Market Power

Musings by an academic economist on the power of markets and the power over markets.

Wednesday, October 27, 2004

Stadiums and Local Economies

It's almost amazing how well independent economists agree on the economic impact of teams and stadiums/arenas - they don't do much, if anything, to improve employment and wages and may even slightly harm an economy. This flies in the face of what public proponents of public funding for stadiums trumpet.

The explanation given by economists on why there is no net impact is fairly straightforward. Most spending on sports comes from people in the local economy - it's redistributed spending, not new spending. A similar thing happens with big sporting events like Super Bowls and Final Fours. These events draw lots of people to the host economy, but it also scares away other people who otherwise would have come. There's no net impact.

This does not mean teams should not exist. It's an argument against public funding for teams and the places they play in.

Craig Depken at Heavy Lifting has a series of excellent posts on the situation in Arlington regarding the Cowboys desire for public money to build a new stadium there. His posts will appear at the top of his blog until November 2nd.

For the record, Red McCombs, owner of the Minnesota Vikings, has given up lobbying for a new stadium - at least for the time being.

Hmmmm. LA still doesn't have an NFL team although it supported 2 teams for several years. This is the second largest market in the US. The NFL dictates what teams can play where. Can you say "credible threat"? Can you say "Market Power"? Can you say "Minneapolis Lakers"?