New York Games and Tradition Center: A Positive "False Begin".


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New York Games and Tradition Center: An Unequivocal "False Begin" Rajasekharan Pazhaniappan Erica Shinohara Jessica Solid April 30, 2005 Diagram Extent of our study Review of New York Games and Tradition Center (NYSCC) Contentions for/against stadiums Key suppositions and Approach
Transcripts
Slide 1

New York Sports and Convention Center: A Definite “False Start” Rajasekharan Pazhaniappan Erica Shinohara Jessica Strong April 30, 2005

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Outline Scope of our study Overview of New York Sports and Convention Center (NYSCC) Arguments for/against stadiums Key suspicions and Methodology Cost and Benefits of the venture Synthesis Conclusions

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Scope of Our Study Brief correlation between NYSCC Developer report and the NYC IBO investigation Critical examination of suppositions made for Cost Benefit calculation Analyze the presumptions\' effect made on the reported net advantages Limited to City of New York’s point of view

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Jets’ Background Information Since 1984, home recreations held at the Meadowlands Stadium in New Jersey (imparted to the New York Giants) 2004 establishment esteem = $567 million Current limit is 80,242 seats Average participation from 1983-2004 was 65,731 In 2003, normal ticket cost was $66 per ticket; $368 per amusement for a group of 4

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Hudson Yards Project Background Multi-reason office development and redesign Construction of new 75,000 seat outside stadium, presentation and diversion focus Expansion and remodel of existing Jacob Javits Convention Center; 1 million new sq.ft. Expansion of No. 7 tram line

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Current utilization of range

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Future arrangements

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Proponents contend that stadiums convey monetary improvement to urban communities Increased income through tourism spending, new occupations, and duties City turns into a “big-league” city through reputation and new organizations Benefits gather and balance the appropriations so there’s no expense to the city after some time

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However, depreciators say there are distinct expenses with freely sponsored stadiums Benefits and multiplier impacts are typically overestimated Gross incomes spent at stadium are substitutes for other amusement Future prominence of group is unverifiable Opportunity cost: cash could be spent to expand social welfare in different ways

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Key Assumptions in Calculating NPV Number and sorts of occasions Attendance Type and blend of guests Ticket and occasion costs Multiplier impact Timeframe and rebate rate Number of employments and duty income created

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Event & Attendance

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Visitor Type and Mix

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Ticket and Event Prices

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Multiplier

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Construction Lagged tax break from development Operation Lagged tax cut from operations Timeframe and Discount Rate 2006 2009 2010 2015 2036 2043 Discount Rate = 6%

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Jobs and Tax Revenues Generated

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Methodology

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PV Benefits $399 million PV Costs – $306 million NPV $93 million The Basic Math IBO

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Challenging Cost Assumptions Costs are terribly downplayed: Opportunity Cost – inescapable property assessment Cost of extra open administration Costs of extra foundation Encumbrance or decrease in City’s holding limit

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Challenging Benefit Assumptions Benefits are unfathomably exaggerated: Optimistic stadium participation Number of works – not incremental Number of occupations and nature of occupations Multiplier – no thought of spillages Incremental Property Tax income development rate - hopeful

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Synthesis Scope – Reexamining pivotal suppositions: Opportunity costs Constant income development of 2.5 % Discount rate of 6 % Stadium participation Number of articles Incremental property charge Multiplier

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Synthesis - Actual Base Case

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Synthesis - Opportunity Cost Opportunity expense of predestined property charge income

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Synthesis - Revenue Growth of 2.5 % Business cycles mean development and subsidence

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Synthesis - Discount Rate

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Synthesis - Stadium Attendance

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Synthesis - Number of Expositions

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Synthesis - Incremental Property Tax

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Highly Sensitive Synthesis - Multiplier

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Combined Synthesis - Realistic Scenario

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Conclusion Developers significantly misrepresent the advantages to the city Including a tradition focus does not balance net misfortunes The venture is a channel on present and future era of city citizens Stadium legislative issues Alterna

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