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Home Key Myths

Key Myths About The Stadium

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The argument for a baseball stadium in San Jose is based on a handful of key myths. You'll hear these over and over and over again, in different variations. These arguments have been made so often that they have become articles of faith for sports fans. But the arguments are either not true or based on very overstated claims.

1. The stadium will create jobs.

Sure. Any time something is constructed and money is spent, some jobs are created. But a stadium is a very poor job creator in absolute numbers and in quality of jobs, and a terrible job creator in terms of the public cost per job.

The stadium will cost San Jose thousands of full time, good paying jobs over the long term.

Construction jobs are good, but they are temporary. Anything built at the Diridon site will create the same or more construction jobs, probably over a longer period of time. And something will be built at Diridon. The City acknowledges that when it says that continued purchase of land at the site is justified because if no stadium is built, then offices, residential units, and shops will be. In fact, the Diridon site, as the only develop-able land parcel next to the emerging major transportation hub at Diridon station, will be one of the most valuable sites in San Jose for a 21st Century economy.

The baseball Economic Analysis Report stands on its head to get to a claim of 980 'full and part-time', 'direct, indirect, and induced jobs' as a result of the stadium, and this becomes a headline claim of "almost 1,000 jobs created". But a footnote in the report gives the realistic number: "138 net new jobs at stadium, for 84 events a year". Jobs at a baseball stadium and outside jobs generated by it are almost all occasional, part time, minimum wage jobs - ticket takers, concession workers, a few waiters and bus boys, etc. Remember - there are only 84 events a year planned for the San Jose stadium; it's basically empty the other 280 days of a year. Players and executives are extremely highly paid, but they don't live in San Jose.

Using an estimate of $100M in public costs for the stadium, the cost for the 138 new stadium jobs is almost $725,000 per job. That's a terrible value.

In contrast, a fair analysis of the alternate development scenario for the Diridon site shows that almost 4,000 full time jobs would be directly created, probably many of them well paying, professional jobs. The ripple effects of this (the indirect and induced jobs) would be to create proportionately more and better paying jobs than for the baseball stadium. That's thousands of jobs we won't get with a baseball stadium - a lot of jobs we can't afford to pass up.

2. The stadium will bring economic benefits to San Jose.

Yep - some. But not much, and not nearly enough to justify the cost. Fans will spend money, and money is economic activity. But, again, compared to what? The San Jose RDA has bought out viable, tax paying businesses at the Diridon site, razed their buildings, and created surface parking lots. Now they claim the site is underutilized, and compare the economic activity from a baseball stadium to nothing.  Nice trick. If it's successful, it will cost us billions of dollars.

The Diridon site won't stay unused. It is potentially one of the most valuable and attractive sites in the city for businesses and residents. The market demand study done recently as part of the Diridon Station Area Planning process forecasts a demand of 2.4 to 3.6 million square feet of new office space and 2,700 to 4,500 new residential units. This study goes on to make the following points:

  • Office space is the land use that benefits the greatest from improved transit access;
  • High Speed Rail adds prestige to location and access to Southern California and the Central Valley;
  • Office employment concentration supports local . . . venues;
  • High density development generates the greatest tax increment revenue.

A fair analysis of a non-baseball use of the Diridon site shows that it would create four times more economic benefit for San Jose than a baseball stadium. You don't need to read the detailed numbers to understand this issue. The A's have roughly $200M a year in annual revenue. A large percentage of this is paid out to a handful of players and team executives and immediately leaves the host city. By contrast, a company like Adobe has annual revenue of roughly $3 billion dollars - more than 15 times as much. Adobe provides a lot of well paid jobs in San Jose, and supports a large local infrastructure of consultants, service providers, and secondary companies.

Baseball is emphatically a minor league economic player, with good publicity. A stadium, over its 40 or 50 year expected lifetime, would represent a loss of several billion dollars in economic benefit to San Jose.

3. The stadium will be built with private money.

The implicit subtext of this myth is that a stadium will cost San Jose little to nothing. Look at the deal San Francisco got!

The brutal truth is that stadiums don't get built without public money. The only variables are how much public money and how well it's hidden. Team owners have gotten better and better at hiding the public costs, and politicians discreetly look the other way. They won't be around when and if the bill is due. They might well be working for the Stadium Authority.

