Certainly, part of the reason that the proposed Minnesota Speedway Park appeals to some is because of the developer’s suggested boost to local economic development and employment. When I read this article on the economic benefits of the Daytona 500, I emailed the study’s author, Dr. Victor Matheson, associate professor of economics at the College of Holy Cross, for his thoughts on the proposed development in Elko New Market. Below is the entire email exchange. In summary, he says:
- there are exaggerations throughout the proposal that call into question the validity of every claim made
- the jobs this proposed development will create are significantly overstated
- the economic benefit is also inflated
- the citation of increased property values around Kansas Speedway are for the years when housing values increased significantly nearly everywhere (the housing bubble)
- the odds of getting a Sprint Cup races are close to 0. That means if any race were to come, it would be a second or third tier race and would only draw from the immediate region. That means tourism dollars would be redirected from other Minnesota entertainment options.
With such seemingly suspect information presented by IMEDC, does (or should) any credibility remain? Is this the type of neighbor that would be good for Elko New Market?
Now, the exchange with Dr. Matheson:
I recently came across your research related to the economic impact of the Daytona 500. The study findings are of particular interest to me because a developer has proposed a 65,000-seat oval racetrack and 35,000-seat drag strip for Elko, Minnesota, and has promised economic benefits of $200 million annually and 1,330 net new permanent jobs. The racetrack will be about 15-miles north of your undergraduate alma mater, St. Olaf. By chance, have you heard of this proposal from the International Motorsports and Entertainment Development Corporation? I’d be curious for your thoughts related to the true economic benefits of this track and the likelihood that such an endeavor could succeed in Minnesota, with or without a NASCAR-sanctioned Series race. You can find the presentation given to the community in November, which summarizes the project and its impact, here. Would you be willing to spend a few minutes reviewing the proposal and provide me some thoughts that could help inform local government officials? I appreciate your time and consideration. Thank you.
On Sun, Apr 29, 2012 at 8:41 PM, Victor Matheson wrote:
Not sure how much you know about my overall research, but I do a tremendous amount of work related to the economic impact of sports on local economies, so I have dealt with perhaps hundreds of cases just like this.
So, there’s a lot to say here, but the most important question is what the developer is asking for. If they are simply asking for a building permit and the county government’s blessing to spend the developers’ own money on this thing, I really don’t care much about what they say. If they are asking for any handout at all, then it is important to get this right.
So, first of all there are a couple of obvious exaggerations in the presentation. 70% of people regularly watch racing? I would be surprised if 70% of people had ever watched an auto race much less 70% being regular viewers. When someone throws out such a statistic (without even an attempt at citation) it makes me question everything else in the presentation.
Second, the NASCAR schedule is pretty full and getting a top-level race, one that really draws a national audience, is very tough. Good luck getting a Sprint Cup race. Since there are races essentially every weekend now, getting a Sprint Cup race means pulling a race from somewhere else, and does one really think Minnesota is going to be able to steal a race from Talladega or Daytona? Thus, you are probably left with a Nationwide Series race (2nd division) which means primarily a local crowd. I’m not driving from Detroit, St. Louis, or Chicago (all with the 600-mile target area designated by the developer) for a minor-league auto race. When a local Minnesotan goes to a Minnesota track, that is money spent at the track rather than elsewhere in the local economy. 65,000 Minnesotans at a race means 65,000 Minnesotans not at the Twins, or Valley Fair, or local bars and restaurants, or the movies, or the Walker/Guthrie, or the Mall of America, you get the idea. So, while the gross expenditures at the track may total $200 million, the net revenues for Minnesota generated by the track will be far less than $200 million since it is all just money shifted around in the state.
Third, I personally find the $200 million figure a bit hard to swallow. Both the Twins and the Vikings generate just over $200 million per year in team revenues. Are these folks really suggesting that a track in Elko will generate a similar amount of fan spending as MLB or the NFL?
The claim of thousands of jobs is equally absurd. Michigan may employ 5,000 at events, but unless the speedway has events 250-300 days per year, the number of full-time equivalent jobs is tiny. The Vikings employ a similar number on game-days, but the FTE jobs by a typical NFL team is closer to 200-300, less than a large Walmart. And let’s not forget that most of the jobs that are generated on game day are concessions, parking, ushers, etc. Minimum wage sort of stuff. The people making real money are drivers and crews, and any money they earn leaves Minnesota immediately after the race is over.
While it’s not central to the presentation, I just cannot believe that the company would actually put the claim that Kansas property values went up by 100% between 2001-2006 into a presentation. Did they really think that everyone would forget that the nationwide housing bubble between 2001-2006 popped in 2007 putting 10 million Americans out of work? Somebody surely ought to ask what has happened to land values near the track in the 6 years since that time.
So, overall, I wouldn’t believe a word of this. That being said, if they are not asking for money or property tax abatements or major eminent domain or zoning variations, well then let them say whatever they want. But they don’t deserve a dime of taxpayer money to help them build their pipedream.
<<< 4/30/2012 12:21 PM >>>
Thank you for confirming many of my suspicions related to the credibility of information in IMEDC’s presentation. Rightly so, your perspective will carry much more weight than mine.
At this point, the developer is not asking for public financing of the Speedway venue. They have, however, made it known they expect the public to cover infrastructure upgrades, which will be significant. In the case of Kentucky, those upgrades were $96 million and still were not adequate for the proposed purposes. It’s too early in the process to know if the city or county will offer tax breaks. (We’re told they will begin the EIS process in the next few weeks.)
Just so I’m clear, are you okay with me using quotes from your email with elected officials? Also, can I have your permission to share this information on our opposition website?
I respect your position and reputation on these matters and certainly do not want to put you in any sort of difficult situation by sharing information out of turn/context.
Yes, you are free to quote me or anything I wrote.