December 4th, 2023
An open letter to interested parties,
We, the undersigned professionals who hold a PhD in Economics or Finance, write to express our collective viewpoint on the proposed arena financed with public money and through new debt. The minimum expenditure of $900,000,000 with taxpayers also bearing the burden of any cost overages is an imprudent use of public money. As experts and practitioners in the field of economics and finance, we believe that our insights can contribute significantly to the discourse surrounding this matter.
· The consensus of academic research is that the proposed arena will not affect economic growth and may even detract from some sectors (1,2). This is in direct contrast with the purported evidence put forward by a commissioned report prepared by Applied Economics. The discrepancies between such consulting reports and the analysis of actual outcomes are well known. The report, itself, includes a disclaimer clearly stating that the estimates of possible impacts are not likely to be accurate.
· The commissioned report lacks sufficient detail to justify the conclusions being drawn from it. Moreover, it is based on outdated economic analytic models and does not address the relevant cost-benefit analysis – how much impact will a new arena generate above those of Paycom Center? Just as no business would continue to operate using Windows ’95, basing the decision to spend nearly one billion dollars on such insufficient analysis is imprudent.
· Lastly, we reflect on the experience of other cities that have decided to build new arenas or stadiums. Since 2010, 12 new arenas and 12 new stadiums have been constructed. For these, the average public expenditure was approximately 42%. Since 2020, three arenas have been built with no public money (1). The proposed arena in OKC would be the most expensive in over thirty years with taxpayers covering a minimum 95% of costs. The threat that the Thunder will leave the city for a “better” deal does not justify the public footing nearly all the costs.
It is our professional opinion that a new arena will not have a meaningful impact on economic growth or economic activity in the Oklahoma City metropolitan area. Instead, it will divert public money away from other needs while incurring new debt. Our assessment is grounded in decades of academic research and economic analysis. The vote on continuing the 1% sales tax to replace Paycom center will have important implications for current and future residents of Oklahoma City and any employees of businesses that rely on Oklahoma City services. It is imperative that such decisions be informed with state-of-the-art methods and appropriate cost-benefit analyses.
It is important to note that we are collectively against this particular tax-financing arrangement and the proposed terms, not the idea of supporting the Thunder and/or building a new arena under different financing plans. Alternatives that involved a larger ownership share or private financing would be superior options for the city.
A “no” vote on this proposal is not a vote to send the Thunder packing, nor is it a vote to take away the rights of the team to continue to try to improve fan experience, or the City’s ability to attract other high-profile events. Voting no is simply a statement that the current proposal carries too high of a cost to taxpayers with far too little benefit in return.
(1) Bradbury, J.C., et al. (2023) Public Policy Toward Professional Stadiums: A Review, Journal of Policy Analysis and Management.
(2) Rogers, C., Stitzel, L. (2019) NBA Sweet Spots: Distance-based Impacts on Establishment-Level Sales, Growth and Change.
| Cynthia Rogers, PhD Professor of Economics University of Oklahoma | Thomas Brown, PhD Former Dean, College of Business Oklahoma City University | Travis Roach, PhD Associate Professor of Economics University of Central Oklahoma |
| Greg Burge, PhD Professor of Economics, Chair University of Oklahoma | Mary Gade, PhD Associate Professor of Economics Oklahoma State University | Brent Norwood, PhD Associate Professor of Economics University of Oklahoma |
| Yuri Hupka, PhD Assistant Professor of Finance Oklahoma City University | Mu-Jeung Yang, PhD Assistant Professor of Economics University of Oklahoma | Tyler Ransom, PhD Associate Professor of Economics University of Oklahoma |
| Mariya Burdina, PhD Professor of Economics University of Central Oklahoma | Daniel Nedelescu, PhD Assistant Professor of Economics University of Oklahoma | Zhen Zhu, PhD Professor of Economics University of Central Oklahoma |
| Rui Du, PhD Assistant Professor of Economics Oklahoma State University | Neil Metz, PhD Professor of Economics University of Central Oklahoma | Jayash Paudel, PhD Assistant Professor of Economics University of Oklahoma |
| Zi Jia, PhD Lecturer of Finance University of Oklahoma | Sohee Park, PhD Assistant Professor of Economics University of Central Oklahoma | Chintamani Jog, PhD Associate Professor of Economics University of Central Oklahoma |
| Huiying Chen, PhD Associate Professor of Economics University of Central Oklahoma | Ibrahim Kekec, PhD. Lecturer of Economics University of Oklahoma | Samantha R. Johnson, PhD Lecturer of Economics University of Oklahoma |
| Firat Demir, PhD Professor of Economics University of Oklahoma |
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