The day after D.C. Mayor Anthony A. Williams announced that city negotiators had reached a deal with Major League Baseball, he and his advisers said the publicly financed $440 million stadium package would enrich -- not deplete -- city coffers.
They projected a net gain of more than $12 million annually for the city, based on estimates of increased tax revenue generated by the team and its fans. "I believe it's going to bring new people and tax money to our city," Williams (D) said.
In this the mayor was following the two-part script that has unfolded almost every time a city has proposed to build a sports stadium with tax money. First, stadium advocates issue rosy economic forecasts showing that the public "investment" will boost businesses, swell tax collections and return a profit to the city. Almost as quickly, a chorus of university economists pronounces those predictions deeply flawed and calls the stadium plan a costly public subsidy to wealthy sports owners and millionaire athletes.
Yet the debate over the economic benefits of baseball in Washington may be taking a somewhat different shape, with some of the most ardent critics of public sports financing moderating their protests. They find the claim that the new D.C. ballpark might benefit the city's tax coffers at least plausible. That is because the fan base of Washington's new team will be spread across Maryland and Virginia, bringing money into the city that spectators would otherwise spend closer to home.
"It's an abnormal situation," said Andrew Zimbalist, a Smith College economics professor and one of the most prominent critics. "There may not be a net drain there."
"It's possible they'll gain revenues," said Dennis C. Coates, an economics professor at the University of Maryland Baltimore County and the author of several papers on public financing for stadiums.
Under the agreement negotiated by the city and Major League Baseball, more than 80 percent of the stadium financing would come from a new tax on big businesses in the District and new and existing taxes on tickets, concessions and merchandise sold at the stadium. The remainder would come from rent paid by the team, which would reap virtually all of the financial benefits of the stadium, including the naming rights and ticket and concessions revenue.
As the D.C. Council prepares to debate the financing plan, one of the key issues is whether the investment of public money will yield benefits to the city.
In arguing that ballparks do not generate significant new state and local tax revenue from spending by fans, economists make the case that the economic boost around the stadium drains revenue from other places.
In the economists' view, the $100 that a Montgomery County family spends going to an Orioles game, for example, is money that it won't be spending at entertainment businesses closer to home. As a result, the increase in sales tax collected in Baltimore is offset by a drop in sales tax in Montgomery, the economists say.
But in the case of the District's ballpark, the surge in sales tax collections in and around the stadium would be offset by a drop in the tax revenues of Maryland and Virginia. D.C. officials estimate that 80 percent of the fans would be coming from those two states.
Their loss would be the District's gain.
"You're cannibalizing revenue from the other tax districts," Zimbalist said.
One of the primary arguments of advocates of the D.C. stadium financing plan is that the increased tax revenue will augment city services.
"Those are . . . new tax dollars to fund other important priorities, like schools, hospitals, police stations and social services," Williams said.
As for the ballpark tax on big businesses and the in-stadium taxes on tickets and merchandise, city officials say those would not exist were it not for the stadium project and thus cannot be viewed as diverting money from existing city services.
"Money that you expect to fund schools, rec centers and street repairs will continue to do just that," Williams said.
Yet estimating what would be gained is an exercise fraught with complications and uncertainty -- and, critics say, exaggeration.
The city's projections on economic benefits, from a study done by Economic Research Associates and distributed by D.C. officials, are based on estimates that the team will draw 2.5 million a year in attendance, about as much as the Baltimore Orioles did this year and more than the average major league team. The study predicted that those fans will spend $17.4 million at restaurants outside the ballpark, make $5 million in other retail purchases and spend $11.5 million on transportation.
That spending would generate $2.7 million annually in tax revenue.
The study also projected about $2 million a year in taxes on the hotel rooms that out-of-town fans would use; about $3.5 million a year in income taxes paid by players and other team employees living in the District; and revenue from a business franchise tax and other sources.
The total annual benefits to the District would be about $12 million, the study concluded, not counting the in-stadium tax revenue used to pay off the ballpark construction debt.
And District officials hold out the possibility of far more: the ballpark's potential to set off a building boom around the Anacostia River site. Williams projects "billions" in improvements.
Several sports economists look askance at most of these figures, however.
Typically, the financial benefits of having a stadium are overstated, while the costs of owning a stadium -- maintenance and infrastructure expenses -- are underestimated or not included at all, they say.
Many of the details of the financing plan and the lease between the team and the city have yet to be released.
"There will be some benefit, but it's probably less than what the politicians are representing," Zimbalist said.
Moreover, the District's special geographical circumstances do not mitigate one of the critics' central gripes about such projects: that the largest beneficiaries of the public investment in the stadium will be baseball owners and players.
Major League Baseball purchased the Montreal Expos for $120 million and, now that the team appears to have a new home that is nearly paid for, hopes to sell the franchise for more than $300 million.
And once play begins, most of the team revenue from the ballpark will go to the players -- about 60 percent is the typical share -- and with their incomes, they seem unlikely candidates for a handout.
The critics suggest that if the team had been forced to pay a larger share of the stadium's cost, the tax revenues for the city would have been even higher. They say that the city, for example, could have collected the in-stadium taxes now earmarked for the ballpark's construction.
"It seems clear that the team could have paid for more of the stadium," said Ed Lazere, director of the D.C. Fiscal Policy Institute, a nonprofit research group that focuses on city budget issues. "If they had, the taxes at the stadium would have gone to provide for other city needs."