Environmental Impact Report Reveals Shocking Surprise: Hindsight is 20/20

hindsight signAn initial draft of the Environmental Impact Report (EIR) for Sacramento’s proposed Entertainment and Sports Center (ESC) was released to the public this past Monday, December 16. If you’ve never read an environmental impact report (I confess, I had not), you might be surprised to find that this one is an absolute page turner, a thriller, a classic of the genre.

Or not.

For most of us the EIR would be an antidote to insomnia. Authors of reports like this seem determined to eliminate anything that could possibly be construed as controversial or surprising.

So reading through it, you find your eyes glazing over as you gloss passages like the following:

The [EIR] analysis also addressed the potential for the closure of Sleep Train Arena to adversely affect businesses in North Natomas, and concluded that the evidence suggests that there is little connection between Sleep Train Arena attendance and the level of economic activity in Natomas, leading to a conclusion that the closure of Sleep Train Arena would be unlikely to materially affect Natomas businesses or result in any business closures.

Buried in it, however, is this innocuous little statement: “there is little connection between Sleep Train Arena attendance and the level of economic activity in Natomas.” It’s actually quite revealing, and perhaps more controversial than you might think.

That assertion has the ring of a CYA statement: “Look, no harm will befall the good people and businesses in Natomas when we blow up the arena there,” suggests the EIR, “so they’ll have no reason to complain when their major tenant moves to a different community a few miles down the road.” Arena demolished. No repercussive effect. No impact. On to the next topic.

Yet that statement in the EIR also belies the promises made over and over by the same people who funded this study – that sports arenas are economic engines creating all manner of economic activity in the neighboring communities where they’re built.

The sad truth is, the EIR may be absolutely right. The arena in Natomas may make no difference one way or the other to nearby businesses.

But isn’t this what economists have been saying for years?

Economic studies, magazine articles, and newspaper reports reveal again and again the fact that sports arenas themselves do not create positive economic benefit for the region in which they’re built – this, despite the fact that arena proponents and lawmakers invariable claim that they do. Why the difference? As Forbes reports, “lawmakers selling stadiums as an engine of economic activity and job creation are engaging in sales, rather than economics.”

Economists Robert Baade and Victor Matheson address this point in their 2011 study, Financing Professional Sports Facilities: “Researchers who have gone back and looked at economic data for localities that have hosted mega-events, attracted new franchises, or built new sports facilities have almost invariably found little or no economic benefits from spectator sports.” [Emphasis added.]

Okay, so perhaps the arena in Natomas didn’t generate economic benefit for the community. But the downtown arena is different!

Unlike Sleep Train, this new arena, say proponents, will generate an astounding $7 billion in new economic activity and “create transformative economic and civic benefits for our entire region.” If you do the math, you’ll see that the new arena will supposedly create $27 dollars of economic activity for each $1 that the city invests. That’s nothing short of miraculous.

Perhaps like me you feel these promises are somewhat exaggerated. But twenty-five years from now, will anyone remember the economic claims made by the proponents of the new arena? And if so, will we dismiss those predictions with a bored yawn?

After all, hindsight is 20/20.

Ed. note: This blog post was originally published on the Sacramento Arena Debate website.