New MMAC study touts jobs to be created by new arena

As the Wisconsin Legislature prepares to give final consideration to the proposed $250 million in public financing for a new arena in downtown Milwaukee, a new economic impact paper by a prominent Marquette University economist found that the Milwaukee Bucks’ proposed sports and entertainment district could yield approximately 2,100 permanent non-construction, non-arena jobs.

The jobs would be on top of the 14,000 construction jobs projected for the development by the construction group Building Advantage, and the sports and operations jobs at the arena that would be created and maintained by keeping the Milwaukee Bucks in town.

Tim Sheehy, president of the Metropolitan Milwaukee Association of Commerce (MMAC), which requested the study, said the new analysis reinforces the dramatic impact a new downtown sports and entertainment arena would have on the metro Milwaukee region in both the near and the long term.

“For months we have asserted that whether you’re a sports fan, a concert goer, a construction worker, a developer or a state or local taxpayer there is a significant positive impact from a catalytic project like the arena and its surrounding development,” Sheehy said. “This new Marquette University analysis adds just one more layer of credibility to that claim, and draws the picture of the regional benefit of this project into even clearer focus.”

In the paper, “Cities, Sport Arenas, and Redevelopment: The Case of Milwaukee and the Arena District Redevelopment Plan,” Anthony Pennington-Cross, chair and professor of finance at Marquette, looked at the proposed arena development and its impacts based on the projected number of square feet planned for retail and office space, apartments and the Bucks’ practice facility. Pennington-Cross emphasized that his estimations are “conservative.”

“The economic models I’ve used in this study show only the jobs created by the proposed development, not including the arena itself,” Pennington-Cross said. “Previous studies have used a ‘multiplier effect,’ meaning some jobs will result in other new jobs.”

In assessing the sports and entertainment district’s overall impact, Pennington-Cross, a former senior economist at the Federal Reserve Bank of St. Louis, added that the Park East corridor has been a vacant brownfield since the freeway demolition in 2002, and developing the land would be an economic boon.

“This land has been nearly impossible to develop for more than a decade,” he said. “To convert these 10.5 acres of unused land into economic active land that is integrated with the city is very positive.”

That integration is key to a successful arena project, Pennington-Cross said. In his study, he finds that a key feature for a successful arena is for it to be part of a larger redevelopment plan and one that blends the arena into the overall urban landscape — something he said the BMO Harris Bradley Center does not do.

“The best arenas built in the past few decades avoid having a fortress-like feel to them,” he said. “It is important that an arena and its surrounding business district be connected to its surroundings so that it feels like a part of the city. Successful arenas, like the one the Bucks are proposing, become part of the fabric and identity of the areas in which they reside to create a live, work, play environment. The Bucks arena redevelopment plan provides an opportunity for an important and valued amenity that helps Milwaukee compete for a highly mobile, highly educated, creative workforce to attract future companies to the region.”

Pennington-Cross noted in his research that professional sport teams and their arenas are a “public good.” He wrote in the study, “Sporting events and the stadiums they are located in can be viewed as one of the amenities that a city uses to attract a skilled workforce and the firms that want to employ this workforce. You do not have to attend the games to benefit from the existence of the team. The fact that anyone can enjoy the team without directly paying for it (attending games) makes professional sport teams and their arenas a public good.”

Pennington-Cross cautioned that much of the academic research concerning the economic impact of sports arenas is from the 1990s, which can make it challenging to determine the direct value of a “sports team amenity.”

Other key findings from Pennington-Cross’ study include:

  • The arena redevelopment plan meets all the basic requirements of successful projects identified by the academic literature: 1) The arena is physically integrated with the surrounding area; 2) there are only a limited number of or no new surface parking lots; and 3) the arena is close to other amenities, jobs and housing.
  • High-quality professional sports teams provide a potentially important amenity. The Milwaukee Brewers and the Milwaukee Bucks are well-known professional sports teams with the ability to attract fans from outside the city and the region.
  • While it is almost impossible to measure directly the value of the sports team amenity, economists can use rents paid on housing to indirectly measure its value. One such study found that rents are 8 percent higher within a city with a professional football team and 4 percent higher within the metropolitan area. This provides strong evidence that professional teams provide a substantial public amenity to the region, one that is valued by people living in the region.

Sheehy said that the Marquette study contributes a valuable new perspective to analysis and projections of a downtown arena development and its impacts. He cited a 2012 analysis done by MMAC research director Bret Mayborne on the overall economic impact of the existing BMO Harris Bradley Center, as well as a recent analysis cited by construction group Building Advantage that projected 14,000 new construction jobs could be created by the new arena project.

“Our 2012 analysis of the BMO-BC gave us a sobering picture of what we stand to lose if we do not get this project done and the Bucks leave town,” Sheehy said. “The Building Advantage projections and this new study by Dr. Pennington-Cross give us an exciting picture of what we stand to gain if we get this project done.”

It remains uncertain as to when the Joint Finance Committee will meet to discuss an arena funding proposal.

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