New blogs covering Birmingham

I recently discovered two blogs covering the Birmingham area. The Terminal- Birmingham is a clearing house for local news, events, and the opinions of Andre` Natta. I particularly like the Real-Time traffic monitor on the home page. The major news pieces are links to MyFoxAL.com but the best part is the intimate knowledge (and pictures) of events and locales in town. The worst part is the unabashed support of Larry Langford's policies.

BirminghamDome.com is a blog in support of bringing a dome stadium to the Magic City. I question the timing and appearance as this blog seems to have been started on December 1, 2007. I believe the two are operated by the same person. According to this blog, a dome stadium will cure all that ails the city of Birmingham. If Birmingham builds a dome stadium then magically the schools will be better, crime and blight will disappear, and businesses will flourish again. I expect BirminghamDome to offer some neutral alternatives or specific policies about the Dome rather than the generalities in which this proposal was sold to the public.

I am also pleased to read a post on Mayor Langford by Punditry by the Pint. For a while I thought I was the only dissenting voice to the Dome proposal. I felt like Will Ferrell's character(Mugatu) in Zoolander when he said [about Zoolander's look], "Doesn't anybody notice this? I feel like I'm taking crazy pills!

Birmingham's new Dome or Doom? Part II.
continued from an earlier post. Don't assume that the following thoughts are all my own. My thoughts were formed from an article from Policy Studies Review,Spring 1998 by Andrew Zimbalist. Click here to see a Google Search of the Zimbalist article. I am not through reading all of them but I hope to go through all the articles which cite this one in order to broaden my views on the economic impact of stadiums and domes on a city.
"Dozens of studies have been performed by consulting firms under contract with the affected city or team. Predictably, most of these studies have concluded that there would be a substantial, positive impact from adding a sports team. There are several methodological difficulties with these studies."(Zimbalist) Here are some of them.

1. They [the studies] do not sufficiently account for the difference between new and diverted (or gross and net) spending. In other words, the studies aren't conscious of the fact that people have a finite amount of their income to spend on entertainment.If they spend $100 to attend a sporting event, that means they will have $100 less to spend on movies, shopping, and restaurants. "The dollar spent at sports events usually replaces the dollar spend elsewhere in the local economy. The spending impact is practically nil."
2. The main source of net spending is out-of-town visitors to a ballgame.This number is practically small for professional sports teams. It consists of the visiting teams and out-of-town media. Most of this will be offset by road trips by the local team and media. I would like to add that the employees attracted to new jobs at a dome stadium will be seasonal and part-time at best.
3. The economic impact is often exaggerated by assuming that an unrealistically large share of executive and player salaries remains in the local economy. The more a team's owner and its players live and spend their income in the host city,the larger the economic impact. Last I checked, minor league teams didn't pay much more than the local Post Office and I have never seen a study on the economic impact of postal employees.

Birmingham's new Dome or Doom?

While doing some thinking about the Magic City's newest grand idea of doubling business license fees and increasing taxes to build a dome, I recalled a policy paper I read in graduate school concerning the economic impact of domes and professional sports teams. The paper I am relying on is, "The Economics of Stadiums, Teams, and Cities" by Andrew Zimbalist. It isn't the exact same situation as Birmingham but some of the findings can be transferred. The journal can be downloaded here and a summary can be read here. The words of the author:

"It is a common perception that sports teams have an economic impact on a city that is tantamount to their cultural impact. This is wrong. In most circumstances, sports teams have a small positive economic effect, similar perhaps to the influence of a new department store."

1. Individual sports teams are not big business. The average NFL team in 1994 grossed $65 million. Compared to the 1993 Effective Buying Income of $21.1 billion for metropolitan St.Louis. The gross of an NFL team would just account for 0.3% of St. Louis's EBI, 0.6% of Jacksonville, Florida, and 0.05 of the EBI of New York City.
2. Studies have shown that most public stadiums do not cover their own fixed and operating costs. Quirk & Fort estimated an average public stadium subsidy (net fiscal cost) of $6.8 million and conservatively projected in excess of $500 million in government subsidies to all professional sports teams in the same year. Operating and debt service deficits mean that city or state governments will have to levy additional taxes. Higher taxes in turn, discourage business in the area and reduce customer expenditures, setting off a negative multiplier effect.
3. Virtually all independent economic research has confirmed a diminutive or negligible economic effect from the relocation of a sports team in a city. For instance, Baade and Dye looked at nine cities over the period 1965-83 and found that no significant relationship between adding a sports team or a new stadium and the city's economic growth. In fact, they found that in 7 out of the 9 cities, the city's share of regional income declined after the addition of a new sports team or the construction of a new stadium. Baade recently updated this study to include 36 areas over a 30 year period and found that in no cases did a new stadium have a statistically significant, positive economic impact on the city's growth and in 3 cases it had a negative impact. Arthur Johnson studies 15 cities that host minor league baseball teams and concluded that:"The economic impact of a minor league baseball team is not sufficient to justify the relatively large public expenditure necessary for a minor league baseball team."