What we know about San Jose costs:

  • the baseball stadium will require land purchases and infrastructure improvements costing San Jose at least $90M initially (in present value), plus a loss of roughly $1M a year from foregone property taxes.
  • the opportunity cost of a stadium is estimated to be $6M a year in lost property tax, $280M a year in lost economic benefit, and 2,500 full time jobs.

What we don't know, and may never know (until it's too late) - a few examples:

  • how are the A's going to finance their part of the construction costs? Will it involve public bonds, to get a tax break?
  • will the stadium lease have disguised terms (e.g. to maintain a 'competitive facility') that commit San Jose to spend millions of dollars in the future - e.g. for a new scoreboard, or renovations to luxury suites - or risk the team breaking the lease and moving (or just threatening)
  • who will pay for construction of any parking lots? Who will get the revenue?

San Francisco did get a better deal than most cities; it's just not nearly as good a deal as most people think. It also shows how the public cost can be hidden in plain site. The common claim is that the SF stadium was built with $275M private financing (95%) and $15M public financing (5%). These numbers leave out most of the real public cost - for example, the land was provided essentially for free, the team gets a major property tax reduction, and the stadium costs the city about $2M a year in service costs. A full accounting of stadium costs shows that the public share of the stadium cost is $144M, or 34%.

4. The stadium will stimulate development around it.

And increase property values! Look at San Francisco (again)!

But please don't look at Oakland, Detroit, or many other cities where a stadium has done nothing but create parking lots and suck up valuable public resources to benefit already rich owners.

Stadiums don't create much vitality, unless you really love sports bars. It is people living and working in a neighborhood that give it life throughout the day and year. Most of the time stadiums are empty and lifeless, creating a large dead zone around them. The TV cameras are always there on opening day, but never on a rainy day in February. Take a look at these photo's showing the (non)activity outside AT&T Park on a gorgeous day in March.

Let's continue to take a closer look at San Francisco. China Basin was the last large undeveloped area within the San Francisco city limits. The plans to develop this area were started many years before any planning for a baseball stadium. The South Park area nearby was the thriving center of new media companies (later to be Internet companies - MacroMedia had its headquarters here) years before the baseball stadium. The stadium didn't revitalize the area; the stadium took advantage of the revitalization that was already happening, and now brazenly claims all the credit. It's nice to be a myth.

In 2007, San Jose commissioned a report titled Neighborhood Economic Impacts of the Proposed San Jose Stadium. This report included case studies of stadiums in urban areas that are popularly considered to have spurred economic development in the surrounding neighborhood. It didn't look at the many stadiums that are obvious failures. The authors of the report tried, but their conclusions are less than an endorsement of the 'stadiums as revitalizing wonders' myth. San Jose appears to have been disappointed - the city doesn't talk about this report, and the authors noticeably haven't been rehired for any more work. Among the conclusions of the report (some of which somehow didn't make it into the Executive Summary) are:

  • successful retail businesses do not rely on ballpark visitors; they cater mainly to neighborhood residents and workers;
  • a MLB stadium, with 81 home games a year, cannot exclusively sustain local businesses of any significant scale;
  • the AT&T Park (San Francisco) study suggests that the San Jose stadium would have a minor or no effect on local property values;
  • new residential projects play a key role in sparking commercial development (more so than a ballpark);
  • sports teams often fight entertainment oriented projects near their facilities because these projects compete with sales inside their stadiums.

And San Jose? The stadium would be crammed into the only parcel of land next to the Diridon Station transportation hub. It won't stimulate development; it will preclude healthy development that would help create a vital, central urban neighborhood where people live and work, and that could be a show place, inspiring front door for San Jose.

5. The San Jose A's will be a terrific brand for San Jose.

We'll be mentioned on TV! We'll be validated (at last) as a major city.

OK. But think a minute. Detroit has major league baseball, football, basketball, and hockey. What do you think about Detroit as a city? When are you planning your next family vacation to Detroit? Are you thinking about moving your business there? Oakland has major league baseball, football, and basketball. Does your heart stir fondly (fear doesn't count) at the mere mention of Oakland?

Smart, confident cities have caught on to this myth.

Last Updated on Friday, 07 May 2010 21:50  

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"The (San Francisco) AT&T Park study suggests that the new San Jose stadium would have a minor effect on local (property) appreciation rates "
Neighborhood Economic Impacts of the Proposed San Jose Stadium
November 2006; prepared for San Jose Redevelopment Agency

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