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Sports, Jobs and Taxes: The Economic Impact of Sports Teams and Stadiums. Edited by ROGER G. NOLL AND ANDREW ZIMBALIST. Washington D.C.: Brookings Institution Press, 1997. Pp. 525.
This edited volume, derived from an October 1996 conference, presents convincing evidence that building new stadiums to attract or retain professional sports teams often produces much smaller economic benefits than commonly claimed. The chapters include conceptual discussions of the benefits from sports stadiums and teams, empirical analyses of the impact of sports teams and stadiums, discussion of referenda on sports stadiums in different cities, and case studies of stadiumrelated controversies in Indianapolis, Minneapolis-St. Paul, Baltimore, Cincinnati, Chicago, Cleveland, and San Francisco. The book also includes discussion of how federal taxes affect local subsidies for stadiums, the economic benefits from baseball spring training, and recent developments in minor league baseball stadiums. Authors in the book are many leading authorities in sports economics and public finance, including Robert Baade, Allen Sanderson, Dennis Zimmerman, Rodney Fort, Mark Rosentraub, James Quirk, Bruce Hamilton, Peter Kahn, John Blair, David Swindell, Ziona Austrian, Stephen Agostini, John Quigley, Eugene Smolensky, and John Zipp.
The book shows that subsidies for sports stadiums and professional sports teams are large by some standards. According to the editors, "Industry experts suggest that more than $7 billion will be spent on new sports facilities before 2006. The average subsidy from a host city to its sports team most likely will exceed $10 million a year" (p. 494). These amounts are not large compared to the U.S. economy, but they may be significant for a particular city.
I will focus on two main themes that emerge from the book: (1) most economic impact studies greatly overstate the tangible economic benefits of sports stadiums and teams; and (2) subsidies for sports teams are a problem primarily because of their distributional implications.
WHY SPORTS STADIUMS AND TEAMS GENERALLY HAVE MINOR TANGIBLE ECONOMIC IMPACTS
The reasons for the minor economic impact of sports stadiums and teams are fairly straightforward. A sports team's revenues are usually modest compared to a metropolitan economy. Most of these revenues would be revenues for other entertainment or consumption providers in the local economy if the sports stadium did not exist and the team left. The main direct, tangible...