Cause for skepticism about benefits of new sports arena in the city of Virginia Beach

A new study by Chmura Economics and Analytics found that an NBA team moving to Virginia Beach would increase Virginia’s revenue by over $500 million annually.


The city of Virginia Beach has been entertaining the possibility of building a new arena to attract an NHL or NBA team. City officials say that a team could begin playing in the new arena in 2015.

The study was conducted for the Virginia Beach Development Authority and it found a number of interesting figures. First, an NBA team would support close to 3,77 jobs in the commonwealth. Furthermore, an NBA team would generate an additional $11 million in tax revenue annually for the state government.

While the study sounds an opportunistic note, studies in the past about the positive economic impacts of new pro sports arenas haven’t all been favorable.

One startling finding that came from earlier studies of new pro sports arenas was the following: “a statistically significant negative impact on the retail and services sectors of the local economy, including an average net loss of 1,924 jobs.”

Moreover, it’s unclear just how much a new arena would run the city of Virginia Beach and its taxpayers or even if the city’s taxpayers would be willing to foot the bill for longer-term returns (which are not guaranteed).

As in the case of the sweetheart deal made to the Washington Redskins to move their training camp to Richmond , it’s unclear who will actually benefit from this seemingly win-win situation in the short and long run. In the case of the Redskins moving to Richmond, what is the cost, for example, of the increase in traffic due to training camp attendance? That is, how much extra time and money will Richmonders have to fork over due to the presence of the new Redskins training camp. This is merely one question to consider.

While it sounds reasonable to conclude that a popular venue would boost the local economy, this result does not necessarily follow. Before the city of Virginia Beach decides to move forward with a new arena, it would be wise to conduct at least one more meta-analysis of how new pro arenas have affected local economies elsewhere in the country.

References

http://www.chmuraecon.com/

http://www.dailypress.com/news/virginia/sns-ap-va--nba-economic-impact-20121019,0,3639027.story

http://news.illinois.edu/news/04/1117stadiums.html

http://news.illinois.edu/news/04/1117stadiums.html

http://www2.timesdispatch.com/news/2012/jun/07/9/tdmain01-redskins-training-camp-moving-to-richmond-ar-1971587/