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New Stadium, Old Argument

Love or hate the new look, but don't count on the revamped BC Place for an economic boost.

By Ben Christopher, 6 Oct 2011, TheTyee.ca

New BC Place roof

BC Place reborn: source of civic pride or a waste of money? Photo by Judy B via Your BC: The Tyee's Photo Pool.

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Finally, the moment arrives.

It's Sunday, a quarter after one in the afternoon, and BC Place is about to open its new sunroof. Slowly, the circular fabric roof is drawn inward on steel cables, seeming to shrivel beneath a sun miraculously exposed. An aching guitar anthem blasts from Volkswagon-sized speakers that hang above the field.

The crowd, suddenly finding itself out of doors -- or at least nearly so -- cheers. It's a momentous occasion for the 21,000 in attendance. Surely, many have come to see the game, but the main attraction is the venue: BC Place, new and improved.

Unless you happen to be the owner of a major league sports franchise, it's hard not to raise your eyebrows at the price tag affixed to the renovation project. Coming from a government still patting itself on the back for the fiscal discipline of its jobs plan, $563 million does seem like a lot of money.

But for those of us who neither live in downtown Vancouver nor have any interest in live sports, arena-rock shows, or seeing the Pope speak during his next visit to Canada, there is the economic windfall to consider. Never mind this week's collective action vote by the current stadium staff, the new facility is supposed to create jobs, revitalize neighborhoods, and boost incomes.

It's the same argument that has been made in almost every major city in North America since the 1970s. Singing the economic praises of the new arena on Tuesday morning, the argument was made again by Vancouver architect and real estate developer Michael Geller.

Speaking on CKNW's The Bill Good Show, Geller said: "What I'm troubled by are those people saying that we shouldn't have been building this, that we should have been putting that money into housing in the Downtown Eastside. And to that I say, absolutely not. Yes, the taxpayers foot the bill, and the taxpayers receive the benefits in terms of the economic life of the city."

If you build it, they will come

If you find any of what Geller said surprising, you haven't been paying attention to what the stadium's biggest supporters have said over the past three years.

"The stadium is going to draw a great deal of interest from groups around the world that will want to utilize the facility," says David Podmore. Podmore is the chair of B.C. Pavilion Corporation (PavCo), the crown corporation responsible for designing, building, and operating the stadium.

As he describes it, the new facility will act as a money magnet: local sports fans, international tourists, business investment, and international rockstars and conventioneers will all come running to Downtown Vancouver for a piece of the action.

"We need a facility like this in British Columbia," says Podmore. The only reasonable alternative -- building an entirely new stadium -- would be much more expensive than $563 million.

In total, PavCo and the provincial government estimate that the stadiums will generate anywhere from an additional $40 million to $100 million of economic activity every year.

All things considered then, Podmore says, we're getting BC Place at a deal.

An unlikely unanimity

Optimistic though stadium builders and boosters may be, the academic literature on publicly funded stadiums presents a much less compelling case.

"It's always about how these projects are going to create thousands of jobs and raise incomes and raise tax revenue," says Brad R. Humphreys, a professor of economics at the University of Alberta. "In fact, there's no evidence that professional sports facilities generate new jobs or new income in a city."

Humphreys isn't alone in this assessment.

"Few fields of empirical economic research offer virtual unanimity of findings," write economists John Siegfried and Andrew Zimbalist in their study of forty-six major league facilities across the United States. "Yet, independent work on the economic impact of stadiums and arenas has uniformly found that there is no statistically significant positive correlation between sports facility construction and economic development."

The argument goes like this: the money that locals spend on sporting and music events at a stadium necessarily comes at the expense of money they would have spent elsewhere. Likewise, the $563 billion the province has poured into BC Place could have been directed towards other projects that might have improved productivity or basic living standards -- say, public transportation, education, or to pick another random example, housing in the Downtown Eastside.

Looking at stadiums in particular, the return one can expect in jobs and additional spending from every dollar spent on them is "lower than it would be for other entertainment activities like bars or movie theaters or restaurants," says Humphreys. That's because, relative to their size and expense, stadiums don't tend to employ very many people directly. On top of that, sports teams and concessionaire companies are more likely than local businesses to spend their money outside the city, state, or province.

As for the claim that the stadium will attract international entertainment acts, conventions, and tourist dollars, Humphreys is skeptical. Vancouver already has considerable international draw, he says. There's only so much room for improvement.

"It's Vancouver, it's not Saskatoon."

'Faith-based governing'

There are exceptions to every rule. It is possible that Vancouver's BC Place will buck the trend and actually pay for itself.

But according to NDP tourism, culture and arts critic Spencer Chandra Herbert, without a BC Place business case or market study available to the public, we have no way to evaluate the optimism of the project's proponents.

"You may attract more shows and conventions, but then again you might not," says Herbert, who represents Vancouver-West End. "Optimism is great, but that optimism needs to be based on a market study that looks at all the possibilities. We've got to get beyond faith-based governing."

A spokesperson for the Ministry of Jobs, Tourism and Innovation, which oversees PavCo, says that while the provincial Treasury Board did approve the crown corporation's business case before construction began, because that document is considered to be advice to the cabinet, it is confidential.

As to the accusation, also made by Herbert, that the government is trying to "fool the public" by calling the $563 million "on budget" when a Jan. 2009 capital project plan projected a cost of $365 million, the same ministry spokesperson said that the earlier figure was only a preliminary estimate.

Don't call it a stimulus

While the economics of a project like BC Place may be ambiguous to say the least, it's easy to see the appeal for politicians. Grand, iconic, and promising all the plebeian appeal of professional sports, stadiums are exactly the high-profile spending projects that induce what former Vancouver city councillor Gordon Price calls a "suspension of ideological consistency" among elected representatives.

Never mind the fiscal conservatism of the party in power, says Price. "No politician would put themselves in the position of having seemingly caused the winning team to leave town."

Put less cynically, a newly renovated BC Place may not make money, but plenty of valuable public projects don't.

"Having a really nice stadium might be important for civic pride or the sense of community in Vancouver," says Humphreys. This might seem an oddly qualitative argument to hear from an economist, but this reminder to consider the "intangible factors" of stadiums shows up in almost every academic study on the subject.

Just as long as you don't call it a stimulus, says Humphreys, value the stadium however you like. "Maybe some people think that's worth half a billion dollars. That's not for me to decide."

In other words, what's true of every other major North American city will be true of Vancouver. No matter the economics, the ultimate value of BC Place's half a billion dollar makeover won't be assessed inside a balance sheet, but a voting booth.  [Tyee]

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