The False Promise of Trickle-Down Urbanism

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Tim Gouw / Unsplash

Thousands of spectators fill the Rogers Center in Toronto's entertainment district.

We hear it all the time: Developers, investors, local governments and even citizens tout the positive effects that a large-scale, expensive entertainment-based project will have on the surrounding area.

“People will come from all over.”

“We will be a destination now.”

“People who visit will also visit all the local establishments.”

Will this really happen?

It can, but it’s not that simple. If the main goal for any massive urban economic expenditure is to bring people into the city from the outside, skepticism is justified. Far too often, these projects aim to drive traffic to downtowns in the hopes that visitors patronize local shops and establishments while there, only to realize that this rarely actually happens at the predicted levels. Like trickle-down economics, the effect of trickle-down urbanism is often just that – a trickle.

In 2015, Marketplace published a piece that spoke to this effect with regard to sports stadiums in cities. In it, economist Michael Leeds states:

"If every sports team in Chicago were to suddenly disappear, the impact on the Chicago economy would be a fraction of 1 percent,” Leeds says. “A baseball team has about the same impact on a community as a midsize department store."

Leeds’ point of view is widely accepted in the economics community, despite the continued effort by developers and even local officials looking to – understandably – garner public support by promising that these types of projects will usher in economic prosperity.

When individuals or families attend a sporting event, show or concert, the money adds up after paying for tickets, parking, food, drink, and maybe even a T-shirt or hat. These events drain the entertainment budgets of the surrounding community, leaving little left for patronage at local establishments. While these venues may bring money into the city where it didn’t exist before, this is offset by diverting business away from locally owned restaurants, bars, entertainment, and other small businesses that residents might visit otherwise.

In sum, data shows that people will spend about as much money on entertainment regardless of whether they have a sports stadium, a casino, or not. But when they do have large-scale entertainment options, they tend to spend more on those options and less on local outlets.

Can these big-money entertainment venues be good for downtowns? The short answer is yes, but they have to be done right. Event-goers will not simply patronize local establishments before and after events on their own. There must be a reason for them to do so, or at least there must be no reason for them to choose to get in their cars and simply leave.

Proctor's Theater in Schenectady, New York, is a solid example, with a wealth of local shops, restaurants, and bars of all varieties within a two-minute walk of the historic downtown theater.

Courtesy / Arian David Photography

Proctor’s Theater is located in Schenectady, New York.

Furthermore, Schenectady has invested heavily in a walkable downtown that does well to encourage on-foot exploration. While Proctor’s isn’t on the same scale as the massive complexes mentioned above, it is a strong example of a venue that brings show-goers to a downtown environment that welcomes them to stay.

The moral of the story? As much as officials try to convince us otherwise, large-scale entertainment complexes typically don’t deliver on the promise of creating economic vibrancy. Long term, they fill the pockets of a few and often take more money out of the community than they inject into it. While progress, development, and steps forward to a better downtown are important, we must remember that simply bringing people to our city centers isn’t the answer. Truly vibrant local economies that grow sustainably feature local governments that encourage and facilitate small business growth, as well as developers who realize that the key to growth is creating a diverse tapestry.

 

8 thoughts on “The False Promise of Trickle-Down Urbanism

  1. This is garbage, with vague references to data. The building itself does not bring economic development, it’s the product in the building. The 2015 Marketplace report would turn out differently is 2016 and 2017 in Chicago after a Cubs World Series. Side note – Wrigkey is privately owned and financed and the economic development in that neighborhood is tremendous. Take San Antonio, putting the Alamodome on the edge of downtown for San Antonio, has changed the perception of San Antonio by the outside world forever. Because of that building, we’ve hosted Final Fours, have one of the most successful bowl games in the country, numerous concerts and it is an extension of our convention space. It’s been a game changer for San Antonio. The AT&T center, dropped into a less traveled part of San Antonio, even with an unmatched run of success by the Spurs, the rodeo and concerts, hasn’t hosted the events that draw people to San Antonio and probably hasn’t been as successful, but without it the Rodeo is benefiting as many youth, and the Spurs arenpkaying in New Orleans.
    Arenas, when put in the proper location, and used the right way, can have a huge economic impact on a city on the rise like San Antonio.

    • Good points and with relevant concrete local examples to support your argument. In the end, I think both the author and you, Kevin, are correct. When done properly local businesses can benefit from both paradigms but they don’t apply equally in every case.

    • You hit it on the nail, The Alamodome has done a lot for our city, They should has demolished that worthless eyesore called the Institute of texan cultures years ago and put the AT&T Center there. That would have formed an entertainment district that multiple events and businesses would flock to.

  2. Let us hope the city fathers don’t put a ball park at the Institute of Texan Cultures location. Arena’s in city centers are acknowledgement of lack of imagination. We can do better.

  3. Oddly enough, the Symphony of all things is a big economic generator in San Antonio, and it is not deafeningly loud and doesn’t depend on a jumbotron for commentary.

  4. There is no such thing as “trickle down” economics. No economist acknowledges it with any credibility.

    It was attributed to Reagan by an opposition media. I wish people would stop using it in an effort to make a point. It ruins any credibility that person may have had.

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