EMSI CASE STUDY (See more here)
In professional sports markets across the US, it’s a heated and weighty topic: how should new stadiums and arenas be financed? Team owners have traditionally looked to taxpayers through massive bond measures, while a few communities have put the onus on ownership.
In Nassau County, New York, the proposed financing solution blends both approaches.
County executives and Long Island’s only pro sports team, the New York Islanders of the National Hockey League, have hashed out a unique public/private partnership to help fund a new $350 million arena. The lease for the Islanders’ current facility, 40-year-old Nassau Veterans Memorial Coliseum, runs out in a few years and the Islanders, with limited revenue potential, would likely leave Long Island without a new arena.
Camoin Associates, a private and public sector economic development firm based in Saratoga Springs, New York, was brought in by Nassau County to analyze the impact of the deal that would see the county float $350 in general obligation bonds and get in return 11.5% of revenue generated at the arena from hockey games and other events.
The key question posed to Camoin Associates: what would the agreement for the sports-entertainment center mean to the Nassau County economy? The answer, derived in part through EMSI’s economic impact model, was striking.
Camoin’s Impact Estimates Could Prove Vital
County and team officials held a press conference in June to announce a new lease agreement—pending public approval. They also showcased to the media the results of Camoin’s independent analysis that showed the project would lead to $1.2 billion in revenue and more than 3,000 permanent jobs in Nassau County.
EMSI gives us an assurance that the data that we’re presenting is reliable.” — Michael N’dolo, Vice President, Camoin Associates
Those estimates could go a long way in helping taxpayers approve Nassau County’s plans for the new arena and, by extension, keeping the Islanders in New York. A public referendum on what Islanders owner Charles Wang called an “unprecedented agreement” is set for Aug. 1.
Camoin Associates’ analysis—which was mentioned in reports by Forbes, Fox News, and other news organizations—showed the new arena would generate the dollars needed to pay off the $350 million debt, with an additional profit of over $400 million during the 30-year lease term for essentially becoming an equity partner in the deal.
“They wanted to make this a public/private partnership,” said Michal N’dolo, Vice President of Camoin Associates, “and they wanted to use the county’s ability to bond as a way to support the project. But they didn’t want to have the residents to pay for this.”
“Obviously there’s a difference between being the financing source and being the funding source,” N’dolo noted. “They wanted to be only the financing source, not the funding source, which is actually highly unusual. This is something that is not coming out enough in the press and we’re trying to raise awareness about—in a lot of these stadium deals, the host community is the funding source. They’re essentially ponying up the money and paying for the stadium, for the privilege of having [a] team.”
Deal Could Create 3,000-Plus Jobs
N’dolo said the key part of the agreement, regardless of estimated revenue impacts, is the 3,000-plus jobs that will come to Long Island, an area that needs an economic lift after years of business shutdowns and moves.
Camoin Associates also estimated the number of visitors that would come to the arena every year, and used EMSI’s model to estimate the direct and indirect jobs—and earnings—that would be created by the visitor spending. The earnings estimates helped N’dolo and his staff estimate how much tax revenue Nassau County would see through the 30-year agreement
Said N’dolo, “We take the earnings for those folks and we plug that in to a little calculation we do where we say, ‘If they make $100 million, we only think 70% of that is going to spent in the county, and only 25% of that spent in the county is going to be subject to sales tax.’ We give it a couple of big haircuts. This number left over is spent on goods subject to sales tax, therefore the county gets sales tax off this.”
Camoin Associates has used EMSI data and tools on many projects in recent years. N’dolo said the value of going with EMSI over other data sources and input-output models is knowing EMSI’s data and impacts are trustworthy.
“EMSI gives us an assurance that the data that we’re presenting is reliable,” he said. “And it allows us to look at a NAICS-code level of what’s changing in the economy. And it gives us earnings output that allows us to calculate sales tax.”