Thursday, March 5, 2009

MLS in Portland: Attacking a Straw Man

Once again this week the MLS to Portland idea is being attacked in an Op-Ed in The Oregonian. Earlier in the week William Glasgow had a thoughtful piece in which he expresses support only if the risk were fully born by Merritt Paulson. In general he was against it but for generally good reasons (he doesn't believe the net social benefit is worth the potential net social cost). Today's opinion, however, is disingenuous and uses a fictitious straw man to attack the proposal. Dave Lister latches on to a comment made by Paulson to the legislature that there would be 600 construction jobs and 300 permanent jobs created by a new MLS franchise in Portland. This was clearly a nod to the fiscal stimulus idea during the current downturn. The 600 are short term jobs during a time of excess unemployment, full stop. Mr. Paulson has been admirable in his restraint from talking about the overall growth enhancing aspect of an MLS team because he knows that the evidence for this is just not there.

Yet Mr. Lister in his opinion chooses to construct out of this a straw man that claims Mr. Paulson was claiming exactly that: the MLS team would be an engine of growth. [He also have some seriously convoluted logic claiming that Sam Adams, an MLS supporter, is weakened by scandal and that makes an MLS deal more likely. Say what?] Claims that saying 'no' to previous public goods projects would have funded the Sellwood Bridge replacement and other more worthy endeavors is simply disingenuous. Bonds used to pay for the PGE park renovation and the Convention Center, for example, are still being serviced in large part by operating revenues. The Sellwood bridge will bring in no revenues, so the two are not comparable.

So what does Mr. Lister's prefer? Well, private enterprise of course. In his mind the city should give the $85 million to small businesses and they would be happy to hire folks. So let's pay small businesses to employ people - that's the free market at its best! Seriously, this plan is not about long term jobs it is about the livability and vibrancy of the city. Small business will thrive in Portland if it is a place people want to be, to spend time and where businesses want to locate. I believe that MLS will help enhance the city. I would, though, I am a huge soccer fan. Those who don't like soccer (and have any idea what they are talking about) will probably disagree and this is where the debate should be, not on tired fallacies of engines of economic growth.

The facts are that the MLS, after some early fits and starts, is now a solid sports league with stable profit-making teams. This is evidenced by the explosion in franchise fees, now at $40 million, up from $20 million a few years ago, the number of purpose built stadia, and the steady rise in the quality of play. Recent franchise additions have thrived - Seattle has already sold 20,000 season tickets before they have even played their firs MLS game - partly because tickets are reasonably priced. Smart business people are investing lots of money because soccer, the most watched sport in the world, has huge growth potential not just in domestic markets (like the NFL, for example) but in worldwide markets.

Anyway, as the least happy city in the US, don't you think we could use some more entertainment around here??

[Note: The Miami bid has been pulled, leaving only four bids left (out of seven initial bids) and few serious contenders. The probability of landing a team if a deal can be reached with the city, therefore, is very high - almost a certainty.]


Todd said...

I'm not sure where you're getting the notion that the MLS is profitable. According to a recent Forbes article, only three teams made a profit last year:

The three profitable teams were in LA, Toronto, and Dallas, all much larger markets than Portland. Some of Lister's arguments were poor and he brought in too many unconnected beefs with City Hall. Nonetheless, it's pretty damn speculative that fees generated from a Portland MLS franchise will actually be anywhere near enough to service the debt payments over 30 years.

Patrick Emerson said...

Well Forbes was guessing as MLS does not release data, and I was going by MLS statements. But you are right that profitability is a question - though asset values have risen fast. The heart of the matter for the city is revenues and this means the Timbers must not fold and must attract good crowds. Will they be a success here? I can't say for sure but the Blazers did well originally, and I think that bigger markets have the drawback of competition with other teams. The Timbers will have a soccer specific stadium that is centrally located and extremely well connected to transit - distinct from almost every other MLS stadium that has been built that are generally way out in the suburbs. So I am pretty confident that an MLS team would do well, but I am well aware that this may be wishful thinking on my part.

There is a risk/reward tradeoff to everything. As I have said before, how you feel about the balance I think is largely a function of how big a reward people think MLS is.