More thoughts on stadiums in the context of natural disasters – the case of Christchurch

By Sam Richardson 04/09/2012

I’ve been thinking more about the implications of the Christchurch blueprint for the rebuild of the city, and specifically the role of a stadium within it, and I find a few commonalities when I read back across the 2007 paper by Victor Matheson and Robert Baade on the implications of funding professional sport in New Orleans after the devastation of Hurricane Katrina that I have linked elsewhere (see working paper version linked here).

While the arguments warning against stadium investments within much of the literature are compelling, questions can be asked as to the applicability of these arguments in the case of Christchurch and New Orleans, both of which suffered from natural disasters that have caused significant disruption to the cities. In the case of Christchurch, there has been (and remains) significant debate over the appropriateness of a stadium (and sports facilities in general) as a key component of the rebuild of the shattered city. I harken back to Matheson and Baade for instructive points which I’ll elaborate on below.

Replacing the infrastructure for professional sports and mega-sports events can be justified if the benefits provided by the facilities exceed the costs incurred in the reconstruction. Both costs and benefits have to be measured over time since the facilities provided a stream of benefits as well generating costs associated with operations and maintenance.
The city has lost not only AMI Stadium but is also faced with replacing QEII Park. In this sense, the gap for a major facility exists, and the costs of such a facility have been out in the public domain for some time, but there is less clarity when it comes to the actual benefits of such a facility. Stadiums, in general, don’t generate tangible economic benefits. There is a growing part of the literature that suggests that they do generate quantifiable intangible (public good) benefits which are every bit as important to the cost-benefit calculus as the tangible jobs created and increases in GDP. There are sound reasons why a facility in Christchurch is unlikely to generate tangible benefits, the most important of which is the ability to service influxes in visitors. Without the necessary (fully operational) infrastructure in place, Christchurch will struggle to extract full value from visitors to the city for sporting events. To this end, there is a clear dilemma surrounding the role of the stadium, and policymakers are faced with a choice – adopt the “build it and they will come” philosophy and attract visitors to the city in the hope of revitalising the city in this way, or focusing on providing the necessary infrastructure so the city attracts back the population lost and creates a market for the new facility. At the heart of this dilemma is a point that Matheson and Baade make beautifully, so I’ll post it here:
Sports yields hedonic value, in other words, and the quality of life benefit it imparts is a luxury affordable in affluent communities rather than an activity that helps a community achieve affluence. Sport for the most part is properly viewed as a luxury good and not a productive resource.
Therein lies the crux of the argument, and it is here that we are likely to see the more passionate divergences of opinion. There is no doubting the importance and potential quality of life value of sports in Christchurch. The initial call of whether the investment makes sense is largely dependent on this value, I believe, and how it stacks up to the costs. This is a complex value, as one must also factor in the role of the sports environment including the new temporary stadium, as well as the impact on other facilities in the city and surrounding areas. As I have mentioned in my earlier posts on this issue, complicating matters further is the role of sports in the context of the rebuilding city’s priorities. Do Christchurch policymakers see the stadium as a luxury good or a potential productive resource? 

I find the call on the stadium being left to the Christchurch City Council an intriguing one. From central government’s perspective, funding a brand new stadium makes little sense as all it does is exacerbate competition between cities for the same pool of visitors. A roofed stadium in Christchurch will compete directly with Dunedin’s facility, so it becomes a zero sum game when viewed from a national perpsective. From a local perspective, however, there is a view from some within the academic community that local gains are what are important, regardless of whether those gains come at the expense of other areas. It is exactly the argument used in favour of downtown stadiums – the downtown area may benefit, likely at the expense of surburban areas. The suitability of such a project, therefore, is likely to depend on your point of view. 

For me, I’d really like to see the reasons behind the inclusion of the stadium within the blueprint. Yes, there are arguments in favour of its inclusion, but some are less credible than others. Even the most credible may still fail to pass the cost-benefit test.