March 20, 2006


Ballpark figures: Sports economists agree that cities--and taxpayers--get close to nothing from spending public money on sports teams. What they haven't figured out is why we're still doing it. (Drake Bennett, March 19, 2006, Boston Globe)

WHEN A TEAM WANTS money, and it's usually money for a new stadium, it commissions an economic impact study. The predicted economic impact tends to be dramatic. The study the accounting firm Ernst & Young did for the proposed New York Jets stadium in Manhattan predicted that it would bring in $72.5 million in additional annual tax revenue. A similar study by the consulting firm Economics Research Associates, ERA, calculated that the new Dallas Cowboys stadium in Arlington, Texas, due to open in 2009, will add between $12.48 billion and $27.65 billion to the county economy over an estimated 30-year lifespan.

Independent economists dismiss these numbers. Much of the envisioned economic impact, they argue, comes from the money spent by fans, either on tickets or concessions or in nearby restaurants, hotels, souvenir shops, and the like. The problem with this argument, economists say, is that most families, whether they keep a budget or not, spend a finite amount of money on entertainment. As Vanderbilt University economist John Siegfried puts it, ''What are people going to with their money if they don't spend it on the Red Sox, flush it down the toilet? No, they'll spend it on something else: books, maybe, or bowling, things that Boston would benefit just as much from."

As for new jobs, sports teams and their stadiums do create them, but remarkably inefficiently, according to Roger Noll, an economics professor at Stanford University and co-editor, with Zimbalist, of ''Sports, Jobs, and Taxes" (1997), one of the most comprehensive works on the public funding of sports. In Baltimore, he says, the cost per job created by Camden Yards was $125,000, whereas for the city's other urban redevelopment programs it was $6,000 per job. And $125,000, according to Noll, is actually pretty efficient for a sports stadium.

University of Chicago economist Allen Sanderson puts it another way. ''Cities would be better off," he says, ''if the mayor were to go up in a helicopter and dump out $100,000." [...]

ACCORDING TO Siegfried, there's a remarkable agreement on these points. In economics, he says, ''with most empirical issues there's lots of debate. Does the minimum wage cause unemployment? There's lots of debate about that issue. Here there's no debate." Even the consulting firm ERA put out an issue paper, back in 1995, cautioning against ''overblown claims of the economic value of major league sports teams" and concluding that, ''Compared with more traditional public investments of scarce economic development dollars. . .sports facilities are a rather poor investment."

But if public subsidies for sports teams are such an incontrovertibly bad idea, why is a city like Washington, D.C., still willing to pay $611 million for a sports stadium? Sports economists point, with varying degrees of frustration, to a combination of politics and unfortunate economic realities.

Major league sports, they argue, are essentially monopolies: They can ensure that the number of teams always stays below the number of cities that can support one. In economic terms, this creates a scarcity of supply and thereby drives up the ''price"-in subsidies, favorable land terms, or stadium lease deals-that a team can demand. Chicago built the White Sox a new stadium to keep them from moving to St. Petersburg, Fla., in the late '80s, for example. More recently, Nashville had to agree to build a new stadium to lure the former Houston Oilers to town.

Politicians, who like the publicity that comes from being associated with a major league sports team, see sports subsidies as a particularly glamorous use of public money-and are particularly vulnerable to the allure of gaining a team or the pain of losing one. As a business sector, major league sports is fairly small, and yet, points out Clemson economics professor Raymond Sauer, ''It's the only sector with its own section in every major newspaper in the country. It's an attention getter, so it's very natural for political people to align themselves with sports projects."

Still, there are also less cynical explanations. Mark Rosentraub, dean of the college of urban affairs at Cleveland State University, has consulted on a number of stadium projects, and has been vocally skeptical of many of them. But he believes that well-thought-out projects can benefit cities. Though they don't create economic growth, he argues, stadiums like Camden Yards and San Francisco's SBC Park (which was built almost entirely without public funds) have helped guide it.

The natural pattern of development, Rosentraub asserts, tends to be sprawl, but stadiums can function as focal points around which apartment buildings, stores, restaurants, and bars cluster. And they can help bring back hollowed-out downtown areas. In San Diego, the Padres' new Petco Park turned a desolate area full of abandoned lots and storage facilities into a landscape of luxury condominiums and boutique hotels. Washington is hoping a new stadium will do the same for the city's blighted Anacostia neighborhood. Of the recent stadium deal, Washington Mayor Anthony Williams's office has said the ''exciting economic revival" the stadium would trigger, ''will benefit our whole city for generations to come."

