The Economic Impact of Sports Facilities, Franchises, and Events: Contributions in Honor of Robert Baade (Sports Economics, Management and Policy, 23)

This edited volume discusses the economic impact of sports facilities, franchises, and events on local economies. Written in honor of Robert Baade upon his retirement, the book provides a state-of-the-art of current research on the economic impact of sports, and recognizes the seminal contributions that Dr. Baade has made to this topic. The analysis of the economic impact of spectator sports is a vital public policy topic as $75 billion has been spent on stadium construction since 1990 in the US alone, with nearly $35 billion of this coming from taxpayer subsidies. True public cost of sports franchises is much higher than this as this figure excludes facilities outside the Big 5 domestic leagues (like NASCAR track, NCAA facilities, minor league baseball, and the Canadian Football Leagues), public subsidies for major events like the Super Bowl or Olympic Games, and excludes sports subsidies outside of direct stadium construction subsidies. Including contributions from many of the most notable researchers studying the economic impact of sports, topics include impacts of stadiums and franchises on local economies, labor markets, and tax collections, the effect of sports franchises on property values, and changes in the public and academic discourse on sports subsidies over time. This volume will be of interest to researchers and students of sports economics, management, public policy, and public finance. Preface 7 Contents 9 Introduction: A Few Words About Robert Baade 11 Robert Baade: Stadium Economics Pioneer 14 1 Introduction 14 2 Stadium Mania 16 3 Stadium Economics 18 4 Mega-Events 23 5 Public Policy 24 6 Conclusion 28 References 29 The Unshakeable Belief in the Economic Impact of Sports 32 1 Introduction 32 2 Problem 1: Economic Impact Is an Exceptionally Complicated Estimation Problem Full of Assumptions and Fraught with Errors 33 2.1 Ex Ante Studies 33 2.2 Ex Post Studies 34 2.3 Ex Ante or Ex Post? It Doesn ́t Actually Matter 35 3 Problem 2: Economic Impact Is the Sine Qua Non Metric That Will Magically and Irrefutably Explain the Value of Events, Teams... 35 3.1 Problem 2a. Sport-Related Economic Impact Reports Are Ubiquitous in the News 36 3.2 Problem 2b. Economic Impact Is Unchallenged and Presented as Fact 37 3.3 Problem 2c. The Media Frames Economic Impact As Consistently and Unequivocally Positive 37 4 Problem 3: Public Belief in the Economic Impact of Sports Is Unshakeable 38 4.1 The Context of Super Bowl 50 39 4.2 Public Sentiment Toward Super Bowl 50 39 4.3 In a Period of Negative Public Sentiment, the Belief in Positive Economic Impact Persisted 40 4.4 Conclusion 43 5 Why Is the Public Belief in Positive Economic Impact So Persistent? 43 5.1 Direct Spending Isn ́t Economic Impact (But People Think It Is) 44 5.2 Conspicuous Spending Isn ́t Economic Impact (But People Think It Is) 44 6 How Do We Move Forward? What Is the Solution? 46 6.1 Financial Analysis Better Represents the Government ́s Ability to Pay 46 6.2 Redistributive Analysis Identifies Broader Harms or Benefits 48 Benefits to Private Businesses 48 Benefits to Individuals 49 Costs to Individuals 49 Public Cost 50 Public Costs Lead to Additional Costs to Individuals 50 6.3 Summary 50 7 Conclusion 51 References 51 The Local Economic Impact of Phantom College Football Games: Evidence from North Carolina 55 1 Introduction 55 2 Context and Literature Review 57 3 Data and Empirical Methodology 58 4 Empirical Results 61 5 Conclusions 63 References 64 Growth Effects of Sports Franchises, Stadiums, and Arenas: 15 Years Later 66 1 Introduction 66 2 Literature 68 3 Data 73 4 Empirical Model 75 5 Results 76 6 Conclusion 91 References 92 The Consumer Surplus and Economic Impact of a Participatory Micro-Event: The Beech Mountain Metric 95 1 Introduction 95 2 Data 96 3 Economic Impact 97 3.1 Methods 97 3.2 Results 98 4 Willingness to Travel 99 4.1 Empirical Model 101 4.2 Results 102 5 Conclusions 103 References 104 The Dollar Value of an NFL Rivalry 106 1 Introduction 106 2 Theory 107 2.1 Applying Random Utility Theory to Value an NFL Rivalry 107 2.2 Preferences 108 2.3 Uncertainty 109 2.4 The Fans ́ Perspective 110 Type 1 Fan 110 Type 2 Fan 111 2.5 Predict Type 2 Fan Membership 111 Estimating a Model Predicting Type 2 Fan Membership 113 Likelihood of Type 2 Fan Membership 114 2.6 Valuing an NFL Rivalry 115 Maximum-Likelihood Estimation 116 2.7 The Vikings-Packers Choke Price 118 Histogram of WTP for Vikings-Packers Rivalry 118 2.8 The Value of the Vikings-Packers Rivalry to Minnesotans 119 Appendix: A New Stadium for the Minnesota Vikings: What Is Your Opinion? 120 References 126 The Effect of National Political Conventions on Hotel Occupancy: Updated Evidence 128 1 Introduction 128 2 Empirical Framework 130 3 Results 131 4 Conclusion 134 References 135 The Dallas Cowboys ́ Relocation and Intra-metropolitan Sales Tax Revenue Impacts Across Cities and Industries 136 1 Introduction 136 2 Sports Facilities, Redistribution, and Sales Tax Revenue 137 3 The Synthetic Control Method (SCM) 139 4 Empirical Results 141 5 Robustness Checks 145 6 Conclusion 146 References 147 Impacts of Mega Sporting Events: Does the Moderate View Still Apply? 149 1 Introduction 149 2 Academic Boosters, Breaking Up the Consensus? 150 3 Methodical Issues and the Problems of Impact Estimates 152 4 Conclusion 156 References 157 The Effect of Sports Franchises on Property Values: The Role of Owners Versus Renters 161 1 Introduction 161 2 Background 163 3 Model 165 4 Conclusions 173 References 174 The Impact of Sports Teams on the Urban Economy: Evidence from the St. Louis Rams ́ Departure 175 1 Introduction 175 1.1 Research Context 176 2 Empirical Analysis 177 2.1 Data Description 177 2.2 Empirical Method 179 Spatial Treatment Assumptions 180 Outcome Variable Pre-trends 180 2.3 Results 182 3 Conclusions 183 References 184 Major Stadium Construction in the Twin Cities: If We Build It, Will Construction Employment Increase? 186 1 Introduction 186 2 The Theory 189 3 Empirical Analysis 190 3.1 The Data 190 3.2 The Empirical Models 192 3.3 Regression Results: ARCH Models 194 3.4 Two-Stage Instrumental Variables ARCH Results: Second Stage 197 4 Conclusion and Discussion 200 Appendix: First-Stage Regression Results and Discussion 201 References 204 The Effect of Having an On-Campus College Football Stadium on Attendance 205 1 Introduction 205 2 Literature Review 206 3 Model and Data 207 4 Results 211 5 Conclusion 213 References 213 New Stadiums in North America and Europe: A Comparison and Agenda for Future Research 215 1 Introduction 215 2 New Stadiums in North America 215 3 New Stadiums in Europe 218 4 Directions for Future Research 221 References 222 Financing Professional Sports Facilities: An Update 224 1 Introduction 224 2 The Data 225 3 Looking Ahead 231 References 233