Arena Counterfactuals

Recently, a little birdie dropped something very interesting into my hands. The nugget I got from my source was the draft economic impact analysis from the Pittsburgh Penguins’ consultants ERA. I’ll be blogging more about this later once I can scan several of the pages into blogger.

However, as I was reading through this set of documents and the other economic impact studies on the slots license, the biggest thing that jumped out at me was the counterfactual that the ERA team was using for their economic impact analysis.

They were looking at the impact of a new arena and mixed use development as if the current Civic Arena, Lower Hill and portions of Uptown were thrown into eleven dimensional space by means of quantum tunnelling this morning, and that there is now nothing on the site and no capacity for what they want to do. From this assumption, they proceed to imagine a greenfield development where there are no net shifts within the city of employment, residences, local office spaces etc. The tax revenue projections assume brand new users of the space. The study has no care for distribution of its users.

My counterfactual when I have been reading and blogging about these studies on the arena has been that the Mellon Arena is still there, and that there is a decent degree of substitution capability as represented by a combination of the Convention Center, Palumbo Center and the Peterson Event Center once they implode the Arena, and that therefore the net add-on effects of a new facility are going to be a whole lot smaller than the net add-on effects as projected by ERA. I am worrying about distribution.

More later, once I have time and a scanner.

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