Yesterday it was reported Gov. Scott Walker supports the state of Wisconsin borrowing $220 million to help the billionaire owners of the Milwaukee Bucks build a shiny new arena from which they can draw greater profits to line their pockets, and the issue quickly became a hot topic among folks from both sides of the political spectrum who either agreed with Gov. Walker’s decision or who thought it was a terrible idea at a time when the state is considering cutting $300 million from the UW system budget.

Supporters of Gov. Walker’s plan to borrow $220 million to help fund a new arena for the Milwaukee Bucks were quick to note the economic benefits of a new arena funded by the state borrowing hundreds of millions of dollars, but it’s worth noting a report released by the City of Milwaukee’s Legislative Reference Bureau found that publicly funded sports arenas do not provide a positive economic impact to communities.

Publicly financed sports arenas do not provide a positive economic impact to communities, according to a new report released Friday by the city’s Legislative Reference Bureau.

The report was done at the request of Ald. Michael Murphy, who said the community deserved an “open and honest assessment of the fiscal implications” of a publicly financed arena.

The report was released in advance of a conference Monday at the Marquette University Law School that will discuss key questions relating to a new arena in Milwaukee. The conference is co-sponsored by the Milwaukee Journal Sentinel.

[…]

The Legislative Reference Bureau report notes that new arena proponents often say construction of a new facility will create jobs; that those who attend sports events generate new spending; that a sports franchise attracts tourists and companies; and that the new spending produces a so-called multiplier effect in terms of additional spending.

But studies by the Cato Institute, Zimbalist and Dennis Coates, another prominent sports economist, have shown that most stadium and arena spending comes from local metropolitan residents.

“Instead of spending their entertainment dollars at local restaurants and nights out dancing, they are spending at the ballpark or the arena,” the reference bureau report cites Zimbalist as saying. “Their overall entertainment spending is constant.”

This is known as the “substitution effect,” in which consumers do not increase their overall spending when a new arena is built, but substitute spending at an arena when they might otherwise go to a movie or show.

Coates’ study, released in 2003, reports that “economists have found no evidence of positive economic impact of professional sports teams and facilities on urban economies.”

“These results suggest at best (that) professional sports teams and facilities provide non-pecuniary benefits like civic pride and a greater sense of community, along with consumption benefits to those attending games and following the local team in the media; at worst, residents of cities with professional sports teams pay a high cost for the privilege, both in terms of large public subsidies and in terms of lost income and employment,” Coates concluded.

While I understand that there are going to be strong opinions on either side of this issue, one Democratic proponent of Gov. Walker’s plan to borrow $220 million to help the Bucks build a new arena said, “Anyone who speaks against this is against our city.”

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11 Responses to So let’s talk about the “economic impact” a new Bucks arena would really have for the City of Milwaukee

  1. Jake formerly of the LP says:

    Zach- Who was the Dem proponent that made that statement? Not only do I disagree severely with the statement (read what the budget cuts will do to UWM, for example), but has this person seen where the arena goes and what the larger development is? If so, I think the rest of us would love to hear about it before we see how indispensable it is for the city.

  2. MaseMan says:

    Milwaukee is very unique in that it is the smallest city in the country to enjoy having two major sports franchises (Bucks and Brewers). Letting the Bucks leave would be a major blow to Milwaukee’s downtown. Sen. Kohl and the current owners have both pledged substantial money to the project, and it’s time to get something done. I’m obviously not a fan of Governor Walker, but it is time to move forward and replace the outdated Bradley Center.

  3. wisconsin Conservative digest says:

    Economic impact is BS as is more development. Better off to push the two college teams, they have real impact. So i agree with you. My question lies with the NBA. What does contrsact say> will they ayutomatically pul the frncis or is therea choice? Milwaukee need to fix up the mess that 100 year of leftwing govt has brought in crime, schools, poverty, unemployment of kids.
    Only bad thing is that cities that lose franchises get balck eye.

    • nonquixote says:

      Can never tell the truth can you, Bobby? It’s a black eye on any POTUS candidate to lose any professional team franchise. This is not about any of us, it is Scooter looking out for himself. Funny he ever ran as a Republican when he mimics the other mascot so perfectly.

      What other reason is motivating the destruction of WI? Not a trick question. NO other reason.

  4. Joe R says:

    MaseMan — Just so we’re dealing with facts and not emotions: Milwaukee is not the smallest city with two major sports teams. Minneapolis (3 teams), Kansas City, Atlanta (3 teams) Cleveland (3 teams), Oakland, and Arlington, Texas, are all smaller in population than Milwaukee. You can look it up.

    Let’s look at metro area numbers. The Milwaukee-Racine-Waukesha metropolitan statistical area is No. 33 in population. The Nashville MSA is smaller at No. 37 and has two teams. Buffalo is No. 46 and has two teams. New Orleans is No. 52 and has two teams.

    Losing the Bucks would be a blow, for sure. But what good does it do to have a gleaming new sports facility when the schools are falling apart, parks are neglected , cultural institutions are failing, and infrastructure is crumbling? It makes no sense.

    • This comment sums up exactly what I think of the situation. It’s foolish to spend hundreds of millions of dollars on a shiny new basketball stadium in a community whose citizens by and large can’t afford to go to a Bucks game.

  5. EmmaR says:

    The challenge is that our system places cities and regions in competition for growing businesses and the best performing workers. Professional sports teams play a role in that but the size and impact of that role is tough to quantify. So we have to ask ourselves whether the Bucks moving out of state represents another nail in the coffin. Probably, as it displays a lack of upward momentum to potential employers and high-performing employees. We also have to ask whether Milwaukee is dying anyway with or without the Bucks. Again probably, as the state’s policy is making Milwaukee and Wisconsin in general undesirable regardless. Walker brags that he has vision. But our supposed visionary can’t figure out a way to rejuvenate Milwaukee as a whole and fuel the economic engine that is the UW System? How does this person think he is qualified and ready for the Presidency? He can’t even problem-solve his way through a Tuesday.

  6. t says:

    This should be a bipartisan position: No public money for pro or college sports arenas. They are making money hand over fist while the regular people are getting the shaft.

    • EmmaR says:

      You realize of course that in most of Wisconsin the hand out’s are going to big corporations and low income white people. So you make it crystal clear to your own side on red blogs, talk radio, newspaper editorials and any winger gathering that they are the real parasites, yes?

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