A Stitch in Haste

For those who are following the stadium debates in New York City and Washington, D.C., a major Brookings Institution report has been released showing that, historically, despite the relentless claims by politicians and central planners to the contrary, a close cousin of publicly-funded stadiums -- publicly-funded convention centers -- rarely if ever deliver on the promises that politicians' make about them.

Here are some highlights:

Despite the commitment of billions of dollars by a variety of state and local governments, the available national data on convention demand is at best scant, murky, and of limited reliability. The national market data regularly employed by consultants comes from a small number of industry sources, and often reflects estimates rather than performance, guesses rather than substance.
...
Washington, D.C. replaced its 380,000 square foot center with a new $834 million, 725,000 square foot facility at the end of March 2003. ...More recently, the center saw convention attendance of 281,900 for fiscal year 1999 and 345,800 for fiscal 2000, with a total of 352,243 hotel room nights in fiscal 2000. Authority officials anticipate about 400,000 room nights generated by the new center in 2004. After building an entirely new convention center with almost double the exhibit space, the Washington Convention Center Authority has seen effectively no increase in attendance or hotel use.
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Faced with convention centers that are routinely failing to deliver on the promises of their proponents and the forecasts of their feasibility study consultants, many cities wind up, as they say, "throwing good money after bad." Indeed, weak performance -- an underutilized center, falling attendance, an absence of promised private investment nearby -- is often the justification for further public investment. A new center is thus often followed by a subsidized or fully publicly-owned hotel, then by a new sports facility such as an arena or stadium (occasionally combined with the convention center), ultimately by an entertainment or retail venue, and perhaps a new cultural center or destination museum.

Now of course convention centers compete against each other while stadiums rarely do, so the economics of a convention center are in some respects different from the economics of a sports stadium (as noted above, however, the two are often bundled in one vanity "super-program").

But much of the economics are the same, especially when it comes to alleged "multiplier effects" (e.g., "new stadium equals new tourists equals new restaurants equals new revenues for the city"). Break that first link in the chain, as the Brookings study does, and the whole house stadium of cards collapses. (Compare and contrast: Despite chronic promises to the contrary, hosting the Olympics is invariably a money-losing proposition.)

Meanwhile, Kansas City provides yet another example of the "pseudo-economics of rooting" with a proposal to implement a new county sales tax in order to maintain the Truman Sports Complex, home of the Kansas City Chiefs and the Kansas City Royals. If the county doesn't pay for the upgrade, the teams would be allowed to move. Of course, the notion of those teams actually paying for their own stadium, or why people who don't use the stadium should have to pay for it via a sales tax, didn't seem to come up. (Hat tip to Government Bytes.)

UPDATE: Great timing -- related posts today from Reason's Out of Control on both convention centers and the D.C. stadium fight.

Related Posts:
Sports Stadiums and the Pseudo-Economics of "Rooting"
"Buy Me Some Peanuts and...a $432.5 Million Stadium"
Anybody But Bloomberg: NYC and the Olympics
The Folly of Public Provision of Private Goods