? “I don’t know about that one,” said Arlington Mayor Robert Cluck, who supports the proposed stadium deal. “If you find out, let me know.”
A call to Economic Research Associates (ERA) produced no answer. Cowboys spokesman Brett Daniels said he’d look into the question. A few days later, he had an explanation. “The word ‘via’ shouldn’t be in there,” Daniels said.
In reality, the money would come from the shops at the stadium selling paraphernalia like jerseys, helmets — and cheerleader calendars. What’s more, a close reading of the study reveals that Arlington is promised only 10 percent of the “Pro Shop” profits — about $2.5 million per year instead of $25.5 million.
If that were the only strange number in the report, taxpayers might not have much to worry about. Unfortunately, the “cheerleader factor” is only one of a long list of overblown, misleading, or misstated assumptions in the report, which one sports economist called “one of the silliest studies I’ve ever seen.” Under scrutiny, layer after layer of supposed profits to the city peel away. The bottom line, according to several experts, is that, at most, a stadium like the Cowboys’ proposed new home probably would at best produce $20 to $40 million a year — and that’s for the regional economy, not for Arlington’s alone. Arlington itself might realize as little as $14.5 million a year.
Compare that to the city’s $20 million annual tax investment, and the stadium proposal, once the monetary makeup and high-sounding hair spray are washed off, looks like a pretty plain Jane, with no dowry in sight.
Who does make the money? Jerry Jones, of course. In fact, courtesy of the taxpayers, he might be getting a stadium virtually free.
In the past several decades, as cities competed for the right to host professional sports teams, the major argument for spending tax money on stadium and arena projects has been that the team’s presence would spur economic development. It seems only logical: A sports stadium brings thousands of fans, who spend lots of money. Players earn high salaries, and surely they and the wealthy owner will invest in the community. All this new money running around creates new businesses — hotels, restaurants, bars — and new housing in the area near the stadium. And as an added bonus, the city gets plenty of free publicity through national television broadcasts, publicity that might draw more residents and more businesses.
Promoters of the Cowboys stadium plan certainly buy it. “I firmly believe that this stadium will have even more economic development than the figures in the ERA study,” said Arlington Mayor Cluck. “This is a unique area, and the Rangers’ stadium and Six Flags will create an area that will grow more housing and more businesses. Arlington is going to benefit greatly from this deal.”
Sports economists, however, cringe when they see the numbers touted in the ERA study and by folks like Cluck. “All of these studies are silly,” said Andrew Zimbalist, an economics professor at Smith College in Massachusetts, who has studied stadiums and their economic impact for decades. “The team gives the numbers, and then the economics firm ... multiplies them into huge numbers. Every team and city trying to sell this thing to voters comes up with such huge economic development numbers, and then when you look back on it years later, you find that there is never much economic development associated with a sports stadium.”
Zimbalist, who wrote the book Sports, Jobs & Taxes: The Economic Impact of Sports Teams and Stadiums, sees the Arlington/Cowboys study as much worse than many studies that have come before. “We expect the numbers to be very inflated,” he said. “But when you go through this study, they come up with figures that will not hold up to standard economic [practice]. It’s one of the silliest studies I’ve ever seen.”
Craig Depken is an economics professor at the University of Texas-Arlington and an expert in sports economics. “This stuff always sounds good in a sound bite,” he said. “The problem is that sports business is too small to have that much impact on a local economy, and most of the money spent by a team is on players’ salaries. That money is not re-spent locally.”
What Depken and the other economists have found is that the spending patterns of teams and their fans are different from citizens, say, going shopping at Wal-Mart. About half of the Dallas Cowboys’ revenues — $80 million per year — go into player salaries and benefits. Federal taxes take a large chunk out of that money. From what they take home, players tend to save more, given their short careers. And they tend to spend less of their money locally than the average worker. Just because Darren Woodson makes $4 million a year doesn’t mean he’s going to hang around the stadium ‘hood after the game to spend much of it.
