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Study: Pro sports teams don’t always boost local economies

I’ve always thought it was odd that so many Americans cheer so heartily for sports teams that leech off local taxpayers.

Think about it: In many a city, the owners of a team prevail upon taxpayers to build a fancy stadium, and then the money the owners thereby save is used to pay players millions of dollars. In effect, the taxpayers are paying the players’ exorbitant salaries.

Ah, but the claim is made that the stadium and the team are good for the local economy.

It says HERE, however, that such is not always the case:

The owners of professional sports teams, along with their favorite politicians, often claim that sports franchises are good for the local economy. That assertion is then used to extract subsidies for new sports facilities (or to make upgrades to existing stadiums or arenas). Case in point, the National Football Leagues Atlanta Falcons want$400 million in public moneyfor a new stadium.

But according to research published by the Bureau of Labor Statistics, having a pro sports team in town may be a net negative for the local economy. Paul Staudohar, professor emeritus of business administration at California State University, found in an examination of last year’s National Basketball Association lockout that shutting down sports leagues can be good for a city’s finances.

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9 Comments

  1. This would clearly not be true when applied to my beloved Green Bay Packers.

  2. Craig Knauss

    I feel a classic example that proves the above is the new White Sox stadium. The state built it and leases it. However, any year the average attendance doesn’t hit a threshold value (I think it’s 21,000) the Sox owners don’t pay any rent, which appears to be most years. Also most jobs at the park are part-time.

    The tax payers got screwed!

  3. Craig,

    Here is more on your specific example. Seems like a perfect example of politics, the Chicago way.

    http://isportsweb.com/2012/05/25/open-letter-to-chicago-mayor-rahm-emmanuel/

    It was not too many years ago the owner of the White Sox wanted a new stadium. He wanted the taxpayers to build it for him, tax him as little as possible, so he could make a nice profit. Chicago politicians saw nothing wrong with that. Richie Daley was the Mayor and is a Sox fan. Of course he would do everything he could to spend taxpayer dollars, many millions of them, to build a new stadium.

    The first step was to hire an engineering firm to provide political cover. The idea was to condemn Comiskey Park, say it is unsafe, so there was a real need for a new stadium. Oops! If memory serves me correctly, they said it was built like a fortress and good for at least another 50 years. What do they know? Somehow a second firm got hired and came to the predetermined conclusion the building was almost unsafe and something had to be done.

    At that point, the Sox owner said that if a new stadium was not built he may have to move the team to St. Petersburg, FL. They had already built him a new stadium and were ready for him to come on down.

    Well it got to the 11th hour; a deal for funding had to be struck by midnight or there would be no money for the Sox new stadium. As the minutes ticked by in the state house, phone calls went back and forth between state officials and the Mayor until a simple solution was found. They unplugged the clock in the chamber. That gave Chicago politicians more time to twist arms, make political deals spending even more taxpayer dollars in swaps for other political pet projects. The funding was approved and the clock plugged back in. The deal was cut before the midnight deadline on the only clock in the state that mattered, the one in the chamber.

    Ah yes, Chicago politics at its finest. The fact that the legislature was spending taxpayer dollars against the will of the majority of the Illinois citizens was irrelevant, after all Ritchie is a Sox fan and wanted a new stadium.

    It was not too long after that, the Cubs wanted to improve their stadium. Instead of asking the taxpayer to pay for it, the Tribune Company who owned the team at the time, was willing to pay for the improvements themselves. Of course that presented a problem, it would make it more difficult for the owners of the surrounding buildings to sell the seats on their rooftops and steal the product for their own profits. So the Chicago way prevailed once again. The City declared Wrigley Field a landmark and took over architectural control so those improvements were thwarted. That was OK though, Ritchie is a Sox fan anyway and the rooftop owners make lots of donations to the proper political party.

