Dan C’s Cherry Picking Goes Awry, but at Least We All Agree that Anaheim’s Economic Impact Study Sucks!

Dan asserts that “a $30,000 study isn’t nearly enough money to answer all of the questions needed to get a clear picture of the economic impact of having a major league baseball team in Anaheim.”  I can believe that!  What he doesn’t seem to get is that that means that someone from the City badly screwed up — because a $30,000 study is exactly what they solicited and purchased!  (My guess is that they’ll try to blame this on permanent City staff — but staff isn’t likely the group that messed up here!)

Did the City’s negotiator, temp staffer Charles Black, have anything to do with the choice of vendor and the amount paid?  Should he have known that $30,000 would likely buy only warmed over horse manure?  I would think so.  Did he realize that such a report could only be useful for purposes of promoting a deal in front of an inattentive audience?  Well, this is his business — and anyone who has heard his presentations has no doubt of how invested he is in the project.  Did he object basing his recommendations to the Council on a horse manure-grade study?  Apparently not.  (Do you have any concerns about what he’ll do in negotiations “on behalf of the City”?  Leave a comment.)

5.  CSL’s Reputation vs. CSL’s Report

Now let’s get to Dan’s first substantive criticism of me:

Texas-based Conventions, Sports and Leisure is somehow portrayed, by Diamond, as being hired to provide a slanted report.

Yep — and I’ll explain why below.  But first, what Dan does not seem to understand is that I’m not saying that CSL is incapable of doing a really high quality and reliable report.  I’m saying that they didn’t do one here.  In part, that’s because they weren’t paid to do one here.  If they didn’t tell Anaheim that the report they produced would be, um, “deficient” in various ways that might severly undercut its reliability, then they ripped off the City.  But my guess is that they did spell out the limitations of what they could do for that price — and that the City’s agents didn’t care.  Because what they wanted was a report that could be used to promote the plan that — for whatever reason — they already favored.

Dan writes, with a lamb-like innocence:

According to Diamond, the key statement in the Register’s story is this:  “Based on everything else I’ve seen CSL do, this is a promotional study,” said Andrew Zimbalist, co-author of “Sports, Jobs and Taxes: The Economic Impact of Sports Teams and Stadiums.” “If CSL came out with a study that said Anaheim had no positive economic impact, they wouldn’t get any more work.”

Yes, that is the key phrase — because Anaheim’s entire negotiation strategy is constructed on the foundation of this report showing that the Angels give so much to the City that the City can’t afford to lose them — and the report is horse manure.  It’s presented not for purposes of edification, but of propaganda.  That’s extremely important.

Now that is where CSL was deficient: it could have (and should have) said “no” to the work if it thought that it was being asked to provide a sub-standard report that was just going to be used to bamboozle the citizenry to achieve an end that Councilmember Murray, who was heading the early negotiations, wanted.  If it was asked to prepare a report that should not have been convincing, it should have refused.  Instead, it painted its horse manure report in the most favorable light — as something that should bear the weight that the Council planned to place upon it.

And why did it do that?  Well, you see Zimbalist’s answer above.

Dan then explains that CSL has a fantastic client list and reputation.  That doesn’t matter.  It really doesn’t — because it doesn’t rebut what Zimbalist says.  The sorts of people who establish its reputation are the sorts that want “promotional” reports.  That’s how a company capable of doing good work can get a good client list — by not doing objective and critical work if the client wants alluring fluff.  (Surely this is not news to a Public Relations professional such as Dan.)

The instructive thing about Dan’s argument is that he wants to make this about “is CSL a good company?”  That’s not the question to ask.  The question to ask is: “is this a good report?”  And he agrees that it is not.  Reconciling that with CSL’s reputation is his problem, not mine — but this is a case where blaming the client seems like a very reasonable hypothesis.

6. How the CSL Report Went Bad

This paragraph from Dan is key:

CSL told the Register that Anaheim asked for a report that could account for the money generated by the Angels, but the report did not offer associated city expenses. In that respect the city got what it paid for.  A new, more detailed and likely more expensive study that interviews Angels-game attendees is needed for a more accurate picture.  [my emphasis added]

Back up and look at that more closely.  What he’s saying is that the City asked the question “how much money does the Angels bring into to Anaheim?” rather than the question “how much money does the Angels bring into to Anaheim net of expenses?”  The former is “gross revenue“; the latter is “net revenue.”

