The Impact of a Professional Sports Franchise on County Employment and Wages

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					International Journal of Sport Finance, 2008, 3, 210-227, © 2008 West Virginia University




The Impact of a Professional
Sports Franchise on County
Employment and Wages
John Jasina1 and Kurt W. Rotthoff2
1
Clifton University
2
Seton Hall University


John Jasina, is an assistant professor in the School of Business. His research interests include the economic impact of professional
sports, organization of sports leagues, and applied microeconomics.
Kurt W. Rotthoff, is an assistant professor in the Department of Finance. His research interests include sport finance, financial eco-
nomics, and market efficiency.


Abstract
Stadium boosters have long used the promise of economic development as a means to gain public support for financ-
ing local sports teams. Past research has shown little or no impact on employment or income when viewed at the MSA
level. This paper expands the current literature on the economic impact of professional sports franchises. Following
Coates and Humphreys (2003), we look at employment and wages at the county level using detailed SIC and NAICS
industry codes. We find mixed results on employment within a county but find a negative effect on the payrolls with-
in specific industries.

Keywords: stadiums, arenas, public finance, professional sports, economic development, economic impact.

Introduction                                                               These claims have led to research on the actual advan-
                                                                         tages that sports franchises bring to a city, measured in
The use of public funds to subsidize privately owned pro-
                                                                         terms of local economic activity. Over time, there have
fessional sport franchises is a hot topic. Across the United
                                                                         been many studies on this issue. In earlier works, Baade
States, politicians are singing the praises of sports as a way
                                                                         and Dye (1988, 1990) looked at retail sales and aggregate
to develop the economy in their cities. Places like
                                                                         income in Metropolitan Statistical Areas (MSAs). Their
Arlington, TX, are supporting the development of new
                                                                         1988 paper found little support for a link between major
stadiums to lure, or keep, a franchise in the city. Judith
                                                                         league sports and manufacturing activity, and their 1990
Grant Long (2005) has estimated public subsidies
                                                                         paper found stadiums had an insignificant impact on
amount to $177 million per facility, while Rappaport and
                                                                         MSA incomes. Baade (1996) examined a professional
Wilkerson (2001) say more than $6 billion in public
                                                                         sports team’s ability to create jobs, also failing to find a
funds was spent on stadium and arena construction in
                                                                         positive correlation. When looking at the employment in
the 1990s. In order to gain public support for the use of
                                                                         10 MSAs, Baade and Sanderson (1997) found nine cities
tax dollars to fund stadium and arena construction,
                                                                         with a significant impact from the presence of a profes-
politicians often claim the local economy will benefit
from the creation of new jobs and higher incomes.
                                                    The Impact of Professional Sports Franchise on County Employment and Wages
sional sports team. Interestingly, of the nine significant       Bureau, to get county level data from 1986 to 2005.
cities, five were po
				
DOCUMENT INFO
Description: Stadium boosters have long used the promise of economic development as a means to gain public support for financing local sports teams. Past research has shown little or no impact on employment or income when viewed at the MSA level. This paper expands the current literature on the economic impact of professional sports franchises. Following Coates and Humphreys (2003), we look at employment and wages at the county level using detailed SIC and NAICS industry codes. We find mixed results on employment within a county but find a negative effect on the payrolls within specific industries. [PUBLICATION ABSTRACT]
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