The big sell: Calgary Flames, apple pie and a new arena

An overwhelming number of economists say public funds for sports stadiums is a terrible idea. Heck, even HBO's John Oliver spent 19 minutes urging cities to say 'no' to stadium subsidies. But that won't stop the Calgary Flames from trying.

Economists overwhelmingly agree subsidizing arenas is a bad idea, but that won't deter clubs from trying

Ken King, president and CEO of the Calgary Sports and Entertainment Corp., unveils plans for an enclosed sports complex in Calgary. (Canadian Press)

If only libraries could share their feelings about being invoked early and often by Calgary Flames pitchman Ken King in his unveiling of the team's new arena plans. 

Regardless of whether a person uses a public library, the chief executive of Calgary Sports and Entertainment Corp. said in his opening remarks on Tuesday, they'll agree it's still an integral part of a community. And so it will be for a new arena, King said, connecting the dots.

Would the average public library be flattered by this attention? Confused by the airtime given to humble book repositories? Or, maybe, just a shade annoyed at seeing their good name leveraged for commercial ends? 

Whatever the reaction, the calculated attempt to draw a parallel between the big money turnstiles of an NHL rink and free ones at a public space says a lot about the uphill sales job the team faces. 

When asked about public financing for private sports arenas an overwhelming majority of economists, who rarely see eye-to-eye on much, agree it's a bad deal for a city. 

"Virtually nothing is even remotely close to the kind of uniformity of agreement that economists have with respect to stadium subsidies," said Dennis Coates, a sports economist at the University of Maryland-Baltimore County. "If what you're expecting is income creation, job creation, tax revenue growth, then you're not going to be successful. It's not a good use of public money." 

'Spurious economic techniques'

Professional sports teams, of course, know this as well as anyone. However, that doesn't stop them from trotting out studies that tout the economic benefits of new stadiums. As ever, though, it's important to consider the source.

"These studies, which are often commissioned by franchise owners and conducted by an accounting firm or local chamber of commerce, generally use spurious economic techniques to demonstrate the number of new jobs and additional tax revenues that will be generated by a project," an economist with the Federal Reserve Bank of St. Louis noted in a paper on the subject.

"The assumptions that are made in these studies — such as how much of the newly generated income will stay in a region and how many 'secondary' jobs will be created — often cannot be substantiated by economic theory."

Backers of a new Calgary sports complex say the project will help draw big acts such as Madonna back to the city. (John Shearer/Invision/AP)

The rationale against stadium subsidies is based in part on how money moves around an economy.

Budget constraints mean households only have so much money to spend, particularly on entertainment. If a new sports arena draws more of that money, those dollars won't be spent at movie theatres, golf courses or concert halls.

Economists pour an equal amount of cold water on the power of new stadiums to rejuvenate downtrodden areas or bring significant new cash flow into an area through mega-events. (Here's looking at you Madonna! Mr. King also thinks it would be great if you came to town.)

None of this is to say that a new arena isn't a good idea for other reasons, just that economic arguments don't hold up to the scrutiny of actual economists.

Bending the ear of city council

The brain trust behind the Flames and Stampeders is clearly aware of this, which is why they dangled carrots such as neighbourhood revitalization, cleaning up creosote-contaminated land and a new fieldhouse.

It's a sales pitch that will need all that and more to win over its target audience — not Calgarians at large as much as Mayor Naheed Nenshi and 14 city councillors who are likely more jaded about such a proposal than they might have been a few years ago. 

"When you have guys like [HBO comedian] John Oliver talking about how it's just a waste of money — you're giving money to billionaires but what is your city getting from it — then you're really starting to see the public turning against this notion," said Corey Hogan, a political strategist at Hill + Knowlton.

"I think they're making the right argument to council. They're saying the right things about what needs to happen in the West Village; they're saying the right things about infrastructure that's been on the city's wish list for a while. I thought it was a master stroke to put the fieldhouse in there."

In their ideal scenario, Hogan said, the project's backers would be able to direct the conversation toward the idea that public dollars will be spent on public infrastructure. Similarly, they want to avoid any sense that the whole effort will largely just benefit the Flames and Stampeders. 

With that goal in mind, coat-tailing on the public library is a savvy play, especially given the mayor's comment that any money spent on an arena must be for "public benefit and not private profit." 

What's more of a public benefit than the library? It's an unimpeachable bastion of goodwill where kids learn to read and citizens gather.

Rhetorically crafty as it may be to link libraries and sports stadiums, when viewed through the lens of the public good, they don't really belong in the same sentence.

"It's a flawed comparison," said Martin Farnham, an economics professor at the University of Victoria. "Libraries facilitate the provision of public goods and they clearly do it in a way that sports stadiums do not."

The learning that happens at libraries, for instance, means kids can grow up to get better jobs, draw less on social programs and pay more taxes. Professional sports, while offering entertainment value, just can't match those kinds of societal benefits. 

Which isn't to say the Flames can't make a case for a new arena. Maybe just leave libraries out of it. 

About the Author

Paul Haavardsrud writes for CBC's western business desk in Calgary. He is also a producer on CBC Radio’s national business desk where he talks about business on Radio One in the afternoons. Prior to that he worked for newspapers. On Twitter, he’s @paulhaavardsrud.


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