Sports remains a crucial aspect of contemporary society, over the years, it has endeared itself as a form of income directly through players and indirectly through support staff. Besides the economic aspect, it is a major tenet of peace and conflict resolution often transcending political and cultural boundaries. To a greater extent, it serves as a way of healthy exercise for millions of people who are unable to access other training facilities. The most important role of sports may be its entertainment value, upon which a multi-billion dollar industry has been established. The challenge that most communities face, however, is always in finding the resources to develop state of the art facilities for various sports. In most instances, the burden is often placed on taxpayers with the hope that the facilities can play a vital role in the revenue generation within the communities in which they are established (Stephenson, 2014). This particular write-up focuses on the social and economic impact that sports facilities have on cities in which they are built.
The economic impact of sporting facilities on cities is often tied to the fact that it can create direct and indirect jobs. Secondly, that patrons attending various games can get to spend within the city regarding concessions, merchandise, tickets, meals as well as transportation costs during and after the game. The social impact on the hand is to be found in the sense of pride and satisfaction that comes from following team events and success over the season. Most cities spend millions of dollars to lure franchise teams into their territories with the hope of increased economic activity. Based on this pretext, it is imperative to analyze the economic impact of franchises on the cities in which they operate. To put the issue into context, one can begin by looking at the 2012 Carolina Panthers case where they requested $200 million to renovate their stadium at Charlotte, North Carolina (Harrison, 2013). They threatened to shift to a new location if their demands were not met. While the local government initially resisted they had to part with $ 90 million to help keep the team for another six years.
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This is perhaps the best example of the economic commitment that most cities have to deal with in an effort to attract new teams. A number of trailblazers can be found in the pursuit of the economic influence of franchise teams on cities. First off, according to Lertwachara and Cochran (2007), a municipality must be keen on facilitate a large share of a new stadium or its renovation if they are to attract professional teams. In their study, Lertwachara and Cochran narrowed down the analysis of economic impacts to the rate of income growth and per capita income for the people living within a metropolitan statistical area. The authors focused on the impact that the overall US economy, as well as the local economic base, would have one the aspects they were seeking to measure. They also analyzed the impact of the period of stay by professional teams. In their conclusion, they assert that no study has established statistically whether the idea that professional teams bear positive impacts on the economic well-being of a city. This conclusion emanates from the fact that per capita income in the metropolitan statistical regions is much lower than would be expected. In this case, therefore, they assert that there is no need to use public funds in the development of sports facilities for teams seeking to relocate.
Baade’s PROFESSIONAL SPORTS AS CATALYSTS FOR METROPOLITAN ECONOMIC DEVELOPMENT offers crucial insight regarding the economic benefits of professional sports in metropolitan areas. In his paper, he provides the example of the Jacksonville Jaguars NFL who requested for financial support from the local government arguing that they would rake in a total of $130 million annually, besides creating three thousand jobs. In its response, the Jacksonville government offered $200 million to aid in the establishment of a new stadium (Baade, 1996). Baade’s key focus is thus on the job creating and income growth generation within the metropolis. Relying on regression models that compare jobs and income progression in cities that welcomed new franchises in comparison to those that did not to guarantee the validity of his argument, he controls for external factors including tax changes, demographic patterns as well as metropolitan growth rates. He concludes that no link exists between economic growth and professional sports regarding higher incomes or job creation. However, he goes on to propose ways through which governments can benefit from the presence of sports franchises.
First, governments should develop policies that implore sports teams to spend their revenues within the city. The second option is for governments to steer clear of publicly funding such projects. For Owen, on the other hand, his paper Stadium Game: Cities Versus Teams deviates from economics and focuses on the social impact that sports franchises have on cities. In other words, his focus is on the intangible values of such exploits, an endeavor he achieves by developing a model that focuses on the size of a public stadium subsidy (Owen, 2003). The premise of his argument is that in offering high subsidies to retain professional sports teams reflects an elevated social importance for the team. In this case, therefore, he finishes with a claim that the public value that is derived from having sports franchises leaves the decision of funding as open as possible. In other words, the local governments must determine the number of resources they are willing to commit to retaining the social value that community derives from having professional teams.
