The owners of professional sports teams, along with their favorite politicians, often claim that sports franchises are good for the local economy. That assertion is then used to extract subsidies for new sports facilities (or to make upgrades to existing stadiums or arenas). Case in point, the National Football Leagues Atlanta Falcons want $400 million in public money for a new stadium.
But according to research published by the Bureau of Labor Statistics, having a pro sports team in town may be a net negative for the local economy. Paul Staudohar, professor emeritus of business administration at California State University, found in an examination of last year’s National Basketball Association lockout that shutting down sports leagues can be good for a city’s finances:
Even if the 2011–2012 season had been canceled, it likely would have had little, if any, effect on the economic health of the cities that host NBA teams. A 2001 study of past work stoppages found that, in 37 metropolitan area economies with professional sports franchises, there was no overall financial impact. Indeed, the cities appeared to perform better financially in years that games were canceled. There were other options that people spent their entertainment dollars on, in a substitution effect, while security needed for public safety at sporting events cost less because games were not played.
Hosting the NCAA Final Four tournament has also been found to be a net negative for a city. So perhaps cities kvetching over the NHL lockout don’t have as much to worry about as they think (though of course individual businesses can be substantially harmed). Recent data also shows that Canada’s economy is taking an extremely slight hit due to the NHL stoppage.