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Packers post record net income of $48.9 million
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<blockquote data-quote="HardRightEdge" data-source="post: 668761"><p>A couple of points:</p><p></p><p>- So long as teams have options, a municipality/state that balks at contributing to stadium construction will lead a team to seek a deal in another location. Current options would include a second Los Angeles team, Las Vegas, Toronto, St. Louis (if there is seller's remorse), San Antonio (though Jerry Jones would seek to block it), and the eventual European expansion with London first on the list. Simply saying "no" to funding a staduium is a decision to no longer be an NFL city (inelegantly call it NFLexit if you will) until all viable markets are saturated.</p><p></p><p>This factor does not, of course, apply to the Packers since the corporate charter prevents the team from moving, or at least presents a unique impediment in the form of a protracted and costly litigation to break the charter if team management went in that direction at some far distant date.</p><p></p><p>- While many studies indicate that stadium construction in general at public expense is a net negative economically, it is difficult to fully embrace those conclusions since the counterfactual cannot be proven. There is certainly the element of a local zero sum game, "stealing from Peter to pay Paul", within the local economy, with taxation and higher ticket prices depleting local personal discretionary funds that would spent in other ways.</p><p></p><p>- Given the above point, the zero sum game has an offset if the stadium draws discretionary spending from <strong><em>outside the governmental entity that funds the stadium, </em></strong>as you suggest.<strong><em> </em></strong>This is the Packer experiment, and it is a speculation. The stadium improvements and expansions serve to provide a base for fashioning a tourist destination around the stadium, as we all know, in the hopes that a virtuous circle will develop.</p><p></p><p>So far, the stadium improvements (together with winning) have generated substantial gains in the team's free cash flow, which is the relevant number, not revenue or earnings.</p><p></p><p>Rather than saving up that money for someday building a new stadium, by one estimate the Packers have committed $120 - $130 million, and their leasees having committed $60 million so far, in phase 1 in developing the lodging/dining/entertainment district around the stadium. The question remains as to what degree the spending in this stadium district will cannibalize current spending elsewhere in the community vs. the amount of increase in out-of-area spending. Much of this depends on whether the district becomes a destination for outside spending on other than game weeks.</p><p></p><p>My chief skepticism with regard to these efforts is less about whether local GDP growth materializes and more about the quality of jobs created. Once the temporary construction jobs come and go, the job gains fall to the hospitality industry which are notoriously low-paying. It is no secret that many of these jobs in other communities fall to immigrants, whether self-imported or imported corporately. That's not to say I have any objections to giving jobs to immigrants that existing residents won't take. Quite the contrary. It's just not the outcome the locals expected they were paying for and are often promised.</p><p></p><p>All this we already know or should know.</p><p></p><p>- Your contention that this approach is unique to a small market is questionable. To take just two examples, the Indy dome and LA Forum, investments surrounding these stadiums are measured in $billions in an effort to create a destination drawing outside spending. Indy's "business model" was to create the national capital for amateur athletics. I'll leave others to study whether these propositions are working. Regardless, communities large and small pursue and compete for these opportunities.</p><p></p><p>- Your contention that "the proportion should be limited to public infrastructure improvements (roads, sewers, parking, etc.) which is a more typical relationship that you would have between a private developer and a city" does not quite reflect realities.</p><p></p><p>You'd be hard pressed to find a state or metro area of any size that does not have an economic/industrial incentive program that goes beyond infrastructure. Among the many kinds of incentives offered, tax breaks are quite popular.</p><p></p><p>Among the many thousands of these deals in place, both large and small, I'll mention a couple of high profile deals from communities in which I've lived.</p><p></p><p>In the early 2000's Boeing went city-shopping in planning the move of their headquarters from Seattle. There was serious interest from several cities with Boeing settling on the Chicago offer, which included $60 million in tax breaks over 20 years. In exchange, Chicago got 500 jobs, paying in excess of $1 million per job. Clearly Chicago thought they were buying a "prestige affect" landing a Fortune 500 headquarters. How you measure the economic knock-on affects of "prestige" is anybody's guess. At least there were quite a few high paying jobs out of the 500, if that's a sufficient consolation.