Now let me ask you something: if you’re trying to assess the economic impact of a proposal on the City, should you want to look at gross revenue or at net revenue?  If you think that the relevant figure to examine is gross revenue, then you should not be employed in any activity relying on your financial judgment.

And, CSL’s assertion is that the City asked for gross revenue only — and so that’s what CSL gave them.  If you think that the term “horse manure” was too harsh above, you were wrong — it’s too kind.  Manure is useful.

So, to review Dan’s scenario again:

1. The City hired agents to guide it through the process.
2. The agents asked CSL for a study of gross revenue rather than net revenue.
3. CSL said “sure, we can do that,” and produced such a study.
4. CSL dressed up the study to make it look persuasive — as if it had used relevant data and the right measure.
5. Charlie Black and friends used the report to get the City to adopt a certain course of action.

And Dan’s response to this is: “In that respect the city got what it paid for.”  Wow.

Well, yes — “the City” did get “what it paid for” so long as you conceive of the City as its government rather than its residents — but the residents of the City would presumably be shocked by this maneuver.  I concede that this story exculpates CSL from being idiots — but in my book, if you agree to do a study like this for a municipality without putting a big bright warning sticker on it, then you’re being a knave.  That may be a good way to get ahead in business — governments, not residents, make contracts with vendors — but it’s a contemptible practice that is contemptuous of the citizenry.

Hey, here’s a good study for the Register to do: find out how many people thought that the figures the City was using to make its decisions about these lease agreements were based on gross revenues without any thought of expenses.  (I’d even like to know what the City Councilmembers think of this!  Did they know?)

Dan notes that “using the consultant’s assumptions,” the $4.7 million in gross annual revenue turns into only $2.3 million in net revenue.  (As I’ve addressed before, the assumptions in the report are ridiculous because they base their calculation of how much money is spent in the City of Anaheim — when the stadium is right near hotels and restaurants in Orange and Garden Grove and not far from the facilities of Brea, Costa Mesa, and Irvine — by using figures derived from what people do in stadiums like Houston, where it’s a long drive to stay or eat in any other city!  So even those gross and net revenue figures — not based on a study of Anaheim, but on extrapolation from dissimilar stadiums — are, once again, horse manure.  With flies.

7. Just a Cherry-Pickin’ Minute Here

Dan lampoons my making much of Chapman University economist Esmael Adibi’s findings — actually, I just quoted them from Wisckol’s story — but says that I “neglect to state the economic impact report he conducted on the Angels was completed in 1996.”  Yeah — I don’t think that that matters.  As for “This was before the last big stadium renovation” — again: so?  Then comes the coup de grace:

Diamond missed this key statement from Adibi:

“There’s no question there’s a positive economic impact,” Adibi said. “The question is what it is. And there’s no question that there are firms that do this kind of work and maybe it would be better to go to academics.”

Diamond cherry picked the Register’s story.

This is truly, startlingly, dense — especially from someone who fancies himself a businessman.

“Positive economic impact” is almost meaningless in informing a policy decision because net revenues of as little as $1 are a “positive economic impact.”  What you want to know is — as Adibi says right there — the extent of that impact!

“Does the presence of the Angels bring in enough tax and other revenue to justify the level of concessions that the City is considering giving to Moreno?”

How can an intelligent person honestly think that the question to ask is not that, but “does the presence of the Angels in Anaheim bring in any money to the City at all?”  Because that’s all that “positive economic impact” says!

It’s actually worse than that, of course, because if Adibi hasn’t been attending as closely to these developments and people like Tait and Cynthia and Zenger and I have, he may not know that under the proposed MOU the City’s revenues would be throttled down in various respects compared  to the 1996 lease — and also that the City would be foregoing all other income that it could potentially get from the 155-acre parcel surrounding the Stadium — which it supposedly can’t develop because of the current lease.  (Here’s an idea for negotiators:  negotiate to change that part of the lease!)  (If Adibi hasn’t read the MOUs, he probably could not imagine that the City could be seriously considering such a disadvantageous deal.)

Toss in those factors and it wouldn’t surprise me if the City literally would make less money from this proposal than it would if it just told Moreno to buy the land and pay property taxes on it, or just chased him out of town and sold it to a university or a tech company for a campus.  And that’s why considering the actual degree of net positive economic impact is important — especially before signing these sorts of MOUs!

