Are pro sports teams economic winners for cities?

[thelakelander]

This article claims sports stadiums have about the same economic impact on a community as a Stein Mart store....

There are a lot of things economists disagree about, but the economic impact of sports stadiums isn't one of them.

"If you ever had a consensus in economics, this would be it," says Michael Leeds, a sports economist at Temple University.  "There is no impact."

Leeds studied Chicago – as big a sports town as there is, with five major teams.

"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."

That's for a sport with 80 home games a year. NFL teams only play eight regular season games. Still, politicians love building sports stadiums.

"Yes, we will have the NFL back in Los Angeles!" shouted Carson City Councilwoman Lula Davis-Holmes at a rally last month, celebrating plans for a new stadium housing the Chargers and Raiders that would be built in this small city 15 miles south of downtown.

"Stand to your feet and say we want the teams here, for jobs, for revenue, and for our young people," Holmes said.

Down the freeway, next to Los Angeles International Airport, Inglewood is trying to stay one step ahead of Carson. So last month, its City Council approved plans to build the most expensive stadium in U.S. sports history.

Inglewood – one of poorest neighborhoods in LA — projects a football stadium would generate more than $800 million dollars worth of economic activity a year.

But Victor Matheson, a sports economist at College of the Holy Cross, is dubious.

"A good rule of thumb that economists use is to take what stadium boosters are telling you and move that one decimal place to the left, and that's usually a good estimate of what you're going to get," Matheson says.

Economists say the biggest reason sports teams don't have much impact is that they don't tend to spur new spending.  Most people have a limited entertainment budget, so the dollars they are spending when they go to a game is money they would have spent elsewhere, maybe even at a restaurant or small businesses where more money would have stayed in the community. Plus, Matheson says, rather than draw people to a neighborhood, games can actually repel them.

"Sporting events can cause significant crowds and congestion that can cause people to stop going to other events in the area," he says.

That's part of the reason why a 2003 analysis on Staples Center commissioned by the Los Angeles City Controller included a surprising finding.

"Economic activity in Inglewood actually increased when the Lakers left town," says Matheson.

That is, sales tax revenue went up when the Lakers and Kings moved to Staples Center in 1999.

Full article: http://www.marketplace.org/topics/business/are-pro-sports-teams-economic-winners-cities#.VQuKaw8_5c0.linkedin

[JFman00]

How to Stop the Stadium Wars

Both President Obama and the Koch brothers agree that tax-free government bonds for stadiums are wasteful government spending. I heartily agree.

[finehoe]

...sports stadiums have about the same economic impact on a community as a Stein Mart store....

Sounds about right.

[urbanlibertarian]

I love the Jags and Suns but sports is entertainment and should stand on its own, competing with other forms of entertainment for consumer dollars.  The sports venue business is just one of the many activities that government should not be engaged in.  It's crony capitalism, meaning government is subsidizing or using regulation to protect a business or industry from the challenges of the free market.

[CityLife]

If you ever had a consensus in economics, this would be it," says Michael Leeds, a sports economist at Temple University.  "There is no impact."

Leeds studied Chicago – as big a sports town as there is, with five major teams.

"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.

This is either an atrocious level of analysis by the economist or poorly written article. Of course losing a sports team in a highly diversified and large economy like Chicago would not have a major impact on the city's overall economy. Just like a stock portfolio with 100 stocks doesn't dip when one performs poorly. I also think that anyone who has spent a game day in Wrigleyville would strongly disagree that the economic impact of the Cubs is the equivalent of a department store. I love that they also gloss over the impact moving the Staples Center and the subsequent LA Live development has had in revitalizing downtown LA.

Those cases really aren't that analogous to Jax though. The economic impact of the Jaguars, Bills, Packers, Thunder, Panthers, etc are likely much more significant to their local economies than teams in NYC, Chicago, LA, etc. Improving our local economy is largely predicated upon bringing in outside businesses and wealth. Without the Jags and The Players, I don't think Jax would be nearly as visible on the radar of outsiders. Would we have gotten Deutsche Bank or other corporate relocations? Would all the wealthy people that retire to PVB, Amelia, and the Beaches move here? Perhaps, but maybe not to the extent we have. We simply can't quantify the overall impact it has on our developing economy.

I don't believe we should bend over backwards for sports and personally would like to see Jacksonville become a more cultured city, but I think its asinine to believe the Jags have the same impact on our economy as a department store.

[KenFSU]

"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."

Weird article.

Can't seem to make up his mind whether he's talking about stadiums, or sports teams overall.

I think we can all agree that public subsidies for sports stadiums have gotten out of control, but economists have a tendency to have a hard time seeing the forest from the trees. There is no universe in which the Cubs, Bulls, Bears, White Sox, and Blackhawks have not had an aggregate positive economic impact on the city of Chicago over the last 100 years. Sure, wipe them all off the planet and the immediate economic impact might only be a fraction of 1%, but you can't look at these cultural institutions in a vacuum. Chicago's vibrant sports scene is priceless in terms of the quality of life appeal of the city. Take away the sports, and jobs start going elsewhere. Tourism plummets. Neighborhoods like Wrigleyville decay. Salaries go down.

