By Arnold Kling
The Atlantic Monthly points to this survey of the economic impact of pro sports stadiums. The verdict from many economic studies is that the marginal contribution of a sports team to a local economy is small, and perhaps negative. When a stadium is financed with public money, the benefits do not accrue to the public.
Most revenues from sports facilities, even those built with public funding, tend to flow to the sports teams and not into the coffers of the public sector. While the previous era of sports facilities were unable to cover their debt payments (Baim, 1994), many modern sports facilities generate revenues sufficient to cover their construction and operating costs. Luxury suites, club seats, stadium naming rights, pouring rights, parking revenues, and ticket revenues are just some of the revenue streams that flow from these facilities, streams that generate in excess of the $400 million in funds required for modern sports facilities. However, in almost all cases, these revenues flow to the teams and not to serve the debt from these projects.
For Discussion. I have argued that cities should own sports franchises, so that both the benefits and the costs of sports teams would be socialized. Would this be better than the current arrangement?