The growth effects of sport franchises, stadia, and arenas

TLDR

The paper investigates the relationship between professional sports franchises and venues and real per capita personal income in 37 U.S. metropolitan statistical areas from 1969 to 1994. The empirical framework controls for the entry and exit of professional football, basketball, and baseball franchises, the construction of arenas and stadia, and other sports‑related factors over that period. The study finds that some franchises reduce per capita personal income and have no effect on income growth, and that reduced‑form estimates are not robust to alternative specifications.

Abstract

This paper investigates the relationship between professional sports franchises and venues and real per capita personal income in 37 standard metropolitan statistical areas in the United States over the period 1969 to 1994. Our empirical framework accounts for the entry and departure of professional football, basketball, and baseball franchises; the construction of arenas and stadia; and other sports related factors over this time period. In contrast to other existing studies, we find evidence that some professional sports franchises reduce the level of per capita personal income in metropolitan areas and have no effect on the growth in per capita income, casting doubt on the ability of a new sports franchise or facility to spur economic growth. We also find evidence that results obtained from estimating reduced-form relationships, a common practice in the literature, are not robust to alternative reduced-form specifications. © 1999 by the Association for Public Policy Analysis and Management.