NEWS RELEASE, 08/20/98
Professional sports haven't delivered promised
benefits in seven California cities, says new UC Berkeley report
By Cathy Cockrell, Public Affairs
BERKELEY -- It has long been passionately argued that professional sports teams attract jobs, money, tax revenues and industry to a local economy, ultimately justifying considerable public expenditures to woo and keep them.
But a new report from the University of California, Berkeley, finds that these teams have not produced the hoped for benefits to seven California cities studied.
UC Berkeley researcher Jack Sylvan of the Department of City and Regional Planning conducted a quantitative analysis of data from Anaheim, Los Angeles, Oakland, Sacramento, San Diego, San Jose and San Francisco and wrote an award-winning summary of his findings. The resulting report, "Professional Sports Subsidy as Economic Development," was published in August by UC Berkeley's Institute of Urban and Regional Development.
Using 1972-1995 retail and business sales figures from the State Board of Equalization for seven California cities that host major-league sports teams, the study performs a statistical analysis of the economic indicators in order to test one simple piece of logic.
"Proponents of sports teams say that having a team benefits the economy and therefore justifies expenditure of public money," said Sylvan. "If that's true, you should be able to observe the impact in the aggregate amount of money flowing through the economy."
Analyzing sales figures for the years before and after professional sports teams moved to, or left, a city, the analysis revealed no differences in retail or total taxable sales that could be clearly related to team presence.
While there are significant shifts in per capita sales, the report says, the patterns of increase and decline are roughly the same among all seven cities, regardless of team presence, and are consistent with statewide figures.
These results suggest that sales patterns "are the result of larger economic cycles, not related to any impact of local sports franchises," the report says. Put another way, the health of the economy impacts professional sports team attendance - not the other way around.
The report also notes that while a major league team may help a city attract corporate interest in opening an office or holding a convention there, the city is likely to lose the bid if it has substandard schools, an above-average crime rate, or poor police and fire protection.
"Money spent on a major stadium or arena project," Sylvan said, "is money that cannot be spent on other forms of economic development or neighborhood revitalization."
The report explores issues that get lost in the heat of public debate over stadium funding.
A professional sports franchise may bring to a host city a variety of benefits - enhanced city image and ability to attract business; revenues from game day, parking, concessions, luxury boxes, club seats and stadium rent; construction and daily operations jobs; direct spending and the ripple effect of jobs and revenues throughout the local economy known to economists as the "multiplier effect."
While economic impact often is cited as a benefit, "regional economic theory asserts that only money flowing into a specific city or county from other areas (economic growth) has the capability to expand the local economy," the report cautions.
Furthermore, if a sports franchise decides to relocate, the municipality is left with an unused facility. The report says that few of the complexes that cover their operating expenses actually meet their total expenses, which include service on the construction debt.
According to the report, municipal construction of stadiums and arenas for professional baseball, football, basketball and hockey teams is a phenomenon of the last half century. Many of the earliest large-scale modern stadiums and arenas were built by the teams themselves in the early 1900s.
By mid-century, with the old stadiums reaching their life expectancies and new transportation and housing patterns making parking spaces a necessity, the stage was set for a tremendous boom in stadium construction in suburban areas.
With an undersupply of teams, owners were in a strong position to bargain with their host cities for publicly financed stadiums and arenas and for other contractual terms.
Proponents of public financing of sports complexes argued that although the cost to cities was considerable (by the '90s, a single stadium or arena cost as much as $400 million to build and $100 million to renovate), the long term benefits to a local economy outweighed the public subsidy.
As the numbers show, many city governments and much of the public has been convinced. By 1991, 79 out of 102 professional sports teams in the U.S. played in a publicly owned facility, the report says.
Construction spending for professional sports stadiums and arenas in the U.S., according to the report, totaled $500 million in the 1960s, $1.5 billion in the '70s and another $1.5 billion in the '80s.
Public entities continue to bear the overwhelming majority of these costs.
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