Arena Opportunity Cost

As a follow-on to my previous post about questions for the arena, Governor Rendell, in the Post Gazette explicitly raises the opportunity cost argument that I raised in point 8.

“Mr. Rendell, who needs support from southwestern Pennsylvania Democrats for his re-election campaign in 2006, said yesterday he must talk with local officials about their need for $90 million in state capital funds to build a new arena.

Legislation permitting the state to borrow $500 million for additional capital projects around the state got final approval Monday night and Mr. Rendell will sign it soon.
“Allegheny County will have a certain amount of the money, of course. It’s the second most populous county in the state. I will take my lead from the mayor and the county executive. I will also talk to the [Allegheny County] legislative delegation.”

If $90 million is used for a new arena, Mr. Rendell said that “would be almost all — not quite all, but almost all — of the money that would be available for Allegheny County. And there are some enormously important projects on tap. So I would have to see what the local recommendations were. I would take my lead from the local officials, and they would have to debate the wisdom of using a very high percentage of [the state funds] just for the Penguins.”

I have to applaud Governor Rendell for explicitly laying out the budget constraint and the matter that choices will need to be made. That is rare enough in arena/stadium arguments where it is typically a “And a Pony” type argument is the dominant strain of economic reasoning.

Leave a Reply

Your email address will not be published. Required fields are marked *

Connect with Facebook