The Stadium Gambit and Local Economic Development

Abstract

In recent years, sports franchises have frequently used their monopoly power to extract rents from state and local governments. Taxpayers in cities all over the country foot the bill for new stadiums, improvements to existing stadiums, or infrastructure needed to make new stadiums or arenas as attractive as possible. Despite the beliefs of local officials and their hired consultants about the economic benefits of publicly subsidized stadium construction, the consensus of academic economists has been that such policies do not raise incomes. The results that describe in this article are even more pessimistic, that is, subsidies of sports facilities may actually reduce the incomes of the alleged beneficiaries.

JEL Classification: H79