What Dan says is: “So even the Chapman economist says there’s a positive economic impact but determining what exactly it is isn’t easy.”

Dan is then nice enough to quote the Register as saying that Adibi

said increases in ticket prices and other costs that have exceeded inflation could conceivably bring that amount to the Texas consultant’s conclusion of $204 million– but for the entire county, not just for Anaheim as estimated in the $30,000 report by CSL.”

The mention of “increase in ticket prices” is why I don’t think that Adibi has been following the negotiations: the City’s share of them is capped — and will fall.  But the main point, as I made in the article in the previous link, is that the benefits will go to the whole county, not just to the City of Anaheim.

The costs, though, will go to Anaheim alone.  So that raises the question: “who is it that the Council Majority thinks that it is representing here?”  Not, it appears, primarily the people voting for them!

8. And So at Last We Return to Councilmember Brandman

So Dan has accused me of “cherry picking the Register’s story” (because I don’t acknowledge the estimates of a “net positive economic impact” — of some degree), doing “inadequate research on CSL” (because I didn’t acknowledge their strong client base and such and instead focused on the horse manure report itself) — and now we get to the crux: that I “[paint] an inaccurate picture of council member Jordan Brandman” — which he promises to take apart.’

I’m going to quote this at length.  The bullet points are my writing; the parenthetical comments are Dan’s:

• That he is fully convinced of the Texas report’s findings.  (I am too; they reached the conclusions they did with the instructions they had; CSL was asked to gauge economic impact by revenue generated from the Angels, not assess the net after expenses.  The report should have been more extensive but the fault of this lies with who commissioned the report from City Hall, not CSL.)

Let me state this very clearly.  If Jordan Brandman’s statement that he is “fully convinced of the Texas report’s findings” means that he is convinced that it presents gross revenues to the City and not net revenues, then let him say so loud and clear at today’s meeting.  And if he adopts Dan’s argument, then maybe he can explain for our collective benefit why he thinks that gross rather than net revenues are what matters.

But I could certainly accept Dan’s assertion that the fault was in the instructions given to CSL — although I still place fault with CSL for agreeing to do a report that provides misleading data to help sell a lease agreement.  So let’s flesh that out: who made the mistake?  The one person who we can rule out is Mayor Tait — because the Council Majority isn’t listening to him and out of apparent self-preservation the Staff is following suit.  So I join Dan — or what I presume Dan should be saying — in trying to get to the bottom of how this fiasco occurred.  Who ordered the wrong item off of CSL’s menu?  Who hired that person?  How was that person instructed?  By all means — let’s get to the bottom of this!  (Kris Murray was in charge, right?  Maybe Dan can do another interview with her.)

• That he absolutely believes them. (There is no reason not too; you can debate issues like hotel occupancy on tickets but I sure believe it occurs.  I try to see games in other cities when traveling on business.  If 9/11 didn’t happen, I had Braves tickets in Atlanta I was looking forward to using. I’m not the only one who does this and it’s not at all uncommon).

All right: Jordan was saying that he “absolutely believes” — what, exactly?  Absolute belief is a “strong statement.”  Shouldn’t Jordan say what it is that he absolutely believes?  He absolutely believes that the gross revenue from the Angels is a positive number?  WELL IT WOULD PRETTY MUCH HAVE TO BE BY DEFINITION, WOULDN’T IT?  But it that is all that he meant when talking to Wisckol, that would be nice to know!

• That this is because they are a reputable source. (They certainly are based on years in business and client list; CSL has a solid business reputation.  If they didn’t, there is no way they’d have the business they do now and have a considerable number of clients who have pending projects; define reputable Diamond?  Is Mr. Fitzgerald, with his anti-Semitic and homophobic rants on behalf of a fake non-profit, reputable?  Are jailbirds Jason Young and Vern Nelson, who admitted to drinking a couple of beers with Mayor Tait, reputable?  They are when you push blog posts for promotion.  I’ll take CSL over the Clown Car anyday.)

“Reputable” means “having a good reputation.”  Since Dan asks, Vern is a reputable pianist and Jason is a reputable videographer — more than, in both cases.  My understanding is that Fitzgerald has been a reputable businessman; especially from generations as far back as his, some bigotry has not really been the sort of handicap that we would imagine today.  So for CSL, we have to say: “reputation for what“?

