Researcher Says Most Sports Facilities Not Worth Public Incentives

Andrew Zimbalist, a leading sports economist, argues in a May 1 study on the New Jersey Nets that: "The general conclusion that comes out of the academic literature on this subject is that a city, county or state should not anticipate a positive economic or fiscal impact from a new sports facility. ... In a typical case, a community builds a facility to retain an existing team or attract a new team. In either case, the lion's share of the money spent at the new arena is diverted from existing local expenditures."

This finding largely reflects the fact that families and individuals who spend money to attend a professional sporting event spend less on other forms of entertainment than they would in the absence of an arena or stadium. Other reasons for the minimal impact of a sports facility on local economies include the facts that:

* Sports teams are modest-sized businesses relative to the size of the regional economy.
* A considerable fraction of the revenues attributable to a private sports franchise - those attributable to players' and managers' salaries and owners' profits - are spent out of the immediate area.
* There is a negative impact on the local economy associated with the diversion of public funds from other investments and services.

More here.