The Economic Impacts of a New Baseball Stadium in Oakland
We estimate that a new baseball stadium for the Athletics would generate $3.05 billion of economic impact for the residents and businesses of the City of Oakland over the first 10 years of operation. The analysis does not take into account the location of a new stadium within Oakland, and therefore focuses on the economics of the expenditures on and within the stadium itself. If a new stadium were to be located in the downtown area, there would be additional benefits in the form of increased spending at local businesses and the opportunity for adjacent development.
The impacts calculated below include direct spending by the franchise as well as the indirect benefit of wages that are re-circulated through the economy, and they are presented in constant value terms at the first year of stadium operation. We calculated the $3.05 billion impact using the following inputs:
1. Construction Spending – $768 million in economic impact
A large impact of a new stadium stems from its construction. Unlike other stadium projects around the country, a new Oakland stadium would be entirely privately funded, with no taxpayer contributions. With an estimated cost between $600 and $700 million, we use the
mid-point of $650 million to run our analysis. Other sports stadiums built around the country show that approximately 25% of total costs are “soft costs,” referring to expenditures on planning and design. Because firms located outside of Oakland may perform many of these tasks, we do not include them as local economic impacts.
The remaining 75%, or $487.5 million, in stadium costs will go toward “hard costs,” which are much more directly tied to Oakland through the labor needed to construct the stadium. We estimate that this spending will create approximately 2,000 construction jobs over the two-year construction period. The total economic impact is derived from $487.5 million in direct construction expenditures, and an additional $254.5 million in indirect multiplier effects that are created through inter-industry effects and from workers spending their wages within Oakland. To arrive at our $768 million impact, we split these total impacts over two years of construction and use a 2.3% interest rate to make them comparable to year one spending within a new stadium.
2. Day-of-Game Attendee Spending – $1.54 billion in economic impact
New ballparks around the country have reported a significant increase in day-of-game revenue through a combination of attendance increases and greater per patron spending. While these expenditures represent a financial benefit for the A’s, they are also largely new dollars flowing into the Oakland economy from non-Oakland residents. An analysis of new ballparks dating back to 1999 shows that gate receipts grow by approximately 2x in the first year of operations of a new stadium while concession spending increases at an even higher rate.
To translate this spending into an economic impact, we take historical spending on tickets, concessions, merchandise, and suite rentals at the Coliseum as our starting point. Using the experience of other Major League Baseball teams in new stadiums, we can estimate spending patterns at a new Oakland stadium. We assume that 20% of the spending at a new stadium would have occurred regardless of the A’s existence in Oakland. We exclude this portion from our calculations. Because day-of-game spending supports baseball activities, such as player salaries and team operations that are less likely to have a multiplicative effect, we apply a conservative 1.2 multiplier to reach our $1.54 billion estimate.
3. Ballpark Operations Spending – $742 million in economic impact
In a new stadium, the A’s will make considerable local investments in non-baseball staff, contractors for stadium operations, and marketing of the team. Spending on these items was $43 million in 2015, and we expect these expenditures to grow to above $62 million annually in a new stadium. These dollars will pay the salaries of some local workers while other expenditures will be revenue to local businesses. We apply a conservative 1.2 multiplier on this spending to reflect that some of these expenditures occur across the region, but outside of Oakland. The annual spending numbers are then discounted back to the first year of operation at a 2.3% interest rate to arrive at the $742 million total impact.