(The Center Square) — Weeks later, after more details have been released regarding the $2 billion entertainment district deal between Monumental Sports and Entertainment and state and local governments in Virginia, economists maintain it’s a bad deal for taxpayers — though some components make it slightly less so.
Initially, a handful of figures were released to the public.
The total cost to build the entertainment district in the Potomac Yard neighborhood of Alexandria would be $2 billion. Monumental would contribute $403 million to the development and the city of Alexandria, about $106 million. The state would finance most of the remaining $1.5 billion through bonds to be paid back through revenues the district would generate, according to Youngkin.
Youngkin also said there would be no “upfront investment” to the commonwealth, the mechanics of which became a little clearer with more information.
“I think that’s what they were differentiating was cash on hand. They’re paying some cash payments up front, which…. is pretty standard as these deals go,” said J.C. Bradbury, professor of economics, finance and quantitative analysis at Kennesaw State University.
The “upfront investment” could also refer to rent Monumental will pay.
“Sometimes upfront funding comes from the private entity,” Bradbury told The Center Square. “Some of what the team owners will be paying in rent is going to cover some of their borrowing. The city and state will borrow on behalf of the owners, and the owners will have to pay rent off on some of that.”
That accounts for another $416 million that isn’t coming from taxpayers. Regardless, Bradbury still thinks the cost to taxpayers isn’t emphasized enough.
“There is no City or Commonwealth tax dollars being invested in the arena,” wrote Alexandria Mayor Justin Wilson in a January newsletter.
Wilson and others continually refer to the taxes the district will generate paying down the bonds (sometimes called tax-increment financing). Bradbury called the statement a sleight of hand.
“This doesn’t represent $1 billion of new revenue. People who are spending money at the development are people who otherwise would have been spending their money elsewhere in the community where tax revenue wouldn’t have been going to fund the development. So that represents lost tax revenue [for the taxpayer],” Bradbury said.
As for the economic benefits that will come from the district — 30,000 jobs and $12 billion in economic impact over decades — economists say those are vastly overestimated.
“I suppose you could use that figure if you count every last person… and stretch the definition of what you mean by a job… When people hear ‘30,000 jobs,’ they think 30,000 full-time, high-paying jobs and that’s just not the case,” said Chris Douglas, professor of economics at the University of Michigan-Flint.
“I think we get a misguided notion of how important sports are to the economy because we only see those venues on game days…. In terms of its contribution to the overall economy and total employment in the overall economy, it’s basically a rounding error,” Douglas told The Center Square.
