Sports Stadiums And The Benefits Of Sports Stadiums

Benjamin Okner looked over data on 20 public owned baseball and / or football stadiums for the 1970-71 seasons. He figured out that when about three-quarters of stadium costs that are for debt are ignored, most stadiums earn enough revenue for the city to cover the variable costs and non-debt-related fixed costs. But when he included interest and amortizing principle, stadium revenues only cover 70% of stadium costs. Okner adds that publicly-owned stadiums do not collect property taxes, so when he included his estimate of those taxes, he figured out that the average stadium only covers 60% of total costs (Baade & Dye, 1988, p. 265-6). The beneficiaries from stadium development are the franchise owners and the stadium developers. Those dislodged from their homes are the losers. I am studying the benefits of sports stadiums in their host cities, because I want to find out whether people use stadium subsidies in the best possible way in order to help my readers understand whether that money is better used elsewhere. An analysis of stadium developments requires an examination of past stadium data, job creation in the construction industry, and studies using recent data

Review of the Literature

In 1988, Robert A. Baade and Richard F. Dye studied whether local government should subsidize the construction and operations of sports stadiums. At the time, politicians were turning to sports to revitalize the failing health of their cities, and they made the argument that sports are an easy way of showing economic prosperity. According to them (1988, p. 265), since 1953, 67 of the 94 professional baseball, football, hockey, and basketball stadiums are publicly owned. The more recent the construction, the greater the chance it is under pub...

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... economy that they would have otherwise spent somewhere else (2005, p. 188).
Case studies that concentrate on one or a few cities are able to account for the context in which people build sport facilities. This focus is important because context ties a facility's capability to influence its local economy. When the results of various empirical analyses blend into broad conclusions, the individual findings compromise the nuances. The broad interpretation of independent economic research regarding sports stadiums is that empirical evidence cannot support a positive relationship between such facilities and economic development. Santo's (2005, p. 190) study reported new evidence obtained from contrasting the work of Baade and Dye with current data, which challenges that conclusion. Santo's findings along with a closer look of previous analyses show that context matters.