Saturday, February 24, 2024

Pitch Zero Cost and Cats

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Alan Binder
Alan Binder
"Alcohol scholar. Twitter lover. Zombieaholic. Hipster-friendly coffee fanatic."

While major baseball has just plunged into a shutdown that promises to be long and painful, François Legault’s government has begun throwing political balloons to test its idea of ​​financing a baseball stadium in downtown Montreal.

Tuesday morning, Journalism Two very interesting articles have been published in which it is said that the Quebec government has not yet decided whether public funds will be used to fund part of the construction of a baseball stadium that will host, on a half-time basis, the Tampa Bay Rays.

However, a weather balloon soon appeared in the background. If the government decides to pump hundreds of millions into this project, it will be at no cost to taxpayers., reassure us.

Phew! Here is the unsuspecting residents.

The catch is that public investment in stadiums and stands never comes at a zero cost to taxpayers. This does not happen. Even if we claim, as now, that we will use the taxes paid by the players to finance the stadium, or that the economic fallout from abroad (tourism) will eventually wipe out the hundreds of millions that are swallowed up in the stadium.

Therefore, the most careful observers will note that if the decision to finance the stadium has not yet been made, the calculations justifying the signing of a potential check appear completely completed.

For authenticity, government image makers will have to go back. Because the zero-cost theory is an argument for all promoters who want to build a stadium or arena at the expense of taxpayers. Except that over the years, these claims have been demolished a thousand times by countless studies conducted by famous economists.

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Last March, when the prime minister himself argued that the economic benefits of a baseball half team would justify government funding, I published this column. This text states to what extent the repercussions of having a professional sports team are negligible. Ultimately, taxpayers never take the lead in this kind of maneuver.

One of the economists cited, Professor Allen Sanderson of the University of Chicago, wrote in 2011: If you want to inject money into the local economy, it is better to fly over the city in a helicopter and throw that money into the air than to invest in a new baseball field..

Reading this, many taxpayers will likely think they prefer the helicopter option. Especially since in the current state, half of the baseball team will only produce half the meager repercussions.

Stephen Bronfman is the president of the Montreal baseball team.

Photo: Radio Canada/Ivano Demers

All this brings us back to the introduction to this text.

If the Legault government is eager to help Stephen Bronfman and some of Quebec’s greatest fortunes (like Mitch Garber, Stephane Critter, Alain Bouchard, Eric Boyko) become minority shareholders in an American-owned baseball team, why not say so clearly?

Something like this could happen:

Look, we know it won’t pay off economically, but we think it would be nice for Montreal to find even half a place among the major baseball cities. It is a political decision. It’s that easy. So we decided to donate $300 or $400 million of your taxes to help build a stadium. As a taxpayer, your only benefit will be that you can pay to go to baseball games if you love the sport. However, this public money will give additional value to the many buildings that baseball club owners will build around the stadium. So they will have a double advantage, but we will have a team.

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This position would undoubtedly provoke loud protests. But it would at least have the advantage of being clear and not misleading citizens with questionable economic concepts.

Finally, before embarking on the economic-benefit calculations to justify potential subsidies, it would also be interesting for the government to consider the possible worst-case scenario if the two-headed team concept were to be seen today.

This is what serious investors do before allocating such large sums of money to projects that have not been tested anywhere before.

And the worst-case scenario imaginable – which is far from science-fiction – is that the idea is rejected by the residents of the two cities. And in the medium term, Expos-Rays’ presence would become one of the worst circuses ever in the history of North American professional sports.

Here, too, the zero-cost theory is taken for granted.

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