Much is being made of Nashvilles support levels for the Predators coming from various levels of government. Some might be suggesting that Nashvillians don't truly support their team if they don't want to see tax dollars spent on it. Of course, it should be remembered that CANADIANS didn't want to see their tax dollars going to fund hockey teams either. In this blog I aim to show that the overall economic impact of professional sports teams has been shown to be neglible at best. Yes it is true that certain resteraunts and bars around the location of the sports facility do see an increase in traffic, however this usually comes at the expense of somewhere else within the city. i.e. people don't spend more money, they just spend it somewhere else.
Most of the income derived from a professional sports team goes to the executives, players, coaches, etc who don't generally live in the area anyways. There is a construction boom to build the facilities, but these jobs are gone once construction is complete.
One example of how poor these deals are for cities comes from the Arizona diamondback franchise. THe government gave 240 million to help with construction costs etc. Only 340 jobs (equivalent to full time work) were created by the baseball team meaning that taxpayers spent $705800 dollars per job. It stands to reason that these jobs did not bring in equivalent numbers of tax revenue from the employment.
In general stadiums have been shown to create economic booms around the location of the facility for an average of about 3 years. So while there is an initial boom, it tends to go down after a while ..
This information is cited from:
"Sports, Jobs, and Taxes: The Economic Impact of Sports Teams and Stadiums
Paul D Staudohar. Industrial & Labor Relations Review. Ithaca: Jul 1998. Vol. 51, Iss. 4; p. 712 (3 pages)
In general, "sweetheart" deals for Owners tend to serve one purpose: Make owners richer. There are relatively few examples of sport franchises creating an overall positive economic impact. IMporting a sports franchise is not equivalent to attracting a fortune 500 company to your area. Sports franchises have conclusively been shown to NOT improve the overall net income average of areas.
The deals are generally shown to provide overall benefit to municipalities beforehand, but this generally is not the case. Take for example a case from Baltimore. A prior study suggested that a 200 million dollar facility would raise 3.8 million for the city, and 6.3 million for the state. In reality, the net tax increase collected by all levels of government was 0.7% an oveall neglible figure in terms of tax moneys. (not going to provide all figures as it would be increasingly difficult to read, for more informaton see
information taken from The stadium gambit and local economic development
Dennis Coates, Brad R Humphreys. Regulation. Washington: 2000. Vol. 23, Iss. 2; p. 15 (6 pages) )
The only true impact of publicly funded sports facilities? A dramatic increase in the value of sports franchises.
Now, it is always hard to take figures and studies at face value. THere are many intangible factors that can skew figures both positively and negatively. If you truly believe that sports franchises bring huge booms to local populations, this will not have changed your mind. If you truly beleive the opposite, this probably won;t have changed your mind either. That being said, the truth as always lies somewhere in the middle of both extremes. THat being said, in all the academic journals i perused (about 10) I could not find a single article that said that the economic impacts were beneficial to the area.
The problem is that sports franchises are few and far between. It is the beauty of professional sports that only the elite make it so there are a limited number of franchises, with each additional franchise diluting the overall talent level but that's another topic for debate. Sports franchises are highly visible and can be extremely popular depending on the region. The politician who would be able to bring football to LA, or hockey to Winnipeg would most likely be extremely popular. For that reason, there are always municipalities and states that would like to get their hands on franchises to demonstrate that their city/town/region is world class and capable of hosting world class athletic events. For that reason, city's are frequently willing to break the bank to attract a franchise. See free rent in Kansas city as an example. Why are they willing to do this? It is not for the economic impact, it is for political reasons. Although many have a hard time beleiving hockey could survive or even be considered a political success in KC, the image it represents is extremely valuable. With more and more cities vying to attract franchises, it will be a virtual race to the bottom to see who can provide the cheapest location to host events.
It is extremely important to remember that for every dollar given to a sports franchise, it is one dollar coming out of the tax coffers. If you support it or not, it is your decision. SOme might be willing to accept that their taxes go to sports franchises, others are not. That being said, it is important to consider that the evidence seems to suggest that the economic benefits aren't what is generally suggested by owners and politicians in support. (Of course, beleiving politicians is always a fools game but again, off topic.) If you wish to support tax dollars going to franchises, that is your decision. Do however consider that the benefits might be outweighed by the negatives.
(apologies if this was long or unreadable, if it was readable, thanksfor reading it!)