Another basic problem with the economics of stadiums is the assumptions that supporters make about the money spent by fans. Stadiums that have higher economic impacts tend to be ones built in urban areas, without adequate surface parking surrounding the site. Fans must park throughout the downtown area near the stadium and walk to games. Along the way — around Jacobs Field in Cleveland or Coors Field in Denver, for instance — they stop in bars and restaurants and retail shops.
Teams like to have huge parking lots around the stadium — it’s convenient for fans, and teams make money from hefty parking fees. But such parking areas tend to become “moats” that hold down any development near the stadium. One reason The Ballpark in Arlington (now Ameriquest Field) has not sparked any surrounding development in the past decade is that fans come to games, park, go to the game, and then drive home. The preliminary plan in Arlington is for the Cowboys stadium to use some of the Rangers’ parking and add more of their own. In other words, the “moat” will spread, bringing in $10 million per year for the Cowboys, while not necessarily encouraging development outside.
What about the money that fans spend in the new stadium? The teams and cities promoting stadiums count the money spent on tickets, parking, and concessions as helping the local economy. Unfortunately, sports economists say, very little of that money comes out of the stadium into the community. “The first problem is that most of the money spent on tickets just goes into the owners’ pockets, and eventually into salaries for players,” said Mark Rosentraub, dean of the Cleveland State University College of Urban Affairs and author of the book Major League Losers. “The jobs in stadiums are part-time and don’t pay very much. The bottom line is that very little of this money makes it out into the local economy. If everything goes perfectly, if all the concession contractors are local, if housing is created near the stadium, then the best you can hope for is maybe a $20 million number.”
“But that,” he said, “would be if everything is perfect.”
The ERA study, in estimating the Cowboys’ economic impact, not only counts all of the money spent on tickets, concessions, and parking, but doubles it, on the theory that money injected into an economy “turns over” several times. According to figures supplied by the Cowboys, the new stadium should produce $106 million annually from ticket sales, parking fees, and concessions. The study claims that will put $204 million into the economy.
“For them to count ticket sales on this thing just doesn’t ring true,” said UTA’s Depken. “It is complete garbage. Most of the sales of tickets and parking go directly to the team and not into the local economy. If the companies that made beer or hot dogs were based in Arlington, there would be some impact. But I don’t know any big firms that make hot dogs or beer in Arlington. The worst thing about this is they doubled the impact with a multiplier. They should have decreased it.”
Multipliers are used to estimate how income affects an economy. If a person does business with a local company, and the business owner lives in the area and hires local people, the money spent at that business would be re-spent in the local economy. In essence, $100 spent at the business will be used to pay employees, who will use that money to pay rent and buy food, etc. The business will pay local taxes and buy services from local firms. So the $100, re-spent several times, could theoretically produce $400 or $500 worth of economic boost.
Depken and the other sports economists said that, at best, the re-spending of ticket, parking, and concession income in the Arlington economy might amount to 20 percent. “None of these multipliers they use here work in the monetary sense,” Depken said.
Cluck insists that the multipliers used weren’t high enough. But others on the Arlington council have concerns. Accountant and council member Joe Bruner questioned some of the figures in the ERA study and said the firm could not answer his questions. “I asked them to explain the difference in the numbers, and they could not explain them,” he said. “A lot of their numbers are based upon the entire Metroplex and not just Arlington. I don’t see how all this money stays in the city of Arlington. It was a quick-shot study that was based on figures already in the Cowboys’ computer.”
“I don’t think I’ll be able to support this based upon ERA’s figures,” Bruner added. Still, he voted to put the issue on the ballot. “The people have a right to vote on this and decide for themselves,” he said, regardless of whether they understand the economic facts of the proposal. “If I can read the books on this subject, then the voters can too,” Bruner said.
And that is part of the problem in putting stadium proposals on the ballot. Gauging a stadium’s impact involves complex economic issues. But to many voters, the only question is whether they like the team involved. And too often, they get little help from the news media in understanding those issues. News media companies frequently are deeply entwined with local sports teams. Piss off the home team, and you can lose viewers and readers.
