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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!)
August 18, 2007 5:00 PM ET | Delete
many interesting points. im not a fan of corporate welfare but having an unused arena doesnt seem to make sense either.
August 18, 2007 5:35 PM ET | Delete
There are always concerts, conferences, etc that can be had at a large venue like that but a permanent client who pays the city would make the most sense in regards to economics. You just have to make sure they pay the city.
August 18, 2007 5:36 PM ET | Delete
A city has no business building an arena. In our capitalist system, the market must be able to support an arena, and if it could, then a private enterprise will build it, with the city only kicking in infrastructure costs (the same thing cities do when they put up new stoplights for that new WalMart. Cities are supposed to provide a decent place to live and to protect commerce and property in that city. Schools, police, libraries, parks- these things are enjoyed by all, regardless of income. When cities build stadiums for millionaire owners, only the rich get to enjoy these, as the poor cannot afford to get close. Just look at Washington and Detroit. Libraries are closing, the police and fire departments are underfunded, yet millions went to stadiums that will have at best a negligible effect on tax revenues, and that mostly cannibalize it from other places in the city.
August 18, 2007 5:52 PM ET | Delete
Oddly enough, I actually think it wasn't a terible thing for Detroit in that it was more of a beautification project. What made Detroit a different case however is that Mike Illitch (owner of Tigers/Wings/Little Ceasers Pizza) poured millions into the surrounding area. What was once a slum is now actually a nice looking place. You can actually walk outside in Detroit around there and that is a major acheivement. That however took a lot of investment from the Mr Illitch and it is definitely not the norm. I'm not sure what it has done in terms of revenue and such for the city, but it actually created a nice place in downtown Detroit where you don't feel like somebody is lurking in every shadow.
August 19, 2007 10:36 AM ET | Delete
August 19, 2007 11:30 AM ET | Delete
In some areas, building new areana is definately a form of civic improvement. Look at cities with minor leage teams, like Bridgeport. For decades, Bridgeport was nothing but a slum that you would go thru on your way to Boston. But now that they have 2 minor league teams (baseball and the AHL's SoundTigers) with brand new areans, the downtown area is going thru a rennaisance, increasing property values in the whole area and helping to clean town up. I think that it is a great idea for a floundering community to spend tax dollars on this kind of improvement...it shows forsight and ability to grow. The same thing happened last year in the city I now live in, New Orleans. Spend tax dollars to get the Superdome up and running and the surrounding areas have really sprung back to life after Katrina, including a huge jump in vacationers, conventions, and tourists. Now, this may not be happening in every major metro area to this kind of extent, but in some cases it works out great.
August 19, 2007 7:00 PM ET | Delete
Yes, Arena's can be used to bring revenue to the city for multiple things. Concerts, conventions, etc... they serve a purpose for a lot of venues. If you have more than one team also it helps. Such as if you have a hockey and basketball team. It would work out pretty well monetarily. Great blog!
August 19, 2007 7:21 PM ET | Delete
thanks for the comments.
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