Panning another RAD shakedown

Panning another RAD shakedown

The Allegheny County Regional Asset District (RAD) board is expected to formally approve its 2019 budget at the end of November. Part of that budget is to include $800,000 to augment a fund that pays for improvements at Heinz Field, PNC Park, PPG Paints Arena and the David L. Lawrence Convention Center.

There are indications that this would become a recurring line item year after year for these facilities, owned by the city-county Sports & Exhibition Authority, supposedly “on behalf” of a public that already has spent millions to build and maintain them.

The additional dive into taxpayer pockets – the money to come from proceeds from the county’s piggyback RAD sales tax — has raised plenty of eyebrows.

After all, multiple millions of public dollars were used to construct these facilities. In the case of the baseball and football stadiums, elected leaders spared no machinations in bypassing taxpayers who, in 1997, rejected the use of tax dollars for such projects. The public continues to pay off the lion’s share of the construction costs.

And the Steelers and the Pirates must be feeling the heat of skeptics – the Allegheny Institute among them – who’ve panned this latest money grab. For the franchises, along with the Penguins, have released summaries of two studies they commissioned that, they say, prove their economic value to Greater Pittsburgh, the Post-Gazette reported in a lengthy story/analysis on Sunday.

Summaries, mind you, not the actual studies. And, to that end, apparently based on proprietary information not available to the general public.

Unfortunately for the barons of sport – but fortunately for taxpayers – the studies (or at least the summaries by the accounting firm of PricewaterhouseCoopers and GumGum Sports) are roundly rebutted, if not outright refuted, by other experts the P-G had the good sense to contact.

While the story quotes top officials from all three sports franchises touting how the public investments in the stadiums “are paying big dividends,” as Steelers President Art Rooney II put it, the newspaper reminds “it’s not hard to find economists who question the value sports teams truly bring.”

That’s because that value long has been sorely overstated. In fact, University of Chicago sports economist Alan Sanderson tells the newspaper that, in general, 90 percent of the numbers generated by teams and tourism bureaus to show their value are “probably exaggerated.”

Then there’s this simply precious quote from Temple University economics professor Michael Leeds:

“The rule of thumb is that a baseball team is worth” to the economy “what a decent-sized department store is worth. Football and hockey are worth progressively less,” he said, adding a kicker that surely he had no idea is a kicker:

“Would you be willing to spend millions of dollars to keep Macy’s?”

Cue the laugh track. You’ll recall that Pittsburgh officials tried just that 20 years ago with Lazarus and Lord & Taylor. Both, of course, were predictable public policy failures.

The P-G even quotes former PNC Financial Services boss Jim Rohr, who says the presence of the professional sports teams was a big part of the banking giant’s decision to invest heavily in Pittsburgh.

With the help, of course, of a not mentioned $48 million in public subsidies to get the PNC ball rolling.

And the panning of the sports facilities’ economic impact goes on and on in an article that truly is a devastating reiteration of such flawed economic analyses. And, again, that based only on summaries.

Not mentioned in the Post-Gazette’s in-depth look is the Allegheny Institute’s September white paper (Policy Brief Vol. 18, No. 34) that documented how the Steelers – and it also applies to the Pirates – paid no rent in the first decade of its lease at Heinz Field. A wide-ranging and ridiculous number of credits were given that offset millions of dollars in lease payments.

Talk about sweetheart deal-making.

Neither is it mentioned how all three franchises were handed development rights to the expanses of property around their taxpayer-funded homes. That has led to architecturally unimaginative, cookie-cutter development between Heinz Field and PNC Park and a long delay in development on the old Civic Arena site.

Back to late November’s RAD board vote:

As Frank Gamrat, this think tank’s executive director, puts it, “It’s a travesty for an organization (such as the Steelers) with an average pay in the millions of dollars that has been a huge beneficiary of taxpayer generosity to be asking for more tax dollars.”

Time and time again, the barons of sport — their bottom lines enriched by public coffers — have overstated their economic impact. We supposedly should thank them for their sparking economic development that they overstate and, oh, they claim, they deserve more public money to keep the smoke machine going.

Stung by public skepticism and scholarly scolding, the barons do so again in advance of what’s expected to be the RAD board’s rubber-stamping of this latest ignoble foray into the public purse.

More truly is the pity.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).