The impact of professional sports franchises and venues on local economies: A comprehensive survey

By John Charles Bradbury, Dennis Coates & Brad R. Humphreys.

"Abstract

Local governments routinely subsidize sports stadiums and arenas using the justification that hosting professional franchises produces economic development and social benefits to the community. The prevalence of venue subsidies has generated an extensive and vibrant economics literature on the subject, which spans over 30 years and includes more than 120 studies. We chronicle the research from early studies of tangible economic impacts in metropolitan areas, using basic empirical methods, through recent analyses that focus on sub-local and non-pecuniary effects and employ more sophisticated estimation strategies. Though findings have become more nuanced, recent analyses continue to confirm the decades-old consensus that the economic effects of professional sports teams and stadiums are limited. Even with added non-pecuniary social benefits from quality-of-life externalities and civic pride, welfare improvements from hosting teams tend to fall well short of covering public outlays. Thus, the large subsidies commonly devoted to constructing professional sports venues are not justified as worthwhile public investments. We also investigate the paradox of local governments continuing to subsidize sports facilities despite overwhelming evidence of their economic impotence. We intend to inform academic researchers and policymakers to motivate future studies and promote sound policy decisions that are guided by relevant research findings."