Gullible and ignorant fairly describe city council’s recent decision to provide St. John’s Sports and Entertainment with $700,000 in extra funds so SJSE can decrease the rent paid by the St. John’s IceCaps to play in Mile One Centre this season and next.
If it’s not a subsidy, it’s surely a giveaway. It is worth remembering until the next election that city council decided on the $700,000 at a secret meeting.
(Coun. Art Puddister, who did the proper thing and went public about the putrid procedure, gets my vote if he moves to Portugal Cove-St. Philip’s and runs for council.)
The tremendously troubling aspect of the sordid subsidy scandal is that it reveals the people who run St. John’s don’t have a clue about basic economics.
(With the notable exception of Deputy Mayor Ron Ellsworth, who astutely said afterward he couldn’t support the $700,000 rent reduction because the IceCaps didn’t provide enough financial details to the city to justify it. He gets my vote if he ever … etc., etc.)
A majority of council members were suckered by jargon and taken in by puck propaganda.
IceCaps leasee Danny Williams — not owner — claims the hockey team creates $25.5 million in economic spinoffs each season.
Williams scores! You can’t argue against economic spinoffs. That would be like arguing with Nan about her blueberry pie.
Except that … said spinoffs are undefined, unproven and nonexistent.
Williams may be a multi-multimillionaire, but his arithmetic is offside.
With 38 home games and 6,287 tickets sold per game, the IceCaps sell 238,906 tickets each season. To attain $25.5 million in “spinoffs,” each ticket buyer would need to spend — or cause to be spent — $106.73 each game night over and above the price of the ticket.
The boys and I attend four IceCaps games each season. Prior to the game, we usually go to that fabulous gourmet burger joint around the corner from Mile One. Total bill for the three of us, including tip: about $75.
When we can’t find on-street parking, we pay $10 (it’s worth it to avoid the parkade). Between periods, we get some popcorn and pop, and maybe a 50-50 ticket. Total spinoff expenditure: about $100. Not $320.19 (3 x $106.73).
Anyone who wants to dispute this math should first consider that this numbers exercise is merely an example, and that “spinoffs” is slang and is not a formal concept in microeconomics. (But it is in high finance. See: corporate raiders.)
If the tax-collecting, tax-spending all-stars on city council had been playing with a full roster, one of them might have said, “Mr. Williams, I believe by ‘spinoffs’ you are referring to the multiplier effect, which, unfortunately, does not apply in the IceCaps’ case.”
Unlike nebulous spinoffs, the multiplier effect is a proven theorem and observable phenomenon in microeconomics. It does not apply to professional hockey teams. It mainly applies to primary industries, such as mining, forestry, fishing, factories and whatnot.
The theory is simple, yet profound and important: new investment in new production in the private sector will lead to new salaries and new demand, creating additional cycles of income and consumption.
Hockey fans going out for a beer or a burger before a game doesn’t qualify. Without the hockey game, it is likely that the fans’ money would have been spent on beers or burgers at another venue, or at a movie. No truly new money is injected into the economy.
That said, go IceCaps.
Brian Jones is a desk editor at The Telegram. He can be reached at [email protected] and can be found on Facebook.
