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But is a sports franchise the brass ring for economic development?

In their efforts to attract a new professional sports team or keep an existing team from leaving, many cities are building new arenas or stadiums with substantial amounts of public funding.  Advocates often cite the economic benefits of the facilities, but economists have found these claims to be generally inflated.  Even scholars who support stadium construction as an economic development strategy place more of an emphasis on the non-economic benefits of stadium construction.

For the first half of this century sports teams played in stadiums that were privately-built and privately-owned.  It was not until the 1950s that cities began to entice teams with publicly-funded stadiums.  Even then, the teams paid substantial leases for the time they used the stadium and revenues from concessions were split.  Publicly-funded stadiums became the trend in the 1960s and 1970s, but changes in tax laws and bond structuring in the late-1970s and 1980s changed the landscape.

Different sources cite varying numbers and time periods, but recent years have seen between $4 and $7 billion in stadium and arena construction or complete renovations, and an estimated $7 billion of stadium construction is on the drawing board for the next 5-7 years.  Most studies agree that 80 percent of those costs are public dollars, and as much as 30 percent of that is shouldered by the federal tax payers through tax exempt bonds.

Why do cities take on this burden?  Cities that want to attract a professional sports team touts the economic impact and the intangible value of being perceived as a “world class” city.  Municipal leaders faced with a team that threatens to leave do not want the legacy of “losing” a pro sports team to reflect poorly on their administration.