Pred Herring

What do you get when you cross professional sports and local government? As the current matter of the NHL Predators and their future in Nashville acutely demonstrates, you get a flight from rationality and clearheaded judgment. Take sensible public officials and civic leaders who care about the city, toss in pro sports and public money, stir until blended, and then stand back and watch emotional fantasy and wishful thinking crowd out facts, objective analysis and thoughtful public policy.

The latest pro sports taxpayer shakedown boils down to this: a group of businessmen buying a hockey team that already has one of the sweetest of sweetheart arena deals in pro sports but still cannot come close to turning an operating profit wants Nashville’s taxpayers to ratchet up the fructose. Specific details have been changing day to day, but the buyers’ have asked that the city let the team hold onto $4 million in sales taxes and seat fees it currently forks over. They have also suggested that taxpayers put several million dollars into capital improvements at the arena and, for good measure, grant parking concessions at a new downtown convention center (when and if that comes to be). If a deal with the city can be completed, the group, led by David Freeman of 36 Venture Capital, will consummate a $193 million deal to buy the Predators from Craig Leipold, who has owned the team since it entered the NHL as an expansion franchise in 1998.

The “save the Preds” rhetoric from ticket holders, newspaper editorialists and the Chamber of Commerce crowd is all too familiar and predictable to those who follow the world of pro sports urban extortion: without the team, downtown will deteriorate. A bad deal with a costly arena tenant is better than no deal with no tenant. Disappearing entertainment dollars will cost us in jobs, incomes and tax collections. Businesses will be less apt to relocate to Nashville, and we’ll be sending those already here the wrong message. Our trajectory into the ranks of world-class cities will be thwarted. The city’s economy will suffer a devastating blow. Losing the Predators, a City Papereditorial concluded last Friday, “would be crushing for Nashville.”

All of this might be compelling if there were much in the way of evidence to support it. Consider a few of the most commonly heard arguments for prying open the city’s coffers to keep pro hockey in Nashville:

A pro team stimulates not just economic activity at the arena but also large amounts of off-site spending. An analysis prepared last month for the buyers’ group by MZ Sports, a New Jersey-based consultant, points to a “study” by the Nashville Area Chamber of Commerce showing that “the Predators have generated cumulative local direct spending of $493 million since their inception,” which includes $369 million at the arena and $124 million elsewhere around the city. These impact numbers have been widely reported, but they turn out to be suspect. Chamber research director Garrett Harper says the estimate he developed and passed on to MZ Sports totals $369 million—the $124 million is part of it, not apartfrom it—so the consultants’ estimate of direct impact is off by $124 million.

But even the correct figure lacks credibility and objectivity. The chamber number is a statistical extrapolation of an old estimate of economic impact the Predators themselves peddled during their first year of operation, Harper tells the Scene. There has been no new, unbiased “study” of economic impact. Harper characterizes the new estimate of impact as “ ‘analytical’ in a very sparing use of the word.” Even MZ Sports president Mitchell Zeits says, “We couldn’t vouch for that number.” It’s no wonder that a 2002 paper in The Sport Journaltitled “Upon Further Review: An Examination of Sporting Event Economic Impact Studies” concluded that cities should view “with extreme caution any economic impact estimates provided by sports franchises.”

Pro sports teams such as the Predators make a meaningful contribution to a city’s economic growth and development. American cities have invested tens of billions of dollars in pro sports during the last couple of decades despite a lack of persuasive evidence for their benefits. Summarizing research on the economics of pro sports in a 2000 article in the Journal of Economic Perspectives,economists John Siegfried (of Vanderbilt) and Andrew Zimbalist noted the absence of any “significant positive correlation between sports facility construction and economic development.” They add that few areas of empirical economic research offer the “virtual unanimity of findings” encountered on this subject. They also point to evidence that sports teams and facilities in some cities can actually reduceper-capita income in host communities.

The Predators are a vibrant franchise that just needs some help from the city to thrive in the long run. A more credible prediction is that the Preds will continue to hover near the bottom of the NHL in attendance. In nine years, the team has become competitive on the ice, has invested $50 million in sales and marketing efforts, and has enjoyed a healthy high-growth, low-unemployment local economy. Even so, average attendance still fell short of 14,000 last season, and according to the team’s front office, the Predators’ operating red ink totals $27 million over the last two seasons (despite receiving more money in revenue sharing from the league than any other team) and $60 million over the last five years. Meanwhile, corporate support is dismal and dropping: corporate buyers last year accounted for just 35 percent of season ticket sales, compared to an average of 60 percent in other markets. Roughly 4,000 businesses owned season tickets during the team’s first couple of years; that number has since dropped by more than half. Among the 14 NHL games played last Saturday, the Predators—smack in the middle of local controversy that could mean the team stays or goes—filled a smaller percentage of seats in their arena than any other home team. New money from the city’s taxpayers will make the Predators’ operating bottom line look a little better, but it’s hard to see the result as anything but a franchise still on life support.