    Now let’s fast forward a few years. Ritchie is gone, but Obama is a Sox fan and so is Rahm; funny how that works. The Cubs have new ownership and want to work with the city to make many necessary improvements to Wrigley. The idea being both the taxpayer and the new owners will contribute money to do so.

    Oh my! Then it is learned that daddy is thinking about supporting a political ad being critical of the mayor’s former boss. How can they be so stupid?

    The first crime is that I should have to be writing this. No sportswriter in Chicago would dare say what I am saying. They know the good mayor would unleash about 900 various inspectors on every facility they have in the state, they would find hundreds of code violations, massive fines would follow and they would be severely punished for speaking out against the mayor and/or his former boss. Ah yes, Chicago politics at its finest.

    Let’s state some obvious facts:

    The Chicago Cubs are the #1 tourist attraction in the City of Chicago and the State of Illinois. They are a big time economic asset to the community and generate a substantial amount of tax revenue for both the city and state.

    The former Mayor and current Mayor are Sox fans.

  4. Neftali

    Agreed with Craig here. I love sports. I love all sports. (well…except Nascar and soccer). But the NFL, MLB, NBA, NHL, PGA, and the Olympics. Love it all. I’m not as bad as I used to be, but I still spend more time than I should on my fantasy football and baseball teams.

    That said, too much public money goes to these huge stadiums, especially when most owners can foot the bill themselves. If conservatives really want to cut government spending, this has to be part of the deal. You can’t complain about money going to fine arts programs then turn around and use public money to build stadiums. It needs to stop. Pro sports teams can operate on their own merits.

  5. ” Pro sports teams can operate on their own merits.”

    I agree with this statement, but I think this could be said for many things, including the arts.

    I am a big supporter of the arts, particularly the performing arts, but there is plenty of money to be had in the community to support these programs.

    Government money should be focused on government functions not entertainment.

  6. Craig Knauss

    doc,

    I think you’re missing a few points.

    A) There are no dates in your posting. Dates are important to this discussion.

    B) The stadium construction predated any influence from Obama or Emmanuel. They had as much influence on it as you do.

    C) The stadium was funded by the state. The Illinois Sports Authority or something like that. One of the big pushers for this project was three-term former governor James R. Thompson (R).

    D) The stadium cost the taxpayers something like $200M to build. This was at the same general time period that the state was kicking in big bucks to expand McCormick Place (nearly a billion $), build the James R. Thompson Center in downtown Chicago (~$200M) and other facilities. The Chicago World’s Fair (~$1B) was also proposed, but dropped.

    E) However, Gov. Big Jim did use his line-item veto to delete $10M for a state office building in Rockford because the state couldn’t afford it. Seriously. (It was built much later under a different administration.)

  7. doc: It’s pretty hard to quantify the popularity of tourist attractions, but your claim that the Cubs are the No. 1 attraction in Chicago and all of Illinois is utter nonsense.

    This past season, the Cubs drew 2.5 million fans for 81 home games. For 284 days of the year, the Cubs attracted exactly zero tourists. Taken together, those 284 other days (and even the 81 days when the Cubs were playing at Wrigley Field) saw many millions of tourists come to Chicago for the various other attractions — the shopping, the parks, the festivals, the theaters, the skyscrapers, Navy Pier, the other sporting events, etc.

    Many people visit Chicago for more than one reason. It’s a world-class city with many attractions, and it’s centrally located.

    Yes, the Cubs are good for Chicago, but it’s ludicrous to say they draw more tourists than any other attraction in the city or the state.

  8. This brings to mind the crooked dealings of GWB in Arlington, Texas, and the Texas Rangers. GWB parlayed a $600,000 investment in the Texas Rangers into $14.9 million, by stealing land from the residents, and getting the taxpayers to foot the bill for a new stadium. Then running for governor proclaiming that property rights for individuals was most important.

  9. This brings to mind the fact that politicians are self- serving and crooked. All of them, to varying degrees. Democrats are saps for puttting their faith and hope for the future with any elected body.

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