New stadiums carry no promise of economic growth

With new football stadiums under construction in Vancouver and Winnipeg, two more proposed in Hamilton and Regina, and new hockey arenas on the drawing board in Edmonton, Calgary and Quebec City, a stadium boom is on the horizon for seven of Canada’s major cities.

Such projects typically demand some public funding, often gathered by team owners in the name of development and revitalization of the area around the new facility.

In Edmonton, expectations are high that the new arena will revitalize a morose downtown core. Meanwhile, a renovated BC Place is expected to spur a multi-building hotel, casino and condominium complex that is expected to generate 2,000 jobs, according to a recent Vancouver Sun story.

But such rosy economic estimates typically overstate the economic benefits of new stadiums by overlooking what economists call opportunity cost.

This means that when sports fans spend money on tickets, concessions and merchandise at a stadium on game-day, another business (like a pub, movie theatre or coffee shop ) where they could have spent that same money is losing out.

This is more than just an abstract pie-in-the-sky theory. When the 2004/2005 NHL season was cancelled due to an owner lockout hockey-related businesses inevitably suffered, but arenas filled their seats with more family events or concerts. And hockey fans and their friends found other stuff to do: they watched movies, visited restaurants, casinos or went wherever else instead. Nobody threw their money away; they just chose to spend it somewhere else.

Moreover, the total construction cost can’t be calculated even when construction finishes. Venues with little over a decade’s worth of wear like Nationwide Arena in Columbus, both the Great American Ball Park and Paul Brown Stadium in Cincinnati, and Conseco Fieldhouse in Indianapolis have sought public dollars to cover significant financial shortfalls.

This isn’t to say that government shouldn’t offer some funding for arenas. But they should harbor realistic expectations when they choose to spend tax dollars on a major-league sports arena.

A monument for the world to see? Sure.

A technological marvel? Potentially.

A place to build community? Hopefully.

A driver of the local economy? Not really.

The bottom line for cities: build the stadium, even fund some of it if your citizens are willing; but don’t expect an economic miracle on ice (or the field).