Is a new downtown arena worth an extra $250 million?

Since SaskTel Centre opened in 1988, cities and towns across the US and Canada have spent over $10 billion CDN building and refurbishing indoor arenas.

Saskatoon now faces a similar decision about what to do about an aging SaskTel Centre. Two radically different plans have been floated. One involves a $101 million rehab of the existing facility on the north side of town. The other involves a roughly $350 million downtown project that includes a complete renovation of the TCU Placethe theatre and convention centre.

• Why SaskTel Centre ended upon Saskatoon's northern fringe

A consulting firm hired by the city has recommended the downtown project, but when deciding between these two options, the citizens of Saskatoon deserve a clear understanding of the potential economic costs and benefits of relocating the city's main sports arena.

'No city-wide increases in any real economic variables'

The proponents of a downtown arena suggest that the project, while more costly, will revitalize downtown, create a thriving entertainment district and provide significant economic benefits for the city. While there is a kernel of truth to these arguments, they fail to tell the whole story.

Stadium subsidies have been studied by academic economists for nearly three decades. In general, these studies have indeed found that stadiums and arenas can result in neighborhood benefits including higher property values and an increase in local bar and restaurant business.

However, these same studies invariably find no city-wide increases in any real economic variables. The simple explanation is that arenas do more to relocate where economic activity takes place rather than increasing a region's overall economy.

In effect, by choosing the downtown location, the citizens of Saskatoon are being asked to spend an extra $250 million to simply move economic activity a few miles south and focus it in one area of downtown.

Would it draw new acts?

There is also little economic evidence that new arenas generate much in the way of additional events. Sporting events, music concerts and touring cultural activities choose to stop in certain cities based on the potential to sell tickets, not based on where the venue is located.

Even the proponents of moving the arena downtown can't credibly claim that the new facility will attract many more events than one located where the current arena is situated. Therefore it is curious that the consulting firm hired by the city claims that a downtown arena will contribute 50 per cent more to the local growth domestic product than restoring the existing facility.

History shows the good and the bad

Finally, it is true that some cities, such as Edmonton, have experienced significant localized economic development following the announcement of a new sports venue. However, it is unfair to point to Edmonton, which has been called the most successful urban arena development project in North America, without also bringing up cautionary tales such as Detroit.

Despite promises of urban renewal associated with their new NHL stadium, the number of housing units in the neighborhood of Detroit's Little Caesars Arena has actually fallen since the stadium project was announced in 2014. Numerous buildings have been razed in favour of surface parking lots.

It is quite possible that the citizens of Saskatoon will decide that they prefer the more expensive downtown arena project, but they should do so with eyes wide open. A downtown arena and renovated convention centre could easily become a beacon of civic pride for the city, but it is unlikely to become a significant economic engine for the city as a whole.

Is that worth the $250 million price tag?

This column is part of CBC'sOpinionsection. For more information about this section, please read thiseditor's blogand ourFAQ.