The Fort Worth Star-Telegram has published columns touting the major economic impact of the stadium in the editorial section (by Arlington edition publisher Gary Hardee), the business section (by columnist Mitchell Schnurman), and the sports section (by columnist Randy Galloway). “I get the feeling that the Star-Telegram is backing this,” said Wade Dennis, an Arlington resident working to defeat the stadium tax plan.
Whether the local newspaper is backing a stadium plan or not, the issue of public financing of sports facilities is often a prickly one for print and broadcast reporters. The first problem is that picking apart an economic development study, like any complex story, is tough — though by no means impossible — for tv and radio to handle. But more important is the role that sports plays in the news companies. Sports pages increase readership, Sunday night sports specials make lots of money for tv stations, and sports radio stations are at times little more than public relations tools for the teams.
Basically, news organizations are taking a big chance when they run stories on why the economic forecasts for a new stadium might be a stacked deck. A tv station running a piece on opposition to the stadium might piss off some football fans in Plano or Fort Worth or Waxahachie, viewers who have nothing to do with the election.
“It’s sometimes difficult to explain all of this in two-minute segments,” said Tom Doerr, news director at KTVT/Channel 11, which has an agreement with the team to be the “Official Cowboys Station.” “But we are not doing anything to favor the Cowboys just because we have partnered with them on pre-season games. There is a real separation of church and state here, and we will cover the news in a fair way that balances all sides of the issue.”
Still, being objective can be tough in the sports realm. During the pre-season this year, KTVT had to transfer broadcast of a Cowboys game to KTXA, the UPN station owned by Channel 11’s parent company. The announcers were KTVT sports anchor Babe Laufenberg, play-by-play man Bill Jones, and sports analyst Mickey Spagnola. Spagnola and Jones are paid by the Cowboys.
During the game, the broadcasters brought out Mayor Cluck to tell viewers why the tax plan for the Cowboys was a good thing. Jones kept saying how great it would be, telling Cluck “this is going to happen.” Spagnola told viewers that Interstate 30 and Route 360 would be improved if voters approved the plan — which isn’t part of the stadium plan. The only one not talking about the subject was Laufenberg.
“I told Babe before the broadcast that he was an employee of Channel 11 and not of the Cowboys,” said KTVT general manager Steven Mauldin. “We realized that he is part of our news department, and we didn’t want him promoting this. We have spoken with Jerry Jones, and he understands our role of covering this issue fairly.”
But Laufenberg’s experience shows the delicate nature of covering sports. Though he did not participate in the fawning over the tax plan, he was in the booth and part of the show. And if Laufenberg had decided to play devil’s advocate and criticize the stadium tax plan, he could have been punished by the team in other ways.
A sports radio host, who asked that his name not be used, told how the Texas Rangers punished his show. “Last spring, we talked about how [Rangers] owner Tom Hicks traded Alex Rodriguez to save money and how he wasn’t signing players to put a good team on the field,” the host said. “The Rangers threatened to pull the advertising off our station. And we’ve asked for players to interview on our show every week during this season, and we haven’t got one for the whole season.
“It’s not so much that the radio stations don’t want to offend any listeners who want a new stadium,” he continued. “But you have to follow the money here. If a team pulls advertising, that can be a big deal. If you can’t get players to interview on your show, you might lose some audience. So at times, there is no great advantage to covering this issue. It all boils down to the money.”
There’s nothing shocking about the fact that Cowboys’ owner Jerry Jones would try to get a good deal to build his stadium. If cities like Arlington are willing to ask voters permission to pay $325 million toward his stadium, Jones would be silly not to push the envelope. It’s just good business.
How good for his business? According to Forbes magazine, the Cowboys make $50 million a year in profit. Studies have also indicated that any time a team moves into a new stadium, their profits increase significantly. A new stadium in Arlington would hold about 15,000 more seats than Texas Stadium. Ticket prices would be increased by about 15 percent. Parking — with 20,000 slots —would increase from about $20 to $36.50 per car. Jones would build nearly 400 luxury suites, priced much higher than those sold in the current stadium in Irving. Concession prices, which also feed the team’s revenues, would be higher.
According to the economic experts, if the new Arlington stadium is built, Cowboys profits will probably top $100 million a year by 2010 — double what the team is making for Jones now.
