In “Sports, Jobs, and Taxes: Are New Stadiums Worth the Cost?”, Roger Noll and Andrew Zimbalist question whether athletic stadiums are a useful or effective means of economic development for communities.* When new stadiums are built, they are often heavily subsidized by taxpayers, particularly by issuing state or city bonds.
Cities do this in the hopes of improving the economy. They argue that new arenas directly create construction jobs and indirectly create more employment opportunities by bringing in fans who patronize local businesses. They also often hope that the prestige of having a new stadium will make the city more attractive to companies looking to relocate, as well as tourists.
Noll and Zimbalist looked at the effects of stadium construction in a number of cities, as have others. They conclude,
In every case, the conclusions are the same. A new sports facility has an extremely small (perhaps even negative) effect on overall economic activity and employment. No recent facility appears to have earned anything approaching a reasonable return on investment. (p. 249)
However, cities continue to subsidize stadiums, despite the evidence that they aren’t economically practical, as well as frequent public opposition. Among other things, they often face a form of economic blackmail: teams threaten to move to another city that will build them an updated facility, with fancier concessions, luxury seats, club boxes, and the like, if their host city won’t. While the benefit to cities is doubtful, the additional revenue brought in by these luxuries definitely benefits the teams.
I thought of their findings when I saw a video over at Jay Smooth’s blog about the new stadiums built for the Yankees and the Mets. It’s 18 minutes long, but it’s pretty funny and also highlights some of the issues Noll and Zimbalist bring up (particularly why teams want updated stadiums, effects on the local economy, fans’ differing reactions to new facilities, and teams’ threats to move if they didn’t get what they wanted). You might want to skip the intro, which is about 40 seconds long.
Stadium Status from Internets Celebrities on Vimeo.
* Source: Sport in Contemporary Society, 6th edition, edited by D. Stanley Eitzen. 2001. P. 248-255.
Comments 9
Jonathan — June 15, 2010
The real reason for government financing of sports stadiums is that local politics are dominated by real estate developers. Real estate developers have the most money of any party interested in any one location. Large businesses usually function on an interstate or international level, making them more likely to influence Federal politics. Land doesn't move, so real estate developers don't generally go beyond the state level. The stadium won't generate money for the city, but it will drive up real estate prices around it.
Joel — June 15, 2010
That's an interesting point, so maybe they have an indirect effect?
If stadiums don't directly contribute, does that mean they aren't any good then? How about contributing to culture and community?
SportsEnthusiast — June 15, 2010
If the city is breaking even, or even making a little money, or even losing a little money, that sounds awesome.
Sports teams provide a very important role in the community. It helps bring community members together, they help form a collective identity in the community, and they provide a boost of morale to folks. It is something for people to get excited about and to be entertained by.
Sounds like a great investment to me.
Rose — June 16, 2010
I think you'll find it's a little more complicated than that.
It depends on whether the stadia are being built for the primary purpose of hosting a single team, or whether they are being built for local sports developement and a team uses them as their home ground. Hampden Park in Glasgow, is a stadium built as the national football stadium; although it is also home to a small local team. It's not the same situation as Ibrox or Parkhead, which are the stadia of local premier league teams.
blueowleyes — June 16, 2010
By 'benefit' do you only mean economic? Seems you could make the same argument about museums, parks, opera houses, theatres... Why single out areas for sport?
There is a long history of building sports complexes across many human cultures. These are/were built for a multitude of reasons and funded in a multitude of ways. Very rarely, however, does the concern seem to be purely economic (if it even can be isolated from other benefits). I don't think that is the case in the modern US/West either (I assume that is the data set here?); in the comments above, a number of other factors, players, interests, and 'benefits' have been suggested.
It seems, rather, that the idea of 'economic benefit' is a selling point or a justification needed in this particular culture for such building projects when the public purse is involved. The benefit of the construction is different from the justification for use of public funds in construction. Whether the justification is accurate or misleading, seems to be the major story here.
J C — June 16, 2010
Sports stadiums should not be funded with taxpayer money, ever, period. I'm tired of our athlete-worshiping culture that overemphasizes sports everywhere (even in institutions that are supposed to exist to educate people). Sports teams that make lots of money (and many do) should use some of it to build their own stadiums. Sports get more than enough voluntary support, and there is absolutely zero need to force people to support them in any way.