Do Sports Stadiums Boost the Economy?

Basic EconomicsHave you ever heard that building a new sports stadium will bring tax revenue to your city/state and increase economic activity?

To me, this seems to be one of the biggest misconceptions among the general populous. The argument is that building a new stadium will employ construction workers and people at the stadium, increase economic activity around the stadium, and increase tourism etc. However, as a paper by John Siegfried and Andrew Zimbalist points out:

“Few fields of empirical economic research offer virtual unanimity of findings. Yet, independent work on the economic impact of stadiums and arenas has uniformly found that there is no statistically significant positive correlation between sports facility construction and economic development (Baade and Dye, 1990; Baim, 1992; Rosentraub, 1994; Baade, 1996; Noll and Zimbalist, 1997; Waldon, 1997; Coates and Humphreys, 1999).”

A study conducted by Baade found no significant difference in personal income growth from 1958 to 1987 between 36 metropolitan areas that hosted a team in one of the four premier professional sports leagues (MLB, NHL, NFL, NBA) and 12 otherwise comparable areas that did not.

Similarly, Waldon found that having a major sports team actually decreased economic activity in the 46 cities he examined from 1990-1994. In fact, he found that increased high school graduation rates and more spending on police increased economic growth. Both Waldon and Baade controlled their study for other economic factors.

Moreover, time series studies confirm the results of cross-sectional studies. Baade and Sanderson found that there is no increase in economic activity in 10 cities that acquired new sports teams between 1958 and 1993.

Just one more example of empirical data proving government spending is useless.

 

– JW

 

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Filed under Chicago School of Economics, Domestic Policy, Economic Methodology, Political Economy, Political Philosophy

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