The Tampa Bay Times ran a story on Saturday headlined “How much do the Tampa Bay Rays boost the local economy?“, and for once, this one talked to actual economists. The result was an article that provides an excellent primer on how it is exactly that despite all the people you see attending games and spending money, study after study shows that sports teams have minimal economic impact.
Do local economies see increased activity when a sports team is playing?
In 2008, [Holy Cross economist Victor] Matheson studied sports projects from across the country to see if taxable sales rose after stadiums were built. The study also examined whether tax collections dipped when sports leagues shut down for strikes or lockouts.
“There was simply not any bump at all,” Matheson said.
But what happens to all that money that fans are spending, then?
When a couple spends $100 for dinner and a movie, much of that money goes to waiters, ticket takers and other local workers and suppliers. Those people, in turn, spend their paychecks on rent, food and other sectors of the local economy.
Each dollar of original spending can contribute $3 to $4 to economic activity and job creation.
Professional sports mute this ripple effect.
“Spending that goes on inside a stadium tends to flow into the pockets of a relatively few, high-income individuals who live a large portion of the year outside the city,” [University of Maryland economist Dennis] Coates said. “Much of that money flows out.”
What about all those economic impact studies released by the teams that show massive tourism revenues as the result of sports spending?
One, commissioned by the Rays, noted that 160,000 tickets were bought via credit cards with out-of-state addresses — presumably tourists. Since the average Florida tourist spent $775 on their visit, the study estimated that the Rays added $122 million to the economy. The actual impact could be higher, the study suggested, because the credit card count did not capture cash-paying tourists.
However, this methodology failed to distinguish between tourists coming specifically for Rays games and tourists who came for other reasons and just happened to take in a ball game.
“A person in town to visit relatives or attend a business meeting or conference is already in town,” said Matheson, the Holy Cross professor. “That visitor would have stayed in a hotel room, gone out to dinner, even if the Rays had not had a game.”
The economists note other reasons why sports spending is overblown (some studies could be double-counting fans for each game that they attend even if they’re in town for an entire series, among other things); the whole article is worth reading. And when you’re done with that, check out Shadow of the Stadium’s rundown of other reports on how economists nearly unanimously agree that stadium subsidies are a really, really bad idea. Not that economists are always right, but it should if nothing else put the burden of proof on team owners to show why the heck they should be getting hundreds of millions of dollars in public cash, when nobody can spot any significant public benefits.