OF COURSE, THERE'S ANOTHER, more familiar factor that can skew the models of economists and planners alike. Many people, Rosentraub points out, just really like sports, and in a way that falls outside traditional measures of cost and benefit.

Posted by Orrin Judd at March 20, 2006 8:03 AM

It would be interesting to see a study done on the percentage of suburban residents that make up the attendance at games played in the new stadiums that have relocated to downtown areas. Those people spending money within the city would be a net financial gain, since it's unlikely they would drive all the way into town just to go to Barnes & Noble to redirect their cash, as Siegfried suggests city residents would do.

Posted by: John at March 20, 2006 9:30 AM

If we give public subsidies to the overgrown, overpaid, and oversexed children playing with their balls, I think we should subsidize blues musicians and beer as well. Makes about as much sense.

I've got nothing against professional sports except that they want to pick my pocket to build their playgrounds. If maybe the Randy Moss-types had their pay cut in half (which would still make them very wealthy), the leagues could build their own d***n stadiums.

It's the same way I feel about NPR--they take money from my paycheck and proceed to insult me. Every year, the local sports teams (whom my son worships) have given us more DWIs, sex offenses, and assaults then a season's worth of Cops.

And what makes it really irritating is that (at least around here, in Minnesota), the electorate has consistently been saying a loud NO! to subsidies for 20 years. Yet the political and business establishment keeps trying to shove it down our throats.

Posted by: ted welter at March 20, 2006 10:39 AM

Have the dismal scientiests figured out a way to quantify civic pride yet?

Posted by: Jim in Chicago at March 20, 2006 10:57 AM


certainly a city that's identified with music--Nashville, NYC, or Memphis--ought to support first class fora, no?

Posted by: oj at March 20, 2006 11:01 AM

Subsidized enterprises whether they're sports arenas or industrial parks or urban blight removal spend our money with gay abandon. No need to be parsimonious. Plenty more where that came from.

Our little town of 5,000 has received state and federal grants in the multiple hundreds of thousands for studies on how to remove the "urban blight" from our "downtown" area of five or six blocks. Urban blight being in the eye of the beholder, the property owners who just happen to run the town government will receive inducements and low interest loans to spruce up their property.

Is this a great country or what?!?

Posted by: erp at March 20, 2006 11:10 AM


No, I disagree with public subsidies for "the arts" as well as sports. Arts subsidies are wrong because it is anti-democratic to steal money from Joe Sixpack's paycheck so Poindexter Pinot Noir can attend a symphonic concert. Sports subsidies would still be wrong even if we were stealing from Poindexter so Joe could bring his kids to the ballgame, but we're not even doing that. Professional sports events haven't been affordable to Old Joe Sixpack's family for about a generation now. Bringing a couple of kids to one pro baseball game is gonna set you back over 100 bucks. Pro football--fuggedaboutit.

Posted by: ted welter at March 20, 2006 11:46 AM


Of course it's anti-democratic. Democracy produces Three's Company, not art.

Posted by: oj at March 20, 2006 12:47 PM

Only Green Bay does it right.

Posted by: Chris Durnell at March 20, 2006 1:06 PM

oj: I'll grant you that democracy (I think "democratic capitalism" is more accurate) produces a lot of what you and I would consider crap, but that is the result of Sturgeon's Law (90% of everything is crap) rather than a feature particular to democracy or capitalism. But the crap ratio (post-reformation, anyway) of government subsidized art approaches 100%.

In America, commerce of the rudest sort has spawned jazz, rock and roll, blues, soul, tin pan alley-you name it. Government subsidies have given us...?

Museums, symphony orchestras, and Shakespeare-in-the-parks don't count, as the original works that have merit were created long ago, either as part of a business (Shakespeare), or funded by private or church patronage.

Posted by: Ted Welter at March 20, 2006 1:36 PM

Yes, Chris, and the Packers had to ask that same public to pony up bond money for a Lambeau Field renovation. This, after being screwed and tattooed by Bud Selig's decrepit Miller Park.

BTW, while watching March Madness, did anyone notice the new arena Jacksonville has? It looks pretty, but would it be used the rest of the year for much?

What cost civic pride?

Posted by: Brad S at March 20, 2006 2:08 PM


Yes, they've given us the world class venues in which to enjoy culture. Government doesn't give us baseball, just parks to watch it in. There's every reason for a city that wishes to be great to provide both.

Posted by: oj at March 20, 2006 3:57 PM


Suburban residents pay for sports subsidies too.

In the Denver area, the special sales tax increase to pay for the Bronco's spiffy new stadium covers three counties, including all of the suburbs of Denver, and many exurbs.

Posted by: Michael Herdegen [TypeKey Profile Page] at March 20, 2006 4:46 PM