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Major League Bucks, Minor League Bang

For Seven California Cities, the Home Team Hasn't Delivered, Says New IURD Report

By Cathy Cockrell, Public Affairs
posted September 2, 1998

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 Institute of Urban and Regional Development finds that these teams have not produced the hoped for benefits to seven California cities.

Researcher Jack Sylvan of the Department of City and Regional Planning in the College of Environmental Design analyzed data from Anaheim, Los Angeles, Oakland, Sacramento, San Diego, San Jose and San Francisco. A paper on his findings won the 1997 McClure Award for the best graduate student paper in the field of city planning nationally. The resulting report, "Professional Sports Subsidy as Economic Development," was published by the institute last month.

Using 1972-95 retail and business sales figures from the State Board of Equalization for the seven cities that host major league sports teams, the study's statistical analysis of the economic indicators tested one simple hypothesis.

"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."

Using 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, it is the health of the economy that has an impact on professional sports team attendance -- not the other way around.

Sylvan 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."

Proponents of public financing of sports complexes argue that although the cost to cities was considerable (by the 1990s 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 have been convinced. By 1991, 79 of 102 professional U.S. sports teams 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 1960s, $1.5 billion in the 1970s and another $1.5 billion in the 1980s.

Public entities continue to bear the overwhelming majority of these costs.

Sylvan is about to begin Fulbright research in Spain, where he will study the impact of the 1992 Summer Olympics on the poor neighborhoods of Barcelona.

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