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Do sports teams create economic activity in metro centers, or just syphon it

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Old
07-29-2013, 04:16 PM
  #51
sandysan
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Originally Posted by triggrman View Post
I'm talking only about local impact, sorry, should have made that clear.

http://www.wkrn.com/story/22951489/s...lle-in-big-way




So other arena's events would not be included.
wow that's a lot of scratch, way more than I would have thought.
if the 9.7 billion is only local, any idea what would the national impact would be ?

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07-29-2013, 04:51 PM
  #52
BraveCanadian
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Originally Posted by TheDevilMadeMe View Post
short version: they probably do create economic development, but not nearly enough to cover the tax expenditures on their stadiums

what they do create is "civic pride" which does have value of some kind
Agreed.

Seems a strange thing to be spending money on given the state of most city/muni/state/provincial finances, though.

Almost all of them are broke and drowning in debt/obligations. I guess as long as no one tries to flush the toilets in the new stadiums it will be ok.

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07-29-2013, 05:05 PM
  #53
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Originally Posted by cutchemist42 View Post
I think the question should be what creates the bigger multiplier effect instead.

I still think too its possible to overpay for an arena compared to the benefits you get, and I think because of the NA model, that happens more times then it doesnt based off anything I've ever read on the subject.
It's possible to overpay for anything -- a school, a library, an airport, an arena, a hospital.

I think it's fair to argue that private interests tend to strongarm their way into public funding for arenas, and that the end result is a large amount of wasteful spending on these facilities. That is par for the course when it comes to partnerships where money is flowing from the public side to the private side rather than vice versa. To me, that's a totally different subject, though, because it has a lot more to do with the nature of budgetary oversight than with the nature of entertainment venues.

What concerns me in this discussion is that advocates tend to move fluidly between talking about "sports team" and talking about "facility"... so fluidly that it's not always clear what's being measured and why. I have very little doubt that sports teams specifically tend to syphon entertainment dollars from other events -- but many of those events are only available because they take place at the same arena where the sports team plays. I don't buy the idea that an arena does nothing but recycle local money, when looking at all events across the board.

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07-29-2013, 05:43 PM
  #54
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Originally Posted by tarheelhockey View Post
It's possible to overpay for anything -- a school, a library, an airport, an arena, a hospital.

I think it's fair to argue that private interests tend to strongarm their way into public funding for arenas, and that the end result is a large amount of wasteful spending on these facilities. That is par for the course when it comes to partnerships where money is flowing from the public side to the private side rather than vice versa. To me, that's a totally different subject, though, because it has a lot more to do with the nature of budgetary oversight than with the nature of entertainment venues.

What concerns me in this discussion is that advocates tend to move fluidly between talking about "sports team" and talking about "facility"... so fluidly that it's not always clear what's being measured and why. I have very little doubt that sports teams specifically tend to syphon entertainment dollars from other events -- but many of those events are only available because they take place at the same arena where the sports team plays. I don't buy the idea that an arena does nothing but recycle local money, when looking at all events across the board.
It's not even event spending though. The money spent on sports siphons from bar, restaurant, clothes, along with other forms of entertainment like movies, etc. Even if the arena did not exist, the money was going to be spent.

I mean this is anecdotal, but I can't say I knew one person who withheld money because he was waiting for a new arena in Winnipeg, and then sat on that money until the NHL returned. That money gets spent, I've seen too much from economists to indicate otherwise.

Alot of these economists are not fools, alot of them just say the multiplier effect could be greater for a city's overall benefit if the subsidy was applied elsewhere.

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07-29-2013, 08:04 PM
  #55
Mr Whipple
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You can't just assume all the money that would be spent on a local sports team would be spent locally otherwise, though. People could be travelling to other nearby cities to attend sporting events, or they may buy things that don't really add jobs or money to the local economy, such as buying things online instead of local stores.

To use a personal example, there used to be a minor league baseball team 30 minutes away from me that I would occasionally go to games. I rarely went to that city other than that since there isn't much else there. Last year they were moved to another city an hour away. I'll make it even less to those games, but it's the "closest game in town". I've been to one game so far, and though I've driven past the town on the highway many more times than I can count that is the first time I've been there.

Meanwhile, my city is talking of building a stadium to try attracting a minor league baseball team. If they do, not only will I go to those games instead, but much more often. I might even become a season ticket holder. I'll also stay locally to eat in restaurants or buy food at the games, and since I'm paying less in gas money since I won't have to drive so far that's even more money I can spend. So in the end, my city goes from having an indirect negative economic impact from people like me who are going elsewhere to attend games to a direct positive impact if we stay and spend our money here.

So there isn't just competition between other local amenities, but also with other towns. It doesn't exist in a vacuum, unless you live in a city with no other cities within a reasonable driving distance.

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07-29-2013, 08:16 PM
  #56
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The simple and complicated answer is just one word..... yes.

Yes, they create economic activity. Out of town fans that otherwise wouldn't come into a town or an area do for the purpose of going to a game and sometimes the area around it. For the positives of a team to the economic area, you only need to look at Wrigleyville around the Cubs in Chicago.

And yes, they siphon funds from elsewhere, usually other luxury spending. People's entertainment dollars only go so far, and ordinarily people that spend more in one area cut back in others, whether that being going to the movies, eating out, going to another team(s)' games, etc., etc.