TO BE CONTINUED

Birmingham: A case study in poor leadership.

BACKGROUND: The sales tax increase, to last six years, is part of new Birmingham mayor Larry Langford's plan to generate $72 million annually to support initiatives including a domed stadium, mass transit improvements and an enhanced police department. The mayor proposes increasing the sales tax by one cent on the dollar and doubling business license fees to pay for his projects. Langford and the City Council met for more than two hours, mostly listening to owners of auto dealerships who said raising the sales tax by one cent on the dollar would make it harder for them to compete with dealers in surrounding cities and would put some out of business. An increase in taxes and business fees can make or break a car dealership especially in a region such as Birmingham. Why pay the extra money to the city when you can move just a few miles, pay less taxes, worry less about crime, and be in a modern, cleaner environment. As you can read below the mayor doesn't mind chastising the businesses he wants to fund his new Visionland. More on VisionLand.

MAYOR: to a legitimate concern of the city's car dealers: "It's not going to last forever. Suck it up with us just one time."
Councilwoman Valerie Abbott argued for the dealerships. Abbott said the smaller increase (.33% instead of 1%)would maintain the dealerships' competitiveness.
MAYOR: "That makes absolutely no sense at all,"

Ray Ingram, owner of East Lake Auto Sales, said he feared doubling his business license fee would be enough to put him out of business. Ingram said the license increase hurts small businesses like his the most. He said he pays about $10,000 a year for a business license and would pay $20,000 under the mayor's plan.
MAYOR RESPONSE: {he once sold cars} and knows that dealers make "a lot more money selling used cars than you do new cars."

Langford earlier had called for creating a Birmingham Rail and Transit Authority to handle the new transit money ($17 million), rather than turning it over to the BJCTA. But he said Monday that such details can be addressed later.
MAYOR: "At this point I don't know," he said after the meeting. "At this point I don't care."
The most important thing is for the council to approve the plan and handle the technicalities later, Langford said.

The mayor ran on a platform of "Change." These changes included a domed stadium. Why and for whom, nobody knows. The mayor just thinks we need it "to move forward." As head of the County Commission, Langford developed a reputation for having things his and only his way. The lack of want of details for the transit authority is a bad sign. The better scenario is to handle the details first and then proceed according to plan. Ask Hillary Clinton what happens when you set out to institute a plan and then plan the details in secret later.
He has been called bull-headed and to that I would add, callous. The above exchange highlights how not to respond to concerns from the people he was elected to represent. One should not respond with personal insults or immediate dismissals of ideas from others as done here. There is not one hint of compassion or empathy coming from the mayor to the car dealers who are actually doing Birmingham a favor by staying within the city limits. The attraction to move into neighboring areas is immense. I am afraid that additional taxes and fees will be "the straw that broke the camel's back." If this happens there will only be one man to blame.

Birmingham, Alabama's largest city is fighting a multi-front battle.

• Birmingham was just named the nation's 6th most dangerous city for the 2nd straight year. Through Sunday, there have been 79 homicides in Birmingham this year. There were 109 homicides in 2006.
• Birmingham City Schools were recently described as "abjectly failing" by an educational think tank.
• Businesses are leaving the Magic City (Saks, Parisians) and heading for the vibrant suburbs offering safety, and better education.

To combat these problems the newly crowned mayor has decided that his first order of business is going to be a 1% sales tax increase and to double the cost of business licenses. That is not the way to go if you need to attract and keep businesses. You don't punish them for doing business in your city, you reward them. Not to mention that an increase in sales tax is regressive and will depress sales leading to lesser revenues than estimated. Too often the governing body then raises taxes again to gets the same result. Also on the agenda is a plan to buy laptops for all children in grades 1-8 and to provide college scholarships for all graduates of Birmingham City Schools.

Larry Langford was elected Fairfield mayor in 1988. He successfully won tax increases in 1990 and 1996. He was elected Jefferson County Commission president in 2002 and persuaded the commission to raise the county's sales tax by 1 cent in 2004 for capital spending by county schools. (Data from Birmingham News) Some of Langford's previous business dealings have caught the eye of the Securities & Exchange Commission.

The mayor's proposal is aimed at generating revenue to build a domed stadium. Nobody can say who will play there or perform there but the mayor is going full speed ahead with his plan. He has also budgeted $1 million dollars for each of the 15 city councilmen and women to be used at their discretion. It sounds more like a payoff to me. At the very least you could say I am very skeptical of the new plan. The CEO of Alabama Power,a division of Southern Company, has been a vocal supporter of the dome stadium. Probably because if it fails he won't lose a dime and if it succeeds his company will be supplying power to a new stadium for years to come. He cannot lose.