Personally, I find Inglewood to be a pretty bad example too. Correlation does not equal causation. The gentrification of Inglewood follows a much larger trend in Los Angeles that began in the Latino neighborhoods before spreading into African American communities. With its location – less than ten minutes from LAX and the beach, and a modest trip into downtown – the upswing was inevitable. It doesn't hurt that the Metro built a commuter rail line directly through the heart of Inglewood either.

[I-10east]

Cities like Jacksonville and Miami are doing the right thing updating their existing outdoor NFL stadiums. Refurbishing perfectly fine outdoor stadiums, in contrast to the overblown talk of 'building a new stadium every 20 years'. EverBank Field will be the home of the Jags indefinitely, don't believe the hype of 'the next 10-20 years another Jags stadium will be built'. Many cities unfortunately have these indoor dim austere environments (ie the Edward Jones Dome) and they need new stadiums, like ATL and MIN are doing.

[fsquid]

maybe, but there isn't a mayor in this country that wants to lose a team on his watch.

[JFman00]

maybe, but there isn't a mayor in this country that wants to lose a team on his watch.

That's the same race to the bottom rationale that leads to Bass Pro/Cabela giveaways and corporate HQ relocation blackmail. What will it take us to get out of this mindset?

[Overstreet]

maybe, but there isn't a mayor in this country that wants to lose a team on his watch.

That's the same race to the bottom rationale that leads to Bass Pro/Cabela giveaways and corporate HQ relocation blackmail. What will it take us to get out of this mindset?

It is what it is.  You might as well add, all the fancy stores at Town Center, Maxwell Coffee plant, that battery plant at cecil, the aircraft manufacturer from S. America that courts Cecil from time to time, Coach, American Express, Mayo Clinic, etc.  It is the business of JEDC, Chamber of Commerce, and every other business development organization. And while we are at it don't forget all those amusement parks that folks are often whining/wishing about coming to  JAX.  You get rewarded for bringing things to town.

One reward is that corporations look for sports teams, universities, housing, shopping besides the logistics for the business. If people (employees)  don't want to go there the company will be less motivated to relocate there.

[fsquid]

maybe, but there isn't a mayor in this country that wants to lose a team on his watch.

That's the same race to the bottom rationale that leads to Bass Pro/Cabela giveaways and corporate HQ relocation blackmail. What will it take us to get out of this mindset?

Unsure, what was it like before cities did this?

[JFman00]

I'd imagine they competed on competitive advantage rather than tax breaks, and didn't throw away taxpayer money while doing so.

The Folly of Corporate Relocation Incentives

Why Have So Many Cities and Towns Given Away So Much Money to Bass Pro Shops and Cabela's?

The Uselessness of Economic Development Incentives

The bigger issue is that incentives do little to alter the locational calculus of most companies. The broad body of evidence on incentives, including the Times series, finds that incentives do not actually cause companies to choose certain locations over others. Rather, companies typically select locations based on factors such as workforce, proximity to markets, and access to qualified suppliers, and then pit jurisdictions against one another to extract tax benefits and other incentives.

[KenFSU]

maybe, but there isn't a mayor in this country that wants to lose a team on his watch.

That's the same race to the bottom rationale that leads to Bass Pro/Cabela giveaways and corporate HQ relocation blackmail. What will it take us to get out of this mindset?

Unsure, what was it like before cities did this?

Almost exactly the same, only without the massive taxpayer leakage. There have been numerous studies showing that well over 90% of companies make their relocation and investment decisions completely irregardless of incentive considerations.

[spuwho]

How to Stop the Stadium Wars

Both President Obama and the Koch brothers agree that tax-free government bonds for stadiums are wasteful government spending. I heartily agree.

There is an entity called the Reedy Creek Improvement District (Disneyworld) that uses tax free munis to fund their improvements. Why stop at stadiums?

http://en.wikipedia.org/wiki/Reedy_Creek_Improvement_District

All Aboard Florida will use tax free PAB's to finance their rail improvements.

Even hospitals use tax free munis for improvements deemed worthy to the public.

So where does one draw the line?

Illinois created ISFA to keep the White Sox from moving to Addison, IL (or as rumored at the time, Florida) and used tax free munis to build what is now US Cellular Field to replace the former owner held Comiskey Park. The Sox owners were going to take advantage of easier access to private tax free bonds in Florida.  This state is designed for development and the regulatory environment around tax-free bonds are pretty liberal to support that. The Sox had to sign a long term lease of course.

Also there is a misconception that all tax free muni's are supported by a taxing body in the event of a financial failure. This is not true. Usually some kind of collateral or surety is required to get the needed financing.

[JFman00]

Unlike your examples of infrastructure or public services, we stop when the demonstrated gains no longer accrue to the public as a whole and instead concentrate in the hands of the few. 50 million dollars for improving the quantity and quality of free urban parks? Or 50 million dollars for a private entity to get more people to pay $150 a visit?