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07-29-2013, 09:06 PM
  #57
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http://www.uwlax.edu/faculty/anderso...s/stadiums.pdf


"Time series studies confirm the cross-section results. Baade and Sanderson
(1997), for example, found no perceptible net increase in economic activity or
employment in 10 cities that acquired new sports teams between 1958 and 1993
after factoring out other economic trends affecting each area. They did observe a
reordering of leisure expenditures within the cities that acquired new teams, but
there was no evidence that the new sports teams brought output or employment
growth to the local area. A more recent study, by Coates and Humphreys (1999),
finds that new stadiums and sports teams actually reduce per capita income in the
host communities. This result is consistent with a higher (negative) multiplier for
the displaced leisure expenditures than for the expenditures on a new team or in
a new stadium because the latter likely involve substantial leakages from the local
economy to the remote residential locations of some players and team owners."



Of course, the controversy about the economic impact of professional sports
teams on their local economy is not just about the teams themselves, but also abouthow specific local restaurants, hotels, and other businesses might be affected. However, even if one assumes, optimistically, that on average people spend as muchoutside the sports facility as they do inside, the economic impact of sports teams in proportion to a typical metropolitan economy is diminutive.


Apart from their relatively small size, there are three key reasons why professional sports teams do not promote economic development: the substitution effect; extensive leakages; and the likely negative effect on local government budgets

Then, the locally-owned entertainment venue multiplier is 1.51, in contrast to the sports multiplier of 1.25.

Neither a football stadium hosting ten games annually, nor a baseball
park with 81 games, is likely to induce many rational independent retailers to invest in adjacent businesses. Among other things, the 1990s genre of sports facilities are designed like European walled cities, seeking to enclose all commercial activity and revenue flows within its confines—making the life of area retailers all the more tenuous. Only when a sports venue is complemented by a year-round business district or residential neighborhood will there be appreciable independent investment activity


The part of the contention that is not plausible is the notion that businesses
will relocate to the city because it becomes “big league.” Sound businesses move in search of a more qualified or less expensive labor force, a convenient location for inputs or sales, a good infrastructure, a sound fiscal environment with amenable taxpolicy, attractive government services, and appealing cultural opportunities. The latter may include the quality of the local theater, opera, symphony, parks, art, museums, hospitals, public schools, universities or sports teams. If the first half dozen or so items are equivalent between two cities, then the business may look at cultural amenities and within them may consider sports. It does not seem plausible that the presence or absence of sports teams would be a decisive location factor for more than a few companies. There is no systematic evidence that business relocations follow sports teams.

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07-29-2013, 09:07 PM
  #58
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This is also a good read. There's ALOT more papers, but its behind the database walls that I dont think everyone has access to.

https://umdrive.memphis.edu/casanto/...o_JUA_27_2.pdf

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07-29-2013, 09:15 PM
  #59
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Originally Posted by cutchemist42 View Post
Only when a sports venue is complemented by a year-round business district or residential neighborhood will there be appreciable independent investment activity
I think cities are becoming more aware of this because it is becoming more and more common. In Pittsburgh alone the location of Heinz Field and PNC Park has been built up a ton with restaurants, hotels, etc nearby. Also you have the Arena district in Columbus and whatever that location is called by Jobing.com Arena.

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07-29-2013, 09:18 PM
  #60
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Originally Posted by cutchemist42 View Post
This is also a good read.
Ya, interesting, and provides a counter-argument or antithesis to your post just above it to a certain extent.
Interesting subject. The trickle down effect or not as the case may be. Context, specificity rather important.

Westgate Beauner...

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07-29-2013, 10:27 PM
  #61
cutchemist42
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Ya, interesting, and provides a counter-argument or antithesis to your post just above it to a certain extent.
Interesting subject. The trickle down effect or not as the case may be. Context, specificity rather important.

Westgate Beauner...
Yeah, there's lots of good reads out there. Even if the overall view of the paper is against, some tidbits for "For subsidies" can be found within them.

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07-29-2013, 10:49 PM
  #62
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i actually did an economic research project about this in undergrad and after reading lots of economic journals about the subject it seems that amongst economists, bringing sports teams to town doesnt bring income to the local economy. Rather it just spreads it around. When we talk about income producing projects in the city were talking about manufacturing, education, and tourism. The secondary economic activities are entertainment, shopping, and dining venues.

Sports teams and arenas just spread around the income of a city, not create an economic base.

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07-29-2013, 11:44 PM
  #63
cutchemist42
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Originally Posted by PanthersHockey1 View Post
i actually did an economic research project about this in undergrad and after reading lots of economic journals about the subject it seems that amongst economists, bringing sports teams to town doesnt bring income to the local economy. Rather it just spreads it around. When we talk about income producing projects in the city were talking about manufacturing, education, and tourism. The secondary economic activities are entertainment, shopping, and dining venues.

Sports teams and arenas just spread around the income of a city, not create an economic base.
It's for that reason that my prof said 9/10 he would most likely want that same total subsidy for an arena/stadium spent on universities/colleges/local schools and major industry in a city. (He never said anything about tourism, but we do live in Winnipeg so who really wants to come here??)

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