The increased profits could easily retire Jones’ share of the stadium bill, which would amount to about $20 million per year. But it’s likely that Jones’ share of stadium costs will be paid without his ever having to open his wallet. When a National Football League team builds a new stadium, the NFL provides a low-interest loan of up to $100 million to pay for it. The loan is paid back using a share of ticket revenue that otherwise would have been parceled out to other NFL teams — money that would never have come into Jones’ pocket anyway.
But the part of the agreement with Arlington that would help Jones is the ability it gives him to tax the fans and use the money to pay off his part of the loan. Here is how it works: The team would be able to place a $3 tax on every car that parks at the stadium and a 10 percent tax on every ticket sold. Jones could then use that money — an estimated $11 million a year — to retire the low-interest bonds the city floats for him. Add the NFL loan into the mix, and Jones will pay basically nothing from his pocket, while his profits double.
Those rather astounding numbers, however, don’t mean that the stadium wouldn’t benefit Arlington. Even if the parking and ticket and concession money doesn’t splash down into the local economy, the ERA study suggests that fans — after paying more than $100 for tickets, parking, and concessions inside the stadium — will spend, on average, about $45 outside the stadium each game, most of it in Arlington. But if you think the cheerleader impact numbers were weird, and Jones’ ability to get a stadium for free was obscene, the assumptions about spending by fans outside the stadium get even weirder.
If you’re a Cowboys fan and go to a lot of games at Texas Stadium in Irving, think of how often you stop in the City of Irving and spend money. If you are driving from Fort Worth, do you stop at grocery stores in Irving, get gas there, or stop in a bar to go drinking after the games? Not likely. Texas Stadium, an island within its inner moat of parking and outer moat of freeways choked with game traffic, has produced very little nearby development. Chances are great that you don’t drop a lot of money in Irving.
Things in Arlington will be different, according to the ERA study. Each ticket sold at the new stadium, the consultants said, will spawn $17.10 in spending at restaurants and drinking establishments and $13.60 spent at grocery stores, gas stations, and convenience stores. That’s about $22 million a year worth of eating, drinking, filling up the gas tank, and buying Slurpees. The study said half of this money will be dropped in Arlington and another 25 percent in other parts of Tarrant County.
ERA’s figures are based upon studies of what other teams have done. But those examples don’t necessarily work here, the experts say. Green Bay fans, for example, with longer drives to get to the stadium, may stay longer when they get there and drop a lot of money in the city. In a city like Cleveland, where fans don’t have to travel far, the gas-and-grocery spending might be much less. “How they say Arlington is going to get more than $4 million in grocery sales a year from football fans is amazing,” said UTA’s Depken.
There are also questions about ERA’s predictions on the number of Super Bowls, college bowl games, or national political conventions that an Arlington Cowboys stadium could draw. The economists interviewed said ERA’s assumptions on those events are as overblown as the other figures.
But the strangest number in the study may be the estimated income to hotels. According to ERA, $8.6 million every year will be spent on hotel accommodations by fans, news media, and visiting teams associated with Dallas Cowboys games, and half of it will be spent in Arlington itself. If room costs are figured at an average $100 per night (higher than the current average of $75) that means the new stadium will be responsible for producing 43,000 hotel nights in Arlington each year. With 10 games, that would be 4,300 hotel stays for each game.
Last year, the City of Irving did a study on the number of hotel rooms rented in connection with Cowboy football games. The number they came up with: 4,215 hotel nights — per year. The ERA study, therefore, is figuring that the Arlington stadium would produce 10 times the hotel business that Texas Stadium produces. What is even more amazing is that Arlington has about 5,000 hotel rooms in the city, meaning that 86 percent of the hotel rooms would be filled by football-related business every time the team plays.
“That hotel room number sounds really inflated,” said CSU economist Rosentraub, who also taught at UTA for many years. “It can’t be that much different from Irving. There’s not that much difference in the distance between Irving and Arlington and downtown Dallas. And the distance to the airport is about the same. In the DFW area, people have all sorts of choices in hotels where you can stay. Just because the stadium is in Arlington, it doesn’t mean you have to stay in a hotel there.”
