The relationship between professional sports and large cities is a fundamental public policy issue. It has become the norm for the major metropolitan areas to host a franchise of the four professional sports league. In fact, large cities such as Los Angeles and New York host more than two professional teams. Hosting professional sports team has economic implications on the city. Cities spent millions of dollars to construct and renovate professional sports facilities. As cities decide whether to host a sports franchise, the city should realize that it might not make money used to build the stadium from ticket sales and jobs created at the stadium.
The trend for investing in professional sports team is on the rise, and this can be interpreted that cities benefit from hosting sports team or the city is willing to cover the costs even when they are not worth the benefits. According to Kihl et al. (2014), the most significant cost of hosting a sports franchise is building a stadium. Sports stadiums are costly, for example, New York’s Madison Square Garden cost $1.1 billion. Most stadiums cost around $400 to $800 million to build depending on the size. Owners of the franchise argue that the money generated from ticket sales, team merchandise, and jobs created outweigh the costs of constructing and maintaining a stadium. However, the stadiums are hardly used during offseason, and there are no ticket sales or jobs for employees who work at the stadium. Consequently, the stadium will only generate money for half of the year when the season is on.
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Another factor to consider before hosting a sports franchise is the popularity of the team. Big teams such as the Los Angeles Lakers, Boston Red Socks, and Miami Heat have a more significant impact in comparison to small teams such as Charlotte Bobcats. Before the city can invest a lot of money in building a stadium, it has to consider the ranking and performance of the franchise ( Houlihan & Malcolm, 2015) . Winning teams often attract more fans to the games, they sell more merchandise, and their games are featured on national television.
Cities justify their massive investment on stadiums claiming that it spurs local economic development. The cities use sales taxes directed on tourists such as hotels and rental cars to repay the stadium bonds, but the taxes are often not enough to cover the cost. According to Lee et al. (2012), governments make decisions based on resource availability, even when the decision might not bring profits because it is good for the public. The decision to construct a stadium might not be profitable for most cities, and yet they do it for other benefits such as hosting other events such as concerts and festivals. No city is immune to the sports facility construction boom, even when the city can use the money to improve other crucial sectors such as health, education, and social services. Studies have shown that city administrators often exaggerate the effects of hosting a sports franchise and the residents might not feel the economic impact of the team (Kihl et al., 2014).
In conclusion, hosting a professional sports franchise is costly for the city. The possibility of the city not making back the money it invested is high even when it is hosting popular sports teams that attract a lot of fans. Hosting a professional team will spur economic development, increase tourism and it is generally good for the city morale. Despite the high initial cost of building a stadium, cities that have enough finances should not shy away from hosting professional sports franchises.
References
Houlihan, B., & Malcolm, D. (Eds.). (2015). Sport and society: a student introduction . Sage.
Lee, R. D., Johnson, R. W., & Joyce, P. G. (2012). Public budgeting systems . Jones & Bartlett Publishers.
Kihl, L., Babiak, K., &Tainsky, S. (2014). Evaluating the Implementation of a Professional Sport Team’s Corporate Community Involvement Initiative. Journal of Sport Management, 28 (3), 324–337. doi:10.1123/jsm.2012-0258.
