In Worcester — Questions Emerging to Cost of the PawSox Deal

Wednesday, August 22, 2018

Many sports economist are voicing concerns about the stadium
After the euphoria of Friday’s press conference in Worcester, some of the shine began to wane on the massive financial deal to lure the PawSox to Worcester and create the WooSox.

As the wooing of the PawSox took place primarily in closed-door negotiations, many elected officials and the public are only now just learning the details of the deal.

A range of sports economists — many of the same who weighed in raising questions about the proposed deals both in Providence and Pawtucket -- are now weighing in as the details and the cost of the new Worcester stadium are emerging.

At Tuesday night’s City Council meeting, former Worcester Mayor and long-time and present member of the City Council Konnie Lukes, said she had heard nothing but positive feedback on the proposal, but challenged the process that the City is now pushing forward.

Lukes asked City Manager Ed Augustus — the chief architect of the deal — if this deal was a “done deal.” And if the process was just a rubber stamp.

Lukes said that there are many concerns.

Augustus was quick to respond that the council had the right to approve or deny the proposal, but that the project had been negotiated with the team and the state extensively and that by amending the deal it would have to be renegotiated.

Councilwoman Konnie Lukes
Dr. Robert Baumann, chair of the Department of Economics and Accounting at the College of the Holy Cross wrote in an opinion piece in the Telegram, “… the improvement and increased spending in one neighborhood usually comes at the expense of the rest of the area. For example, a family considering a dinner on Shrewsbury Street and a Bravehearts [the existing college league team] game may substitute this with dinner near the stadium and a WooSox game. From the perspective of the city, the total amount of spending is the same either way. In essence, new stadiums typically trade-off concentrated gains in the immediate area with diffuse losses everywhere else.”

“In addition, consider an investment in professional baseball that won’t begin to pay off until the stadium’s projected 2021 opening. According to Minor League Baseball, per game attendance at International League games this year is currently about 4.9 percent lower compared to last year and 7.9 percent lower compared to ten years ago. This trend is even more pronounced in Major League Baseball, where average attendance has fallen even faster but at least has the cushion of lucrative television deals. Usually, new stadiums come with a “honeymoon” period of about three years where attendance spikes above its long-run trend. I expect the same to happen here, but what happens after the honeymoon is over? Are we confident that baseball will be popular enough to repay these loans throughout their term?” Bauman added.

Former Telegram executive and Worcester Sun founder Mark Henderson, raised a string of concerns in a series of Tweets:

Mad props to @tweetworcester for landing the #PawSox (@WooSox). That said, I’ve read the packet twice and I think there’s reason for concern. Rather than go on a massive thread, let’s do this one at a time and start with the biggie #WorcPoli @CommonTalkPod @WorcesterHerald 1/6

2/6 A good lawyer will tell you that in a binding doc, if it’s not there it doesn’t exist. So can someone tell me where it says the team that will begin playing here in 2021 will be the Triple-A affiliate of the Boston Red Sox? This is a serious question. 

3/6 Here’s the pertinent graf from the Letter. It refers to the “Triple A affiliated professional baseball franchise operated by the Team.” It makes no representation about which team it’s affiliated with, for how long, or who controls the affiliation. Why is this important?

4/6 Well, don’t let the longevity of the Pawtucket-Boston affiliation fool you; minor-league franchises switch affiliations and do so more often than you think. Check out Buffalo, Syracuse, Columbus, and Scranton/Wilkes-Barre, as examples.

5/6 I’m not suggesting bad faith on the part of the PawSox, but these things happen. What if another owner says, “Here’s $3M, $1M for you, $1M for Boston and $1M for my major-league affiliate, let’s switch affiliations,” there’s nothing in this document that prevents this.

6/6 Not trying to be a naysayer, but city’s about to sign a 30-year deal. I think it would want certainty on exactly what it’s buying. Not sure city would be as enthusiastic if it were going to be the new home of the Pawtucket Pirates. More concerns in days to come. -fini-

Cost of proposed stadium is emerging
In addition, some of the claims of job creation seem to be inflated, the team and city officials claim the project will generate 500 new full-time jobs via the team, two small hotels, and some adjacent retail. The PawSox employ less than 20 full-time employees.

"The idea that this is going to serve as a catalyst for economic development, which is the hope – and I emphasize the word hope – is misguided," Robert Baade, an economist at Lake Forest College in Illinois, said of Worcester' stadium proposal to the Worcester Business Journal.

Also quoted by the WBJ, John Solow, a Massachusetts native and an economist at the University of Iowa who told the paper, "There's a great deal of consensus among sports economists of all political stripes that this is not a good thing for local governments to be doing,"

Worcester City Council’s Economic Development Committee is scheduled to hold the first public hearing at 5:30 PM on Tuesday, August 28 in the "White Room" at Crompton Collective in the Canal District.

A second hearing will be held at 5:30 PM is scheduled for Wednesday, September 5 at City Hall.

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