Fatal Flaw in Economic Impact Analysis of Angels Baseball Revealed

From the Orange Juice Blog: 

1. Tom Tait’s Intuition

Anaheim Mayor Tom Tait has long had this feeling that something deeply wrong about the study submitted showing the economic impact of Angels Baseball on the City of Anaheim — the one claiming to show how much each adult and child spends in Anaheim outside the stadium while attending a game.

(We specify “outside the stadium” to see how much money is injected into the City’s economy; money spent inside the stadium, with some relatively small exceptions that don’t depend on spending beyond admission tickets and parking, belongs entirely to the baseball team — and doesn’t circulate through Anaheim’s economy.  The profit primarily enhances the economy of where Arte Moreno lives, in Arizona.)

Tait hasn’t been shy about expressing this intuition from the dais.  It doesn’t make sense to him that the average fan living in Anaheim spends about $11.50 outside the stadium but within Anaheim each time they attend a game.  It doesn’t make sense to him that the average person coming to the stadium from outside of Anaheim spends about $14.25, nor that the rare average person coming from far enough away to make an overnight trip of it is spending about $103 outside the stadium but within Anaheim.  But the results of the study are the results — and one has to respect them, right?

Not quite.  It’s legitimate to explore and test those assumptions.  People doing studies often can’t measure things directly; they have to do the best they can and argue that those assumptions make sense.  And so, during Tuesday’s City Council meeting, Mayor Tait tried to get at exactly what sort of survey had been done to establish that fans were spending that much money outside of Angels Stadium but inside the city.  And he finally got a cogent answer.

None.  The researchers did no study of Anaheim itself before reaching this critical conclusion.  It was based on studies of fans attending games in other cities.

That matters because Anaheim is not like other cities.  I don’t mean that in some global and fuzzy “Anaheim has the bestest fans in the world” sense.  I mean that, literally, it is not like other cities.

It’s a matter of simple geography!  Just look at a map!

2. Anaheim is Long and Skinny and Its Stadium is on the Very Edge of Town

That section heading sort of gives away the game, but let’s literally look at a map anyway.  Here — let’s use the one posted inside the City Council chamber itself.

If you go to a Dodgers game and eat outside of the stadium, you’re probably still in LA. If you go to an Angels game, where do you eat?

Let’s take a closer look at the “baseball stadium” portion of the map.

Angels Stadium is at the bottom right — the circle towards the right end of the darkish pink area, not in the purple part.

For the benefit of anyone who may be unfamiliar with Anaheim — such as, perhaps, the people paid big bucks out of the public treasury to do an economic study of the impact of Angels baseball on the city’s economy – that big diagonal freeway west of the stadium is I-5 and the vertical freeway just to the left is SR-57.  Where they come together just outside the photo, you’d find a third freeway, SR-22, which is not in Anaheim.

Why does “not in Anaheim” matter?  Because the sales tax, hotel (TOT) tax, etc. from that big white areadoes not go to Anaheim.  It goes to someone in Orange County, sure — but not Anaheim.  That’s important because Anaheim is the place being asked to foot the bill.

The small brown dot in the center of the gold circle is the stadium. The larger the periphery around it gets, the more of the land it covers is not in Anaheim — initially, Orange to the east and Garden Grove to the south.

Let’s take a bird’s eye look at the whole region:

The map of Anaheim imperfectly superimposed over the Google Map shows the Anaheim Police Department’s four districts. The black star is the stadium; the two yellow circles show a 5-mile and 10-mile radius around it.

So now you can ask yourself: how likely are those attending an Angels game to eat outside of the stadium but still in Anaheim?  If they’re looking to eat within a five-mile radius of the stadium, not very likely.  If they’re looking to eat within a ten-mile radius, far less so.  And, of course, some people will eat further away than that.  (Yes, there are potential expenses beyond eating, but except for street parking a similar analysis will apply.)

A scrupulous analysis would look at the range of restaurants, how many cars usually use each exit at this time of day, how many cars use the Gene Autry Way exist from which one passes pretty much nothing edible on the way into the stadium, etc.  Or there’s another sneaky way to find out what people do: ASK THEM DIRECTLY.  Create a questionnaire, publish a draft, post it to get feedback, and then assign a survey company blind to the desired result to interview maybe 50 people per game.  Then you’d have a reasonably good idea of how much visiting fans stimulate the local economy.

But that’s not what our pricey consultants did!  (More on what they did do below!)

