When a sports team wants to get a new stadium they claim this will help the local economy. This gives those teams an economic justification for public subsidies. The Florida Marlins just convinced Miami of that (will they be called the Miami Marlins one day?). Major League Baseball is currently trying to help the Oakland A’s get their hands on some public money (while the A’s are insulting Oakland!). Locally Chester helped finance a soccer stadium. Here is a major problem: Public funds for stadium spending do not create positive economic conditions.
Plenty of economic research points to the fact that stadium spending hurts the local economies. Lots of ways to think of this one… but here are two main ones:
1) The Marginal Propensity to Consume for sports owners are lower than that of the alternative recipient of the funds. This creates a smaller multiplier for stadium financing relative to other public programs. (think opportunity cost)
2) The “it will help stimulate local businesses” argument disappears when you consider the research that shows local businesses are actually a substitute (not a complement) to sporting events. Think of it: you have one day per week to allocate toward leisure. You can either go to the theater or to the game. Not both. Furthermore, local businesses deal with negative externalities such as increased congestion and decreases parking.
The problem (and the power that team’s have over cities) are that they can pick up and move. Maybe cities are stuck in a Prisoner’s Dilemma? If so the solution may be pass a federal law prohibiting such finances (or to threaten to pull the leagues antitrust exemption… which is an entirely different rant). So how do they get the funds? This may help explain things.
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I live in a town that is close to the Pocono Race Track. During the summer I work at a small local restaurant and on race weekend we lose business. Not only do the fans attending the race do not come in, but the local do not want to leave their houses and deal with all the traffic. We are lucky that the race only affects us twice each year.
ReplyDelete"I don't believe it. And this field of dreams is going to be a nightmare for our taxpayers."
ReplyDeleteHotel bed taxes are meant to finance most of the construction, with the Marlins paying $119 million and repaying a $35 million loan from the county. Critics have said taxpayers shouldn't help foot such a large bill for a private enterprise, especially given the sour economy.
"There's nothing wrong with saving until you can think of a better way to spend things," said Reginald Munnings, a 52-year-old resident of the area in which the stadium will be built. "The financial resources of this community should not be used to bail out this private company."
To secure the city's approval last week, the Marlins agreed to several requests, including a promise to employ local residents, to donate $500,000 to charity each year and to build community ballparks around the county.
Sketches for the stadium, which were released earlier this year, show it with a mostly white exterior, with windows beyond part of the outfield seats and palm trees lining the entrance.
As for relying on stadiums to create economic prosperity in cities: I don't think it will work. First, think of Philadelphia and how the stadiums are on the outskirts of the city, the farthest stop south on the Broad Street Line, pretty far away from most shops or most of the things stadiums aim to attract. Second, think about the overall traffic pattern, no one wants to go shopping or go out to eat in a district when there is this or that game going on, and to get there you have to manuever through heavy traffic.
-Shannon O'Lone
Reading this entry brought me to think about the casinos being built in Philadelphia. I'm interested to see how the casino in Center City will turn out. I was at one of the public hearings, Foxwoods was speaking about how the local businesses will benefit, it's farther from the truth. Understanding that local businesses as you said are substitutes, brought me to think about this.
ReplyDelete-christopher li
A point that was stated earlier about how teams can pick up and leave when ever they want sticks out to me. I live in Washington DC, which is very close to Baltimore. The Baltimore Ravens haven't always been around, there used to be the Baltimore Colts--that is until the franchise picked up and left to Indianapolis in the middle of the middle of the night with out any of their fans knowing. Even today, Baltimore fans are still sour about the subject of the Indianapolis Colts.
ReplyDeleteThe fact is that these sports teams are franchises; they are allowed to sell their franchise to any other buyer in any other city--sometimes an approval of the league is in order. This explains the odd franchise names that don't quite match up to the locations, ie: Indianapolis Colts (there are no wild horses in Indianapolis like there are in Maryland), LA Lakers (formerly the Minneapolis Lakers), and my favorite Utah Jazz (...yeah, Jazz in Utah?--formerly the New Orleans Jazz).
-Dylan Krueger