</p><p></p><p>In a development that mirrors the Lambeau investment, the state of New York made a $750 million commitment (out of the projected $1 billion cost) to the construction of the Solar City factory in Buffalo. New York will own the factory (just as the city of Green Bay owns Lambeau) and will be leasing it to Solar City on very favorable terms (just as Green Bay leases the stadium to the Packers on very favorable terms). Solar City initially projected that they will bring 1,500 manufacturing jobs, with the hopes of sourcing ongoing parts and services purchases to local companies that they project will create another 1,500 jobs (just as the Lambeau district is expected to have a knock-on job creation affect facilitated by the stadium improvements).</p><p></p><p>Solar City has already cut back their initial hiring to 500 souls, the reasons for which are known, but are outside the scope of this discussion. Suffice it to say, exogenous events have caused promises to go unfulfilled before factory construction has even been completed. Again, however many jobs do get created, there will at least be the consolation they'll be mostly well-paying factory jobs.</p><p></p><p>As always, the devil is in the details of any particular incentive deal and whether the projected net positives to the local economy actually materialize. Blanket statements about whether a city should build a stadium or a governmental entity should provide a particular corporate incentive is a ham handed way of looking at it. The proof is in the putting on a case by case basis.</p><p></p><p>What's been generally lacking in many of these incentive deals are claw back provisions, whereby metrics are established in advance by which the success of the public investment and the fulfillment of corporate promises are measured. If the metrics are not met, the corporate entity should be bound to give back to some or all of the incentive money. Otherwise, the investment falls somewhere between a-hope-and-a-prayer and wishful thinking, with little space in between.</p><p></p><p>In the case of Lambeau and the district, if the end result is a surfeit of chambermaid, dishwasher, janitorial, receptionist, clerical, greeter, etc. low paying jobs, without much else, as a taxpayer I'd expect a claw back from the Packer organization. To reiterate, the public investments in the stadium amount to a quid pro quo...it's puts a ton of money in the pocket of the Packer organization (and money in the pockets of corporate partners or restauranteurs if the district is an economic success for them) with the speculative payback being economic benefits accruing to the populace. Are there any claw back provisions in the public Lambeau funding? I highly doubt it.</p><p></p><p>On the other hand, maybe some believe more sh*tty jobs at public expense are better than none. I wouldn't be one of them. In the world of economic development, aiming to build a tourist industry should be among the least appealing options.</p></blockquote><p></p>
[QUOTE="HardRightEdge, post: 668761"] A couple of points: - So long as teams have options, a municipality/state that balks at contributing to stadium construction will lead a team to seek a deal in another location. Current options would include a second Los Angeles team, Las Vegas, Toronto, St. Louis (if there is seller's remorse), San Antonio (though Jerry Jones would seek to block it), and the eventual European expansion with London first on the list. Simply saying "no" to funding a staduium is a decision to no longer be an NFL city (inelegantly call it NFLexit if you will) until all viable markets are saturated. This factor does not, of course, apply to the Packers since the corporate charter prevents the team from moving, or at least presents a unique impediment in the form of a protracted and costly litigation to break the charter if team management went in that direction at some far distant date. - While many studies indicate that stadium construction in general at public expense is a net negative economically, it is difficult to fully embrace those conclusions since the counterfactual cannot be proven. There is certainly the element of a local zero sum game, "stealing from Peter to pay Paul", within the local economy, with taxation and higher ticket prices depleting local personal discretionary funds that would spent in other ways. - Given the above point, the zero sum game has an offset if the stadium draws discretionary spending from [B][I]outside the governmental entity that funds the stadium, [/I][/B]as you suggest.[B][I] [/I][/B]This is the Packer experiment, and it is a speculation. The stadium improvements and expansions serve to provide a base for fashioning a tourist destination around the stadium, as we all know, in the hopes that a virtuous circle will develop. So far, the stadium improvements (together with winning) have generated substantial gains in the team's free cash flow, which is the relevant number, not revenue or earnings. Rather than saving up that money for someday building a new stadium, by one estimate the Packers have committed $120 - $130 million, and their leasees having committed $60 million so far, in phase 1 in developing the lodging/dining/entertainment district around the stadium. The question remains as to what degree the spending in this stadium district will cannibalize current spending elsewhere in the community vs. the amount of increase in out-of-area spending. Much of this depends on whether the district becomes a