It is without a doubt the United States has professional sports as a crucial component of its society, an element that is depicted through game day holidays as well as the preciousness that comes with winning championships. However, when an objective analysis is conducted on the impact that sports franchises have in the city, it is evident that there exist no relationship between professional sports franchises and economic development. The conclusions of this particular discussion have tremendous implications for policymakers. The spending of public funds in the facilitation and attraction of professional sports teams is unnecessary. While the promise of economic stimulation has largely informed governmental support for such projects, it is clear that there is a need for civic leaders to requisition public funds that aim at developing sports facilities to attract professional sports teams. It is seemingly hard to comprehend how a multi-billion dollar professional sports industry can fail to have an economic impact on a city.
A number of possible reasons can be offered to explain this phenomenon. To begin with, it is possible that professional sports have long and vast value chains which span a multitude of industries, therefore, it is almost impossible to capture their economic impact within a specific region. Another possible explanation would be that most of the cities in the USA have robust and vibrant economies to the extent that sports franchises make a negligible impact on the economies. A good example is to be found in the New York Yankees who despite their $2.3 billion annual revenue are pitted against a $1.17 trillion New York economy (Goodrich, 2013). In such a scenario it is obvious that their impact on an economy would be hidden behind numerous numbers.
A crucial point worth highlighting is that Indianapolis is often cited as a city whose economic turn came through sports franchising. The city’s economic revitalization strategy was significantly enhanced through sports entertainment. Their primary strategy was to develop state of the art sporting facilities that would attract various sports franchises into their territory. They began with a basketball arena targeting the NBA franchise before adding a baseball stadium for its minor league baseball team. The culmination of this strategy would come in 2006 when it was able to host the Super Bowl (Masciotra, 2013). While this is true, it is important to understand the context of the changes and reforms that were undertaken by the government in terms of economic reforms. A crucial tenet of strategy applied by Indianapolis was establishing cross-sector partnerships. While most state governments turn to public funds to facilitate such projects, the Indianapolis city alongside the state government rallied for the support of large corporation to co-fund the large-scale projects.
Ideally, it was the private-public partnership that played a vital role in the success of Indianapolis’ approach. It is also worth noting that its approach was multifaceted, spanning various sectors including the environmental improvement as well as the establishment of a children’ s music. While sports owners often suggest that sports franchises can be profitable for cities, this analysis offers an opposite opinion. The use of public funds tends to create an unnecessary expense for state governments and as such the economic outcomes of such investments become seemingly negligible.
References
Baade, R. A. (1996). Professional sports as catalysts for metropolitan economic development. Journal of urban affairs , 18 (1), 1-17.
Goodrich, J. (2013). Economic Effects of Successful Sports Franchises on Local Economies. Honors Theses and Capstones . Retrieved on 28 February 2018, from https://scholars.unh.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredir=1&article=1154&context=honors.
Lertwachara, K., & Cochran, J. J. (2007). An event study of the economic impact of professional sport franchises on local US economies. Journal of Sports Economics , 8 (3), 244-254.
Masciotra, D. (2013). Sports teams really can save a city . Retrieved on 28 February 2018, from https://www.citylab.com/life/2013/08/sports-teams-really-can-save-city/6479/.
Owen, J. G. (2003). The stadium game: Cities versus teams. Journal of Sports Economics , 4 (3), 183-202.
Stephenson, J. (2014). Letting teams walk: Exploring the economic impact of professional sports franchises leaving cities. MPA/MPP Capstone Projects, 25. Retrieved on 28 February 2018, from https://uknowledge.uky.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredir=1&article=1024&context=mpampp_etds.
