Wednesday, October 31, 2007

Scholarship vs. a study for Ratner: the contradictions of Professor Zimbalist

Andrew Zimbalist is one of the country's leading sports economists, but his performance is far less credible when it comes to paid work for Forest City Ratner, where he seems to be contradicting himself.

As a benchmark, consider an excerpt (below) from the essay "Sports, Jobs, and Taxes: The Real Connection," which he co-authored with Roger G. Noll.

The chapter is part of Sports, Jobs, and Taxes: The Economic Impact of Sports Teams and Stadiums (full text!), the 1997 collection of essays Noll and Zimbalist edited.

Zimbalist and Noll wrote that "promotional studies" often introduce faulty assumptions, such as that "a stadium does not impose additional, security, infrastructural, or environmental costs on the city."
(Emphasis added)

Zimbalist on AY

But consider Estimated Fiscal Impact of the Atlantic Yards Project on the New York City and New York State Treasuries, the updated June 2005 report Zimbalist did (with no peer review) as a paid consultant for Forest City Ratner.

He asserts his work is credible:
Supporters of sports facilities invariably have produced reports from hired guns that claim handsome economic benefits. In my view, these reports are performed with a faulty methodology and make unrealistic assumptions.

But consider this passage:
FCRC has made an initial estimate of the city’s operating expenses at Atlantic Yards. Based on conversations with former budget officials, FCRC concludes that the increment in fire and police budgets would be negligible.
(Emphasis added)

However, the New York City Independent Budget Office (IBO), in its September 2005 Fiscal Brief, estimated annual police overtime costs of $1.7 million for 45 Nets games and suggested additional costs for other events.

Maybe that's not too much in terms of the overall budget, but the willingness to ignore such numbers is, according to Zimbalist the scholar, a hallmark of "promotional" budgets.

An independent expert?

I've commented that Zimbalist didn't even put the statement in his own words and wondered if he believed it. The AtlanticYards.com web site describes Zimbalist as "an independent expert." In this case, the evidence suggests his expertise was compromised by a lack of independence.

In May 2004, Forest City Ratner executive Jim Stuckey told (p. 122-23) the City Council that the developer was not responsible for the study:
It is actually Andy Zimbalist’s report. And I should make that clear because we retained Professor Zimbalist because we wanted somebody who historically have [sic] been against doing arenas and stadium [sic], because it was our view that we wanted to get the honest answers about this project. Not that we wanted to just hire a consultant who would sweep something under a rug, or who would just give us the answer that they expected us to hear....
So let’s just start with that from the beginning. It is really not our report, it is Professor Zimbalist’s report.
[Errors in the transcript are probably those of the transcriber.]

Stuckey’s claim, however, was undermined by Zimbalist’s acknowledgment that he relied on information supplied by the developer:
Many of the numbers used in this report concerning Nets attendance, ticket prices, construction costs and other items come from projections done by or for FCRC. I have discussed these estimates with FCRC and they seem reasonable to me.

Did the numbers about security costs seem reasonable? How could Zimbalist write a "promotional report" when he knows better? It's brutally weird.

"Unlikely" speculations

Zimbalist wrote in his report:
Although the MOU [Memorandum of Understanding] refers to the possibility of additional optional contributions from the city and state, it seems unlikely that such payments would be made and, in any case, it would be entirely speculative to assign a dollar figure to them.
(Emphasis added)

Why did Zimbalist speculate that it "seems unlikely" that additional payments would be made?

Well, the city has already more than doubled its contribution without even addressing the optional "extraordinary infrastructure" payments contemplated by the MOU.

Given that increase in the spending announced in the MOU, it now "seems unlikely" that additional payments would not be made. Zimbalist appears to have embraced the "unrealistic assumptions" he criticizes in others' studies.

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