destination for outside spending on other than game weeks. My chief skepticism with regard to these efforts is less about whether local GDP growth materializes and more about the quality of jobs created. Once the temporary construction jobs come and go, the job gains fall to the hospitality industry which are notoriously low-paying. It is no secret that many of these jobs in other communities fall to immigrants, whether self-imported or imported corporately. That's not to say I have any objections to giving jobs to immigrants that existing residents won't take. Quite the contrary. It's just not the outcome the locals expected they were paying for and are often promised. All this we already know or should know. - Your contention that this approach is unique to a small market is questionable. To take just two examples, the Indy dome and LA Forum, investments surrounding these stadiums are measured in $billions in an effort to create a destination drawing outside spending. Indy's "business model" was to create the national capital for amateur athletics. I'll leave others to study whether these propositions are working. Regardless, communities large and small pursue and compete for these opportunities. - Your contention that "the proportion should be limited to public infrastructure improvements (roads, sewers, parking, etc.) which is a more typical relationship that you would have between a private developer and a city" does not quite reflect realities. You'd be hard pressed to find a state or metro area of any size that does not have an economic/industrial incentive program that goes beyond infrastructure. Among the many kinds of incentives offered, tax breaks are quite popular. Among the many thousands of these deals in place, both large and small, I'll mention a couple of high profile deals from communities in which I've lived. In the early 2000's Boeing went city-shopping in planning the move of their headquarters from Seattle. There was serious interest from several cities with Boeing settling on the Chicago offer, which included $60 million in tax breaks over 20 years. In exchange, Chicago got 500 jobs, paying in excess of $1 million per job. Clearly Chicago thought they were buying a "prestige affect" landing a Fortune 500 headquarters. How you measure the economic knock-on affects of "prestige" is anybody's guess. At least there were quite a few high paying jobs out of the 500, if that's a sufficient consolation. In a development that mirrors the Lambeau investment, the state of New York made a $750 million commitment (out of the projected $1 billion cost) to the construction of the Solar City factory in Buffalo. New York will own the factory (just as the city of Green Bay owns Lambeau) and will be leasing it to Solar City on very favorable terms (just as Green Bay leases the stadium to the Packers on very favorable terms). Solar City initially projected that they will bring 1,500 manufacturing jobs, with the hopes of sourcing ongoing parts and services purchases to local companies that they project will create another 1,500 jobs (just as the Lambeau district is expected to have a knock-on job creation affect facilitated by the stadium improvements). Solar City has already cut back their initial hiring to 500 souls, the reasons for which are known, but are outside the scope of this discussion. Suffice it to say, exogenous events have caused promises to go unfulfilled before factory construction has even been completed. Again, however many jobs do get created, there will at least be the consolation they'll be mostly well-paying factory jobs. As always, the devil is in the details of any particular incentive deal and whether the projected net positives to the local economy actually materialize. Blanket statements about whether a city should build a stadium or a governmental entity should provide a particular corporate incentive is a ham handed way of looking at it. The proof is in the putting on a case by case basis. What's been generally lacking in many of these incentive deals are claw back provisions, whereby metrics are established in advance by which the success of the public investment and the fulfillment of corporate promises are measured. If the metrics are not met, the corporate entity should be bound to give back to some or all of the incentive money. Otherwise, the investment falls somewhere between a-hope-and-a-prayer and wishful thinking, with little space in between. In the case of Lambeau and the district, if the end result is a surfeit of chambermaid, dishwasher, janitorial, receptionist, clerical, greeter, etc. low paying jobs, without much else, as a taxpayer I'd expect a claw back from the Packer organization. To reiterate, the public investments in the stadium amount to a quid pro quo...it's puts a ton of money in the pocket of the Packer organization (and money in the pockets of corporate partners or restauranteurs if the district is an economic success for them) with the speculative payback being economic benefits accruing to the populace. Are there any claw back provisions in the public Lambeau funding? I highly doubt it. On the other hand, maybe some believe more sh*tty jobs at public expense are better than none. I wouldn't be one of them. In the world of economic development, aiming to build a tourist industry should be among the least appealing options. [/QUOTE]
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