Given the lingering controversy surrounding the USOC deal, you’d think that the author of the report, Deloitte, a major international accounting and consulting firm, would have produced an authoritative, in-depth study of the USOC’s actual economic impact.
That’s exactly what they didn’t do.
The report is all of 19 pages. It’s mostly boosterish rhetoric, a few simple charts, and a score of conclusions that magnify the admittedly considerable economic impact of the USOC and its satellites. That’s not surprising, given that much of the report’s data came from the USOC, as well as from the EDC and Angelou Economics.
From the report:
“This study draws its assumptions, analysis, and conclusions from 2009 calendar year data and nearly a dozen interviews with key area stakeholders including:
The USOC and area NGBs;
The City of Colorado Springs;
The Colorado Springs Sports Corp.;
Experience Colorado Springs;
The Greater Colorado Springs Chamber of Commerce;
Angelo Economics (sic)”
After duly analyzing the various economic impacts of the USOC, the NGBs, and other related organizations, the report concluded that they account for 2,158 jobs, $4.9 million in city and local tax receipts, and a total output of $215 million.
These are impressive figures — but let’s examine them a little more closely.
There’s one glaring omission. It is nowhere noted in the report that more than $1 million annually flows out of city coffers to service the $32 million in certificates of participation that the city sold to fund the USOC “retention package.” Ok, so let’s reduce the tax impact by a $1 million to $3.9 million — still a lot of money.
But wait a minute! Of the $3.9 million, $1.5 million is attributed to property taxes paid by employees. That figure is based on the dubious assumption that if the USOC and its satellites were to leave town, all the real estate owned by their employees would simply evaporate from the tax rolls. It’s an interesting statistical conceit, but one which has no basis in reality — at least as far as residential real estate is concerned.
It may be a different story for an enterprise’s commercial property. Consider Intel’s billion-dollar manufacturing facility, which shed much of its value after Intel closed.
But wait another minute! All of the USOC’s facilities are tax-exempt, so if the organization left town and sold the property to a private owner, local property tax receipts would increase, not decrease.
And here’s the sourest note of all.
“Large grant-making institutions contribute to the USOC and thereby bring money into the region that might otherwise go elsewhere. One of the area’s non-profit foundations helped to fund the initial move of the USOC to Colorado Springs, and thereafter began a sports funding category. The size of these contributions in the area continues to grow.”
That’s what I’d call making lemonade out of lemons. One presumes that the report’s authors are referring to El Pomar, the visibly reluctant funder of last resort, which ponied up a few million bucks to help keep the USOC in town. Absent the retention deal, those dollars might have gone to other Colorado charities and nonprofits, some of them in nasty places like Pueblo, Alamosa and Walsenburg. But clearly, the grandees of the USOC can make better use of foundation largesse!
Deloitte, which is the “official economic services sponsor” of the USOC, most likely churned out the report gratis. By ignoring the obvious, stressing the dubious, and using overly optimistic methodology (ask your favorite right-wing economist about ‘Implan,’ the economic impact analytics preferred by stadium promoters), Deloitte did the USOC no favors. Its client would have been better served by a more conservative approach.
That’s because despite the report’s shortcomings and evasions, the USOC’s economic impact is substantial and enduring. It doesn’t need any puffery.
Unlike Intel, or Apple, MCI, or Digital Equipment, our resident jocks are with us for the duration. They contribute mightily to the city’s quality of life, to its economic stability, and to its inherent attractiveness. Absent the USOC, we’d be even more poorly positioned to weather the economic storms that are already brewing on the horizon.
So let’s hope that Deloitte isn’t just blowing smoke in the report’s last sentence.
“With the renewed partnership between Colorado Springs and the USOC, continued economic benefits and opportunities for future growth can surely be realized.”
How ‘bout a USOC-financed downhill course on Pikes Peak for the 2022 Winter Olympics?
Hazlehurst can be reached at email@example.com or 719-227-5861. Watch him at 7:20 a.m. every Tuesday and Friday on Channel 3, Fox Morning News.