The Angels Stadium deal may be very good for the people of Orange or Garden Grove or Placentia or my beloved Brea, where people might stop to buy gas en route to the game.  (City motto: “come check out our Mall!”)  It may be nice for the cities of Fullerton or Huntington Beach or Irvine or Brea — come check out our Mall! — where we may eat before we go to the game.  But except for people driving to the stadium on surface streets from the north or northwest, there’s not much reason to expect that they’re going to stop and spend in Anaheim itself on the way to or from the game — especially because that area is crowded on game gays — unless they have a particular hankering to go to a particular restaurant.

This is very much unlike other cities — Los Angeles, San Diego, Oakland, San Francisco, etc. — hosting stadiums.  If you were compared Angels Stadium to, say, Minute Maid Stadium in Houston, it would probably be fair to compare how much extra money is generated in Orange County overall to how much is generated in the City of Houston.  But if you’re sitting on the Anaheim City Council — and if you’re trying to represent the people of Anaheim — then comparing Anaheim to Houston in terms of tax revenue generated for the City is puzzling.

Or — it’s not “puzzling” so much as absurd.  Why?

The money spent outside of Anaheim does not go into Anaheim’s General Fund.  Is that clear enough?  IT DOES NOT BENEFIT ANAHEIM.

So what did the researchers do instead of the sort of survey of fans that I suggest?

If I understood correctly, they did not study Anaheim directly at all – but simply created a model for Anaheim based on data for a few places like Houston.  (“Close enough for government work!”)

This is bad!  What economic benefit baseball brings to the City of Houston is not a good guide of what will come to the City of Anaheim.  Why is that?  Take a look at this map — with the “A” pin representing Minute Maid Stadium, home of the Astros, and with the boundaries of the City of Houston superimposed:

Map of Houston showing baseball stadium (at pin “A”) and borders (in gold).

Do I need to spell this out?  If you are going to a Houston Astros game and want to have dinner, you are pretty much going to have that dinner within the boundaries of the City of Houston!  And that isnot true Angels fans and dining in Anaheim.  And when the promised economic benefits from an Angels deal don’t materialize – this will be one big reason why!  (That’s OK from the Council’s perspective — the argument’s purpose is just to give the Council political cover, not to accurately predict the future.)

Of course, as stated above, there is an exception: maybe people just really want to go to a restaurant in Anaheim.  And it’s true that there are some restaurants that people absolutely do target as their dining destination.  Of course, if you want to predict how well Anaheim businesses will do overall from just one such restaurant, you should know that there is a catch!

3. There is Only One Catch …

One restaurant in particular that does do really well on game days is actually on the grounds of the stadium parking lot area itself  — you know, the 155-acre parcel potentially being leased to Arte Moreno personally for $1/year – although as I read the proposed MOU all of the revenue from this restaurant would go to Arte Moreno rather than to the City!

That restaurant is called “The Catch” — sometimes known as “Curt Pringle’s second office,” he dines and does business there so often.  And in fact, at the September 3 Council meeting — and at the September 24 Council meeting and at the tiny “Keep the Angels” rally at City Hall prior to the Sept. 24 Council meeting — the manager of this restaurant was trotted out to give speeches about how important the Angels were to his business.  And, the example of The Catch was cited by members of the City Council Majority repeatedly to justify why keeping the Angels was so important to Anaheim’s business community.

There is only one catch to this argument: There Is Only One “Catch.”

OF COURSE the Angels baseball games are a great boon for The Catch – THEY ARE LOCATED INSIDE THE FREAKING PARKING LOT ITSELF!  How many other restaurants have valet parking in a blocked off area within the Stadium Parking Lot?  I think that it’s roughly “none.”  There is only one “Catch” — and you can’t reasonably generalize from its experience to that of other restaurants!

If trying to estimate how much income baseball spending will bring to Anaheim restaurants based on what happens in Houston is a 7.5 on a scale of ten point scale of absurdity, trying to estimate that benefit based on the economic effect on The Catch itself has to be at least a 9.8. But look at the video, friends — that’s really what the Council Majority — everyone but Mayor Tait — was doing.

And, of course, the irony is that what money we get from The Catch won’t benefit the City either, just as if it were a restaurant located in Westminster.  Here’s a proposal that I’d like to see written into the lease: the City gets to own all restaurants within the 155-acre parcel, paying Arte Moreno rent of $1 per year for the lot of them.  THEN Anaheim taxpayers would at least be profiting from the deal.  We can even keep the same restaurant manager — he seems like a nice guy — and the same employees.  And the current owners can set up a new storefront around Magnolia and La Palma – freeway close — and presumably still benefit from the great boon Angels baseball offers to the City overall.  (That’s the theory, right?)

