NFL to LA: Why the Carson economic impact study is way too optimistic
A new study showing a football stadium would "create substantial economic benefits" for Carson is just as optimistic as a similar report on a competing stadium in Inglewood earlier this year, economists said.
“They are projecting a one-third increase in the number of jobs in Carson and a 20-percent increase in total household economy income," said Roger Noll, a professor emeritus of economics at Stanford University. "It’s ridiculously large.”
There's also another problem in the Carson study, he said: It leaves out costs.
For example, if you eat at the stadium or a nearby restaurant, the food had to be bought, likely from somewhere else so estimates of how much money are made from that meal are off.
“When people go to dinner, the food doesn’t come from Carson," said Noll. "It’s shipped in.”
And, if you spend money at a hotel in Carson, very little of that money is staying in Carson or even in Southern California, because the hotel chain is likely based elsewhere.
The lead author of the Carson report, Christine Cooper, who is vice-president of the Institute for Applied Economics at the Los Angeles County Economic Development Corporation, defended her findings.
"We really look at this as a new industry in town," said Cooper. "We do not currently have professional football, and so this is going to generate new activity, and activity that wouldn't occur if there wasn't professional football here."
The study was paid for the San Diego Chargers and the Oakland Raiders, the teams that have said they are interested in sharing the stadium.
Here are Cooper's projections for building the stadium in Carson:
- 16,740 annual jobs
- $1.1 billion in local labor income
- $2.6 billion in total output (business revenues)
- $1.4 billion contributed to the regional Gross Domestic Project (GDP)
- $118 million in state and local taxes, of which Los Angeles County would earn $32.2 million and cities would earn $14.8 million
And here are her projections for ongoing operations, assuming two teams share the stadium:
- 13,380 jobs
- $609 million in local labor income
- $891 million in total output
- $528 million contributed to regional GDP
- $60 million in state and local taxes, of which L.A. County will earn $16.7 million and cities will earn $8.0 million
Noll says the project will create some jobs, but it would probably in the hundreds, not thousands.
The analysis the city of Inglewood commissioned for its NFL stadium made the same assumptions as the Carson analysis did, and reached a remarkably similar projection for annual economic output: $876 million. Inglewood also projected 22,674 jobs during construction and 10,465 full and part-time jobs when the stadium is operational.
A press release from Carson2Gether, a group advocating construction of an NFL stadium in Carson, calls the study "independent." While it was conducted by the Los Angeles County Economic Development Corporation, - not exactly disinterested parties.
Michael Leeds, a sports economist at Temple University, said studies on financial effects of stadiums are often inflated because they assume all spending is new spending - whereas usually when you spend money to go to a ballgame that's money you would have spent elsewhere in the local economy if you're weren't going to the game.
“If you ever had a consensus in economics, this would be it. There is no impact," he told KPCC earlier this year.
Another sports economist, Victor Matheson, put it this way: “A good rule of thumb that economists use is to take what stadium boosters are telling you and move that one decimal place to the left, and that’s usually a good estimate of what you’re going to get."