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Downtown stadium: It's a numbers game

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On multiple occasions, most recently in 2005, Colorado Springs voters have rejected convention center proposals. But on July 1, Mayor Steve Bach proposed spending $60 million on a new "downtown stadium and event center" near America the Beautiful Park. According to the city's Regional Tourism Act application, $42 million will come from local public sources and the remainder from the state.

Many well-done studies have shown that convention centers and sports stadiums are two commonplace but dubious publicly financed projects to promote downtown economic development. Promoters of these projects typically overstate net employment and revenue gains to justify the high construction costs.

In rolling out his plan for this new home for the Colorado Springs Sky Sox, Bach released a 17-page, $40,000 economic study produced by a local economics consulting firm, Summit Economics. The study claims that a downtown location is the most important factor in explaining increased attendance at new AAA baseball stadiums. Summit asserts that another important factor is the new stadiums' close proximity to an interstate.

The report states that in its current location off Powers Boulevard, the "Sky Sox have by far the fastest growing attendance of any AAA team operating in the same stadium since 2005, with a 36 percent growth rate" and has an existing capture rate (average game day attendance divided by metropolitan statistical area population) that is already among the highest of AAA baseball teams. Yet the study also expresses confidence that the Sky Sox will have a sustained average game attendance increase of 2,200 over the 2010 season average of 4,824, a 45.6 percent permanent increase.

If realized, that would make the Sky Sox's capture rate the highest among AAA teams located in cities at least as large as Colorado Springs. Summit says that's possible because most of the increase will be from out-of-town visitors.

A downtown draw?

According to The Economics of Sports, a professional sports stadium typically needs to host revenue-generating events for at least 160 days per year to become financially viable. In 2013, the Sky Sox have only 72 home games. Summit lists several possible alternative events — but doesn't evaluate how many will be relocated from other local sites. Among the larger ones are the finish of the Susan G. Komen Race for the Cure, which will be at Garden of the Gods this year, and Pride Fest, which just this month moved to America the Beautiful Park.

It is common practice in economic studies using statistics that predictions are accompanied by margins of error and levels of confidence. Nowhere in Summit's report are these explanations of uncertainty shown. The study does not identify the methods of statistical analysis performed. And it does not specify which AAA teams' data were used to construct the forecasts.

I have found through public records that only seven AAA teams have built or rebuilt stadiums in the past 10 years. And next year, the AAA team in Tucson will relocate to an El Paso, Texas stadium that will cost at least $60 million, some paid by taxpayers without direct approval.

In that span of time only one team, the Columbus (Ohio) Clippers, had within-city relocation to the downtown. But the move was a mere two miles, and both locations are close to an interstate.

Three other teams were relocated from other cities, with two choosing to build outside of downtown areas. The Omaha Storm Chasers moved to Werner Park in the suburb of Papillion. The new location is 17 miles farther away from Omaha's downtown than its preceding facility. And Werner Park is three miles away from I-80.

The most recent stadium change is the rebuilding of PNC Field by the Scranton/Wilkes-Barre RailRiders in Moosic, Pa., at a $20 million lower cost than Bach's proposal. This Keystone State team joins the Albuquerque Isotopes by rebuilding in the same location away from the downtown. The reconstruction took place in 2003, costing $25 million after Albuquerque voters rejected a more expensive proposal to build a downtown stadium.

These facts do not support Summit's claim of a trend in AAA teams building new stadiums downtown.

The Springs' specifics

To effectively analyze the impact of stadium relocation, it is essential to understand the unique attributes of Colorado Springs. According to a recent Census estimate, Colorado Springs is the 79th most-populous U.S. metropolitan area, with 668,353 people spread over 194 square miles of land area in the city alone.

The most important employment centers are the five military bases scattered around El Paso County. The main growth paths are east along Woodmen Road and north along the Powers Boulevard corridor. Colorado Springs has low-density living with the population center moving away from the downtown toward the northeast, which happens to be where the Sky Sox are already located.

A downtown stadium's failure to dramatically increase permanent attendance is something that Colorado Springs can ill afford in an era of declining federal defense spending. It is essential that Colorado Springs make a good choice as to where the Sky Sox play to maintain efficient city services and low taxes during these difficult times.

David Mullin teaches economics and statistics at the University of Colorado at Colorado Springs. He has been both a professional economist and a Certified Public Accountant for more than 20 years.

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