A new report by sports economists Dennis Coates and Bruce Humphreys shows once again how pro sports stadiums don’t add to economic development – they actually have a net negative effect on local income (University of Illinois News via the Street).
“Our conclusion, and that of nearly all academic economists studying this issue, is that professional sports generally have little, if any, positive effect on a city’s economy,” Humphreys and Coates wrote … The professors based their report on new data as well as previously published research in which they analyzed economic indicators from 37 major metropolitan areas with major-league baseball, football and basketball teams. “The net economic impact of professional sports in Washington, D.C., and the 36 other cities that hosted professional sports teams over nearly 30 years, was a reduction in real per capita income over the entire metropolitan area,” Humphreys and Coates noted in the report. The researchers found other patterns consistent with the presence of pro sports teams. Among them: • a statistically significant negative impact on the retail and
services sectors of the local economy, including an average net loss, • an increase in wages in the hotels and other lodgings sector (about $10 per worker year), but a reduction in wages in bars and restaurants (about $162 per worker per year).
Those employed in the amusements and recreation sector appeared, at
first glance, to benefit significantly from the presence of a pro team, with an average annual salary increase of $490 per worker, Humphreys said. However, he added, “this sector includes the professional athletes whose annual salaries certainly raise the average salary in this sector by an enormous amount. As it turns out, those workers most closely connected with the sports environment who were not professional athletes saw little improvement in their earnings as a result of the local professional sports environment.
The full report is here. I am amazed at how cities continue to get away with such boondoggles in the face of such overwhelming evidence that they are a waste of taxpayer money. Think for a moment of what other, more positive things could be done with those funds – the opportunity costs. I am also amazed that the economic development profession continues to fall behind stadium building efforts. Imagine if doctors continue to practice in a way that flies directly in the face of medical science. As a group of professionals, it would seem that economic developers should be held to some standard of professional accountability here. Is that expecting too much?