All this talk about the economic impact of the $20 million that the NSC is asking for got me really curious about the economic impact study itself.* I went to the NSC website and started looking around. On their bond page, I found something described as the Economic Impact Analysis. I was really excited, because I thought this would help answer all the questions I had about where the NSC was coming up with the $20 million annual impact figure.
Alas, my questions were not answered and, in fact, there is an awful lot of important information that was left out of the “analysis”. To be fair, it appears to be presentation slides and is not, in fact, the entire “analysis”. Nevertheless, I feel confident that the full analysis that was done (at least as represented by those slides) still excludes a lot of meaningful information.
1. The slides show only the fiscal impact that would occur if the bond passes. There is no information about the fiscal impact of the NSC if the bond does not pass. In order for taxpayers to determine if this is a wise use of our tax dollars, we must have that information.
2. The “analysis” is not a net analysis and does not take into account the fact that increased spending on NSC admissions will lead to decreased spending on other things. It must be assumed that people have a limited entertainment budget; i.e. if they spend more money going to the NSC, they will spend less on other entertainment — like going to events at the GSO Coliseum. This is completely irrelevant to the NSC — they want you to spend your money there, but is very relevant to the citizens of GSO, especially since we are paying for the operation of the Coliseum. If improving the NSC means that people are going to spend less money at the Coliseum, does it make economic sense to spend taxpayer dollars to encourage that?
3. Now, here’s what I was really looking for, the meat of the analysis — the inputs. What ticket price does the NSC expect to charge once the improvements paid for with the bond money are made? What increase do they expect to see in visits? Unfortunately, this aspect of the analysis was handled extremely poorly. Dr. Brod assumes that attendance will grow at a straight 5.2%/year and revenues at 4.2%/year. But this is a bizarre assumption.
I say bizarre because it implies that the improvements to the NSC will make no difference to attendance or revenues. If the improvements led to increases in attendance/revenues, then those increases would not occur in a straight line, but would happen in jumps as the various stages of the project were completed. You might even see a dip in attendance after an initial bounce after the first wave of interest wore off.
The concluding remarks says “Reflect growth due to expansion, not price changes”. So it seems Dr. Brod is admitting that he is not allowing for any change in ticket price. But with a large expansion in the facilities will come a need for a (perhaps sharp) increase in ticket prices. That increase in ticket prices will have a negative impact on visitation (not necessarily a net negative impact) and would complicate the analysis.
Nevertheless, assuming that ticket prices will not be increased is shockingly unrealistic. If ticket prices do not increase to pay for the increased expense of running the expanded facility, who do you think is going to be on the hook for those costs?
* Since leaving my job at the Bureau of Economic Analysis, it is not often that I get to delve into the nitty-gritty of this type of analysis — and it is really pretty fun!!
PS There has still been no discussion that I’ve heard as to whether this expansion is actually good for Greensboro. The NSC is going to expand parking — they need to, especially if they expand the facility, but how will that impact the neighborhood? How much are ticket prices going to have to rise? Will it become unaffordable? These are important questions which no one is asking. There seems to be an assumption that the NSC is “nice” and “well-managed” and therefore the projects they are interested in doing are both worth the price they are asking us to spend and worthwhile for the city.