The economics of stadiums, teams and cities

Policy Studies Review

Volumn 15, Issue 1, 1998, Pages 17-29

  Zimbalist, Andrew ^a  

^a SMITH COLLEGE   (United States)

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EID: 0002209585     PISSN: 02784416     EISSN: None     Source Type: Journal    
DOI: 10.1111/j.1541-1338.1998.tb00750.x     Document Type: Article

References (22)

1. Quoted in First Amended complaint, City of Cleveland v. Cleveland Browns et. al., Court of Common Pleas, Cuyahoga County, Ohio, p.2.
2. The $200 million figure may become quickly obsolete. New York City Mayor Giuliani is supporting a proposal to build a new stadium for the Yankees in mid-town on the west side for an estimated $1.06 billion. This modest sum does not include the cost of land acquisition.
3. For instance, according to the Wall Street Journal (March 9, 1995): "The 400 ushers and ticket-takers employed by the Milwaukee] Brewers collectively earn about $300,000 - one-quarter of the average $1.2 million salary for one ballplayer in 1994."
4. James Quirk and Rodney Fort Pay Dirt: The Business of Professional Team Sports. Princeton: Princeton University Press, 1992, pp. 170-171.
5. Robert Baade and R.F. Dye, "The Impact of Stadiums and Professional Sports on Metropolitan Area Development Growth and Change (Spring 1990), 1-14.
6. Robert Baade, Stadiums, Professional Sports, and Economic Development. Assessing the Reality. A Heartland Policy Study, no. 62. April, 1994.
7. Arthur Johnson, Minor League Baseball and Local Economic Development. Urbana: University of Illinois Press, 1993, p. 245. For a review of several additional studies, see John Crompton, "Economic Impact Analysis of Sports Facilities and Events: Eleven Sources of Misapplication," Journal of Sport Management (1995:9), 14-35.
8. Arthur Johnson, Minor League Baseball and Local Economic Development. Urbana: University of Illinois Press, 1993, p. 245. For a review of several additional studies, see John Crompton, "Economic Impact Analysis of Sports Facilities and Events: Eleven Sources of Misapplication," Journal of Sport Management (1995:9), 14-35.
9. Some have pointed out that the presence of a major league sports team may induce certain local resident to travel less, and, thereby, spend more of their income locally. While it would be folly to deny that some may behave in this way, it is hard to believe (and to our knowledge no one has demonstrated) that the empirical effect here would be significant.
10. For instance, a study performed by the Cleveland Growth Association on the economic impact of the Cleveland Browns in 1995 found that out of an average game attendance of 70,160, only 4,780 or 6.8 percent were "non-local".
11. Hosting an all-star game in baseball or the Super Bowl in football provide an additional financial fillip to the fortunate city.
12. Crompton, op. cit., pp. 27-29.
13. The March 1996 Peat Marwick Yankee Stadium Alternative Site Study adopts an unusual bias in considering New York City as the local area for purposes of out-of-town expenditures but New York state as the relevant area for considering multiplier linkages. Similar to other promotional studies of its genre the Peat Marwick study obscures fundamental questions of methodology and substitutes endless numbers of computer-generated tables, intended, one supposes, to lend a scientific air to the report. The report Inter Alia, leaves out the negative multiplier effects of higher taxes for financing construction and/or operating deficits, assumes unrealistically high prices for PSLs, club seats and suites, assumes a 50 percent increase in attendance at Yankee games to persist indefinitely, misapprehends the basic distinction between current and constant prices, along with a host of additional difficulties.
14. This is consistent with estimates cited by Crompton of between .4 and .8 for the local multiplier (based on first round gross spending) of visitor spending in U. S. counties. Op. cit., pp. .29-30.
15. See Dennis Zimmerman, "Tax-Exempt Bond Legislation, 1968-1990: An Economic Perspective," CRS Report for Congress. Congressional Research Service, The Library of Congress, February 7, 1991.
16. See Dennis Zimmerman, Limiting Tax-Exempt Bonds for Professional Sports Stadiums, Congressional Research Service, April 1996. A study by Deloite and Touche of the new stadium being built for the Arizona Diamondbacks in Maricopa County for a projected $280 million (not including infrastructural associated with parking and land acquisition) estimates that the team and stadium will generate the equivalent of 400 full-time jobs. This computes to a cost of $700,000 per job!
17. For an interesting discussion of how new construction projects are viewed by different spheres of municipal employees, see Anthony Boardman, Aidan Vinig, and W. G. Waters II, "Costs and Benefits through Bureaucratic Lenses," Journal of Policy Analysis and management 12 (3) (Summer 1993): 532555.
18. Financial World magazine each year puts out estimates of operating income for all the franchises in the NBL, NFL, NBA and NLLB based on figures and partial information provided by ownership. Their estimates tend to be conservative. For the 1994 season, Financial World estimated that the Browns had an operating income of $6 million, the Oilers had $2.8 million and the Rams had an operating loss or $1.8 million. However, Financial World estimated that the Rams had an operating income of $5.5 million in 1993.
19. While it is true that individual teams can exceed the cap in some years by manipulating the timing of salary payments, eventually the same teams will be constrained to a tighter cap as the payments schemes catch up with them. The remaining NFL cap loophole (that it is not in effect for 1999) is expected to be closed when the current negotiations for a new collective bargaining agreement are concluded.
20. On January 23, 1996, before the Senate Judiciary Committee Commissioner Tagliabue stated that the reason the Rams were allowed to leave Los Angeles was because Rams filed a triple-damage antitrust suit. It is hard to believe that the NFL owners did not anticipate such a suit before their initial decision. Further, if the antitrust suit was the sole motivation for permitting the move, why did the relocation fee jump by over $20 million? Tagliabue also indicated that a disproportionate share of this relocation booty was given to the NFL's low revenue teams. While this is a laudable use of the funds, it is still a payment to the NFL owners. Presumably, the greater use of relocation fees to aid low revenue teams obviates the use of other league revenues for this purpose. In any event, it would make sense for the Congress to request details on the distribution of relocation fees and new revenue sharing initiatives in the NFL.
21. Senator John Glenn has introduced a companion bill to H.R- 2699 in the Senate.
22. Senator Strom Thurmond's bill, the "Professional Sports Antitrust Improvements Act of 1996," extends partial immunity for relocation issues, but it provides no countervailing mechanism to circumscribe the potential abuse from granting the monopoly sports leagues this additional power.