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In the first episode of CCA’s new podcast Listen Up Concord, residents offered the City Council a crash course in stadium economics at their January 22nd meeting earlier this year. The question: Do stadiums generate a net economic benefit to the cities where they are built? The short answer – at least, in most professional economic studies – No.
Doing one’s homework on a topic like this means looking at some primary research – which is readily available. What follows are links to the two studies that were mentioned on January 22 by Concord residents speaking in opposition to the City Council’s consideration of an exclusive feasibility study agreement with Walnut Creek developer Mark Hall. (To watch a video recording of that City Council meeting, click here.)
Here are the two studies that were mentioned at the January 22 meeting
• IGM Forums – Sport Stadiums (2017)
• The Economic Impact of Sports Stadiums and Arenas on City (2011)
Additional studies are readily available with a quick Google search – look for anything written by Dennis Coates, for example, an economist who has studied stadium economics across decades.
What are the consistent conclusions of these studies by professional economists? Here are typical examples:
“Local political and community leaders and the owners of professional sports teams frequently claim that professional sports facilities and franchises are important engines of economic development in urban areas. These structures and teams allegedly contribute millions of dollars of net new spending annually and create hundreds of new jobs, and provide justification for hundreds of millions of dollars of public subsidies for the construction of many new professional sports facilities in the United States over the past decade. Despite these claims, economists have found no evidence of positive economic impact of professional sports teams and facilities on urban economies.”
– Dennis Coates and Brad R. Humphreys, Professional Sports Facilities, Franchises and Urban Economic Development, UMBC Economics Department Working Paper 03-103
“A very limited impact is found to occur in the ZIP Code in which a stadium is built when the city is used as a control, with the only estimated impact being an increase in the proportion of eating and drinking establishments by approximately .293 percent. Using the alternative site as a control, no employment or business composition effect is estimated to occur whatsoever. Thus, the findings indicate that the small impact that does occur in the region surrounding a stadium does not outweigh the opportunity cost of the stadium investment.”
– Scott Sommers, Localized Economic Impact of Sports Stadium Construction
“In our forthcoming Brookings book, Sports, Jobs, and Taxes, we and 15 collaborators examine the local economic development argument from all angles: case studies of the effect of specific facilities, as well as comparisons among cities and even neighborhoods that have and have not sunk hundreds of millions of dollars into sports development. In every case, the conclusions are the same. A new sports facility has an extremely small (perhaps even negative) effect on overall economic activity and employment. No recent facility appears to have earned anything approaching a reasonable return on investment. No recent facility has been self-financing in terms of its impact on net tax revenues. Regardless of whether the unit of analysis is a local neighborhood, a city, or an entire metropolitan area, the economic benefits of sports facilities are de minimus.”
– Andrew Zimbalist and Roger G. Noll, Sports, Jobs, & Taxes: Are New Stadiums Worth the Cost? (Sunday, June 1, 1997)
THE IGM SURVEY
In fact, conclusions of this type are so commonplace that the IGM Survey of professional economists found that 83% of the experts surveyed either agreed or strongly agreed with the following statement:
“Providing state and local subsidies to build stadiums for professional sports teams is likely to cost the relevant taxpayers more than any local economic benefits that are generated.”
WHAT CONCLUSIONS SHOULD WE DRAW FOR CONCORD?
First, we have to acknowledge that the Concord stadium proposal may not be an exact match for the scenarios examined in these studies. And second, we also have to acknowledge that economic impact is only one of several criteria to be used in assessing proposals such as these.
Quality of life, and maintaining the enduring character of a city are also relevant – certainly more relevant to most Concord residents than economic impact, since very few are likely to be on the beneficial receiving end of that impact.
But the primary arguments advanced by stadium proponents center on economic growth, jobs, and the like. There is also an assertion that city tax revenues will also be increased as a result of the presence of a stadium. Professional economists say that data does not confirm those arguments and assertions.
In short: it’s worth doing your homework on this topic, Concord. And ask your City Council representative to do the same.
The Concord Communities Alliance exists to prompt Concord residents to share their perspectives about issues of important to all Concord residents. While we don’t expect we will all agree on everything, we do believe that dialogue is the best way identify the path forward that works best for everyone.