One of the key arguments put forth by opponents of the Cowboys stadium election is what didn’t happen with The Ballpark in Arlington. In the early 1990s, Arlington voters were promised that $130 million worth of economic development would occur if they passed a sales tax hike to build the Ballpark. They did, but it didn’t. “Anyone who wants to know whether there will be economic development if the Cowboys move here can just look at what happened with the Rangers,” said Bill Eastland, another resident working against the measure. “If the city says we need this to help the economy, we have experience that says it doesn’t work.”
Cluck admits that the Rangers stadium didn’t hit economic projections, but he thinks that the new stadium fits well into the sports/entertainment plan for the city. “What we have now, with the baseball stadium and Six Flags, is a part of the city that draws people through the spring and summer,” Cluck said. Adding the Cowboys, with their fall and winter schedule, to the mix means that people will be drawn to the stadium area year-round, Cluck said — and that will make the difference in drawing businesses. “That’s why I think this will work,” he said.
Cluck does have a good point, one that even those skeptical of the stadium plan admit has merit. Even UTA’s Depken says that Arlington has hit the skids in economic development and must come up with some different plans to survive. “I think what we need to know is how this stadium fits into a larger vision that the mayor has,” Depken said. “Arlington needs to develop business in this city. A stadium cannot do that by itself. But if it is part of a larger vision, it might add a little bit to the city.”
One of the big unknowns is whether the stadium would attract new housing. Zimbalist, the Smith College economist, said the stadium will have to draw about 4,000 units of new high-end housing nearby if it’s going to attract new businesses in the area. Unfortunately, both downtown Fort Worth and downtown Dallas are booming with high-end condos right now. Will people with money to spend on new condos want to live in an area with lots of traffic and tailgate parties on weekends? Also, the cities most likely to attract housing near a new stadium are older, more urban cities, where warehouse districts get turned into housing — definitely not Arlington’s profile.
Bill Eastland just thinks the city should drop the hype. “When people decide if they want a place for an orchestra or a new park system, no one from the city tells the citizens how everyone is going to get rich over it,” he said. “In this case, they keep telling us that the reason we should approve this plan is the amount of money it will generate. No stadium has ever done that around the country, and the studies all show that.”
“If you think the Cowboys coming to Arlington will help the city’s image, or if you think that this will add to the city’s culture, then vote for the stadium,” Eastland continued. “But for the city and the team to push this as a billion dollars of economic gain is wrong. It is a big lie.”
The real issue, perhaps, is whether a Cowboys stadium is the best use for the $600 million (counting interest) that Cluck and others are willing to commit. Should the money be used for mass transit or a stadium? Should the money be used to enhance a downtown neighborhood near UTA, or should it be used for a stadium? Should the money be used for job development by drawing businesses, or should it be used for a stadium?
Another question for voters is whether Arlington is the city that would capture whatever economic benefit the stadium does produce. The ERA study admits that a lot of the spending produced by the stadium and the team would land in the bank accounts of other jurisdictions. “It should also be noted that the City of Arlington is located within close proximity to Dallas,” the study concludes. “As a result of this factor, some of the money generated by the proposed stadium development and the Cowboys may leak out of the city.”
One final irony to consider: Economic Research Associates haven’t always been on the rah-rah side for stadiums. On the company’s web site is posted a study from the mid-’90s called “Value of a Major League Sports Franchise.” And it sounds the alarm for those who think that building a sports stadium will help an area’s economy.
“[F]or economic development purposes, sports stadiums and arenas are not particularly effective in creating jobs and incomes,” the report concludes. “Compared with more traditional public investments ... in ports and factories, sports facilities are a rather poor investment. In most cities, a single substantial hotel has a greater economic impact than a major league sports facility.”
If the issue were put that way, maybe it would be easier to decide. Who would vote to raise taxes and spend more than $600 million of city money to build the economic equivalent of a hotel? But the desire to bring the Dallas Cowboys to town may be so strong that it tosses conventional wisdom and conventional economics out the window. Arlington voters may get the team they want to love — even if the only monetary winner is Jerry Jones.
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