Two economists take differing views of the PawSox’ proposal to build a stadium in downtown Providence. One says the plan would bring strong potential for economic development. But as Rhode Island Public Radio’s Elisabeth Harrison reports, another economist says the public investment isn’t worth it.
Victor Matheson studies the economics of sports and gaming at College of the Holy Cross in Worcester. He takes a skeptical view of the PawSox proposal to spend some $85 million on a baseball park on the Providence waterfront.
“This is a privately financed stadium in name only,” said Matheson.
From Matheson's perspective, the team's request for state funding to the tune of $4 million a year for 30 years amounts to a taxpayer giveaway to benefit a private business.
“So essentially half of their building costs, more than half of their building costs are being paid by the taxpayers, and that’s not even including the large potential gift of land as well as the exemption from property tax.”
Matheson admits it’s common for sports teams to receive large public subsidies, but he questions the practice. In this case, he thinks it would mainly shift economic activity from Pawtucket to Providence, and he points out that such generous subsidies are rarely given to other types of businesses.
"One has to ask themselves why do normally rational, level headed people all of a sudden lose their mind when a baseball team or a baseball player gets involved,” said Matheson. “And that seems to have happened now a little bit earlier with software companies in Rhode Island, and it seems to be happening now as well.”
Matheson is referring to 38 Studios, the now-infamous videogame company founded by former Red Sox Pitcher Curt Schilling. The company moved to Rhode Island with a $75 million loan guarantee, then went bankrupt. Taxpayers are still paying the bill.
But from his office at Smith College, sports economist Andrew Zimbalist said this proposal is different. For one thing, it involves the actual game of baseball, not some virtual game. And the site on the banks of the Providence River can hardly be beat.
“This ballpark is spectacularly situated. It’s close to downtown, it’s on the river, coming along with a riverwalk, it probably will promote hotel development there, there’s going to be a miniature baseball field, lots and lots of parking. It’s just a wonderful synergy possibility,” said Zimbalist.
By synergy, Zimbalist means the potential to bring visitors and other economic activity to downtown Providence. He said the PawSox estimate of $2 million in annual tax revenue from the ballpark is conservative. He believes the real number could be considerably larger down the road. And he points out the team is not asking the state or the city to shoulder any bond debt or cover cost overruns from construction.
“The fact that the owners of the team are putting forward $85 million, I think puts this in fiscal terms on the more generous side of these deals.”
Zimbalist said the PawSox proposal should be seen as a starting point for negotiations. And he and Matheson agree the stadium would be a draw for the Providence waterfront. But the question remains just how much public money is worth plunking down to achieve it.
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