Sports Business

Studies praised, panned in convention, stadium debate: Proponents say marketplace provides more evidence

January 31, 2005

Numbers may well tell the story about the need for a larger convention center and new stadium in Indianapolis, but the question remains: Is it fact or fiction?

Even as proponents work to sell lawmakers on a plan to expand the Indiana Convention Center and replace the RCA Dome, some skeptics aren't sold on all the information used to make the case.

"There are a lot of questions [decision makers] ought to be asking," said Rick Eckstein, a Villanova University professor who has studied publicly funded stadium projects across the country. In fact, he has questions of his own after reviewing economic impact projections for Indianapolis. "I saw some interesting mathematics there."

Eckstein and colleague Kevin J. Delaney, a Temple University professor, looked over the materials to prepare for a trip here Feb. 2-3. They are scheduled to make three public appearances to discuss their 2003 book, "Public Dollars, Private Stadiums: The Battle Over Building Sports Stadiums."

They were particularly interested in a December report from consulting firm PricewaterhouseCoopers that projected a 39-percent increase in Indianapolis Coltsrelated visitor spending at a new stadium.

Especially since seating capacity is only expected to increase 9 percent.

"How does it go up that much?" Delaney asked. "It's hard to follow."

"It may be explainable," Eckstein added quickly, "but when you have such a discrepancy, it raises other questions. Are they going to raise ticket prices?"

That level of detail isn't included in the 30-page report delivered to the city's Capital Improvement Board last month, but lead consultant Rob Canton said researchers factored in such variables. The study doesn't reflect the particulars, he said, because the consultants agreed to keep the proprietary information they used confidential.

Ticket and concession prices may well increase, he said, but there are other sources of income, too. That's one of the points of building a new stadium.

"There are more revenue-producing elements in a new, state-of-the-art facility," said Canton, director of PWC's hospitality and leisure practice. "The RCA Dome is economically obsolete."

Even so, Delaney and Eckstein say questions about the data and methodology used to compile commissioned reports should give observers pause.

"These [studies] are strategic attempts to sell a project. I don't think I've ever seen one come out negatively," Eckstein said.

He mentioned a report released this month by the Washington, D.C.-based Brookings Institution that criticized the socalled convention center space race.

That research, conducted by longtime industry skeptic Heywood Sanders, indicted communities for expanding centers even as the once-red-hot convention business cools. It also lambasted the studies cities use to justify their decision.

"These reports need to be tempered a little bit," Eckstein said. "But they tend to be repeated over and over."

Indeed, results of the Indianapolis studies-addressing the impact of both the stadium and the convention center expansion-have been trotted out as proof the $900 million project is worth the investment.

Still, CIB President Fred Glass said such studies aren't the only evidence.

"It is certainly important-it's what persuaded me that this was the right thing to do," he said. "But it just confirmed what our experience has been.

"It's indisputable that our [convention center] has the highest occupancy rate in the country. It's indisputable that two of our largest and most lucrative events are leaving. ... The marketplace is telling us we ought to do this."

Proponents built the case for a convention center expansion before determining a new stadium would be included in the project. And even if those projections aren't firm, the proposal has believers, anyway.

"Most of those studies are grossly exaggerated: They multiply spending out to the point that a little old lady in Beech Grove is getting some of it," said Republican state Rep. Mike Murphy, R-Indianapolis, who nevertheless is looking for a way to help pay for the stadium. "But the intangibles are just as important."

Like keeping the Indianapolis Colts-and the city's status as a major-league city. "That perception matters," concurred fellow GOP Rep. Luke Messer, R-Shelbyville. "It would be devastating for our state to lose an NFL franchise." Delaney has heard that before. "The power of that argument is, it's not quantifiable," he said. But that doesn't mean it isn't justifiable. "You can't put a dollar amount on the importance of football in Indianapolis," said David Carter, a principal in The Sports Business Group, a Los Angeles-based consultancy. "It's like they say, 'Where you stand depends on where you sit.'"
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