I don’t think that Brandman was complimenting CSL for being willing to give the client whatever certified horse manure that it wanted to toss at the public — even though that may be a great way to develop a “solid business reputation” in some fields.  I think that he would have meant that the results of CLS’s studies would be both reliable and valid.  So, again — if Brandman thinks that CSL giving us a study of gross revenue in these circumstances would be a “reputable” act, he should say so.  If it were me, I’d probably expect a reputable organization to produce the data that would permit valid inferences to be made about the topic under study.  Did they do so here?  If not, I’d expect a reputable organization to refuse the commission — just as if you gave a tailor some extremely flammable fabric and asked her to make you custom-made children’s pajamas out of it, she should refuse — because that’s not a reputable thing to do.  Again — Brandman can and should clarify what he meant.

• That he respects the Chapman University economist cited by the Register. (So do I.  The economist said the Angels have a positive economic impact on the community and I agree).

Yeah — he said so in 1996, right?  Beyond that, I’d like to know why Jordan respects him; how he came to that conclusion; how that conclusion affects how he thinks about the MOUs.  Because what he’s about to say does not sound like respect for his intellectual work.

• That he nevertheless dismisses that economist’s statements out of hand. (He did not; he acknowledged it.  You’re putting words in his mouth he never said.  And I call bullshit on Diamond for suggesting it).

What Jordan said was that Adibi’s comments about his study “didn’t change his view.”  That is, he dismissed them.  He said that he respected the man, but was unmoved by the comments.  For using the word “dismisses,” Dan says that I’m lying.  I’m saying: go ahead and judge Dan by that one.

• That he respects people’s right to disagree. (We should all respect people’s right to disagree).

As John Adams said, people are entitled to their own opinions but not their own facts.  If someone disagrees because they’re making up their own facts, they forfeit their right to respect in that circumstance.  And if someone knowingly uses a gross income measure when they know that a net income measure is appropriate — or represents the former as the latter — they are in essence making up their own facts.

• That economists always disagree so the disagreement doesn’t bother him. (Brandman said, “Economists do it (disagree) all the time.” He didn’t say they always disagree.  He said they do, because economists do, in fact, disagree.  All one has to do to confirm that is read different economist’s views on Healthcare Reform. For example, it’s true that Tom Tait drinks with a convicted drunk driver.  But it’s not true that Tait might have said, “another beer Vern?” Let’s not put words in anyone’s mouth).

I’ll concede that “continually” would have been a better choice of word than “always.”  I also doubt that anyone took my statement to mean that Jordan believed that no two economists ever agreed on anything.

• That the study is solid. (As solid as it could be; another one is needed that is more detailed).

See, when I’m considering policies, and I say that a study relevant to choosing among them is “solid,” I’m saying something like “it provides firm grounds for us to rely upon to guide our decisions.”  If Brandman instead meant “they were asked to look at the wrong measure and by God that’s what they did!”, I hope he’ll explain that that’s what he meant — and why he’d ever say such a thing to Wisckol.

• That he believes it. (On the main point, that the Angels contribute positive economic benefits to Anaheim and Orange County, so do I and so does Chapman’s Adibi).

Jordan’s actual words, following saying that the study is solid, were “and I believe it.”  All that stuff that Dan adds about positive economic benefits to Anaheim and — hmmm, why does Dan add “and Orange County?” — that is, ironically enough, Dan putting words in Brandman’s mouth!  What would be really interesting for Dan to do, if he had the guts, would be to watch the video of Brandman’s representations to the Council since September 3 — and find out if he seems to be talking about gross revenue or net revenue.

If he’s been talking about net revenue from the Angels all along, then according to Dan he has apparently misunderstood this study and those confident endorsements he made of it are very wrong.

Worse, if he’s been talking about gross revenues all along in his comments during meetings, then, he’s been using the wrong numbers to decide about what makes a good policy.  Then the question becomes whether he just didn’t understand what he’d been doing — or whether he was deliberately trying to mislead.

I may have to round up a posse to help me weed through his comments.

9. Some Concluding Remarks

Dan had some more to say, but it’s neither worth reading nor responding to.

I promised when commenting on Dan’s story to port my responses here, so I’ll end with them.  The first was addressed to Vern, whom Dan laid into viciously for his DUIs in commenting on his own article.  (I do not recommend reading the comments.  If you value Vern at all, they will make you dislike Dan a lot.)