Subsidizing private sports teams doesn’t help local economy

Politifact (March 9) –   A  2008 summary of research by economists Dennis Coates of the University of Maryland, Baltimore County, and Brad Humphreys of West Virginia University… reviewed more than 40 academic studies, spanning nearly two decades, that examined public subsidies for professional sports teams. Their findings were clear.

“There now exists almost 20 years of research on the economic impact of professional sports franchises and facilities on the local economy,” they wrote, reporting that studies published in peer-reviewed economic journals show there is “almost no evidence that professional sports franchises and facilities have a measurable economic impact on the economy.”

[Humphreys] and Coates found no difference in economic impact between the years when teams were playing their regular schedules and five time periods when they didn’t, due to strikes.

And in a subsequent analysis, they found that having postseason games did not affect real per-person income in a city. Money may shift from one part of the economy to another, but there’s no net benefit.

The evidence is overwhelming, Coates and Humphreys wrote. “Economists reach the nearly unanimous conclusion that ‘tangible’ economic benefits generated by professional sports facilities and franchises are very small; clearly far smaller than stadium advocates suggest and smaller than the size of the subsidies.”They also noted that in 2005, when a random group of economists was asked if they agreed or disagreed with the statement, “Local and state governments in the U.S. should eliminate subsidies to professional sports franchises,” 28 per cent agreed and 58 per cent strongly agreed. That’s a whopping 86 per cent. Only 5 per cent disagreed.

There are special-interest reports that claim an economic benefit and contend that every dollar invested in a sports franchise generates a specific amount of money, Humphreys said, but those are never published in reputable journals because “you can make them say whatever you want them to say” by tinkering with the assumptions that influence how the numbers are crunched.

We posed the question to other experts, including Rick Eckstein, professor of sociology at Villanova University and author of “Public Dollars, Private Stadiums: The Battle over Building Sports Stadiums.”“There are absolutely no publicly subsidized stadiums and arenas that generate enough direct or indirect tax increases to balance the initial (and ongoing) public outlay,” he said in an email.“In fact, some research suggests that sports stadiums actually decrease economic activity and tax revenue in areas where they are built,” said Eckstein. “However, strategically placed stadiums and arenas can sometimes ride existing redevelopment trends, but they are never the cause of these trends.””