Preds release full economic study

Bridgestone Arena report author addresses substitution effect, cites other work highlighting venue's value

As incentive negotiations continue between Metro officials and Nashville Predators executives, the team and its arena management arm have released the full economic impact study that claims a $410 million economic impact.

The 33-page report from economist Bob Leib of Milwaukee's Leib Advisors fleshes out the high points announced last week in an executive summary presented to the Metropolitan Sports Authority.

In addition to those highlights — $73.7 million in sales tax revenue, more than 2,300 jobs and a high proportion of out-of-town and out-of-state ticket buyers — the study projects what would have happened had the Preds left for southern Ontario in 2007, leaving the arena without a tenant. According to Leib's projections, a $30.3 million operating loss would have been borne entirely by Metro government, an $18.8 million loss in rent and sales taxes and 1,400 "direct and indirect jobs."

Leib's work — it's available for download here — also anticipates the most frequent criticisms of studies such as his. Among those is that they do not account for the so-called "substitution effect," which opines that dollars spent at "big events" such as professional sports and concerts would be spent on other entertainment options if there were no concerts or sports available. Leib says that, while 30 percent of Predators fans who live in Metro would likely substitute that spending, the number of overnight visitors and day trippers would decrease. In addition, unlike many other studies, Leib did not factor in the salaries of the Predators' players or the spending done by visiting teams when they play at Bridgestone.

Further, Leib notes that, in part because of the city's relatively stable economy, central location and the siting of the arena itself, Nashville has been cited as a sui generis situation for public-sector spending on professional sports venues.

"There have been several frequently cited studies indicating that the economic benefits of publically funded arenas are overstated. However, recent academic research, such as the study conducted by Charles Santo of Portland State university, that utilizes more current data and case specific methodology, suggests otherwise," the study notes. "His research highlights Metro Nashville as a case study which demonstrates the net economic value of sports teams and positive rewards resulting from the expenditure of public funds. In particular, a study conducted by the University of Memphis in 2005 concluded that, in contrast to earlier studies which ignored city-specific economic characteristics, there is a significant positive relationship between sports related variables and regional income share for Nashville."