By the way — Kris Murray said from the dais on Tuesday that Arte Moreno’s character was being assassinated in the local blogs.  While the Murrbot doesn’t seem to have the sort of crush on me that Lucille Kring has apparently developed, I have a feeling that she may have been referring in part to the work of your humble author.  So let me make this clear: I cast no aspersions on Arte Moreno or on the owner of the Catch.  Each of them, so far as I know, are just good businessmen taking advantage of a Council that seems intent on serving the interests of Curt Pringle, Todd Ament, SOAR and a few others to the exclusion of everyone else.

I’d love it if Arte Moreno responded to the overture by Charlie Black by saying that the deal was too generous to him and would smear his reputation if he accepted it, so it should be scaled back — but that would be too much to expect of most businessmen, especially when they don’t even live in the state and can tune their critics out.  He’s one of the people who will profit — although probably not nearly as much as the entity (commonly suspected to involve Curt Pringle or others in the Pringle Ring as agents or part-owners) — and if he has made a deal with someone to sell the rights to them, then he is doing something bad.  (So don’t do that Arte, not even tacitly.)  But that doesn’t make him a bad person.

The bad people are the people making it easy for him to do it.  Four of them are sitting on the Anaheim City Council — and a bunch of others are paid City staff, like City Attorney Michael Houston and his former mentor (can you BELIEVE that?) former San Diego Padres President Charlie Black.

I’m besmirching Murray’s reputation, nor Moreno’s — but I’m doing so only by writing honestly about what she’s doing.

4. Responses to the Big Reveal from the Podium

I truly thought that Tom Tait might fall over sideways when he learned that the study on which a major argument for the proposed MOUs were based — the beneficial economic income for the City of Anaheim’s General Fund — was derived from studying very dissimilar cities like Houston rather than Anaheim.  Whether he’d fall over laughing or crying or both, I can’t say.

But the Mayor kept his composure.  He pointed out that this pretty much bolstered his intuition that the judgment about how much money fans brought into Anaheim’s coffers was deeply flawed.  The Murrbot had been attacking him relentlessly for raising his concerns about the proposed MOU in part by talking about the great economic benefits of the stadium proven by this solid scientific study — why, just consider the example of THE CATCH! – and for a moment I thought that she actually understood that her contention that this was a sound study of economic impact had a direct hit from a powerful truth missile.

I haven’t reviewed the video — I don’t really have time — but from my second-row venue it looked to me as if the Murrbot faltered for a moment.  Did her programmer Pringle himself not know that the study was a bunch of bullflop?  Did he know and for some reason just not prepare her for this sort of challenge?  What we she supposed to do?  THEY HADN’T EVEN STUDIED ANAHEIM AT ALL!  HOW CAN THIS STILL BE CONSIDERED A STRONG AND RELIABLE SCIENTIFIC STUDY???

I thought that I saw the Murrbot wobble for a moment.  It looked like the Murrbot couldn’t remember all of her programming — an even greater problem than her never having understood it in the first place.  But then, during the course of a long and unpunctuated sentence, the programming finally kicked in.  If Pringle had just neglected to tell her this little tidbit, it was obviously the right call.  She had nothing to rely on other than the direct script that she had been given.  And so — she recited from it.

The Murrbot assured us that this was an excellent study, very reliable, top-drawer, undeniable in its conclusions — soup sort of stew along those lines, the details of which I could not recall because I was inwardly weeping for Kris Murray’s robot essence.  (Repairs to a CPU can be expensive.)  She knows “good” and this study was “good” and shut up.  The end.

Now, though, Murray’s going to have to explain — over and over again during the next 400 or so days before the next election — why she thinks that a study of Angels’ baseball’s economic benefit to Anaheim that is based on a model from cities like Los Angeles and Houston without reference to Anaheim itself makes any kind of sense.

And of course there’s the follow-up question — I’ll be sporting and put it right out front so that her programmers can get started on it — which is this: when she tells us other things about economic benefit to Anaheim, are they also based on nothing more than the ability to parrot Curt Pringle’s bullshit as directed?  In other words, is this disaster for her credibility an aberration — or is really just business as usual?

Oddly, I’m starting to think that the woman among the majority who may be the first to figure this out is Gail Eastman — the one who stands the least to gain personally from being part of the Pringle Ring.  If Eastman turns, what will Jordan Brandman do?  He’s so rarely without the cover provided him.

And let’s just internalize one final lesson from last night.  We only learned this incredibly important factabout the model being used to predict the economic benefits to Anaheim for one reason: because Tom Tait asked City Staff the right question.  And that makes Jordan’s proposal to keep Tait from putting these sorts of concerns onto the agenda really, really, REALLY bad.

Would Jordan prefer that we didn’t know about this travesty?  Because if he had already gotten his way and passed his Pringle-crafted proposal a month ago — we wouldn’t!  WE WOULD NOT KNOW.

How’s a court going to feel about that?