Five out of five economists agree: Letting Rams, Chargers leave is a fiscal win for cities

SI.com asked a bunch of economists whether St. Louis and San Diego should have coughed up more money to keep the Rams and (potentially) Chargers from moving to Los Angeles, and if you read this site with any regularity, you can probably guess what they said:

Brad Humphreys, sports economist and professor at the University of West Virginia: There is no evidence in any peer-reviewed scholarly journal that a professional football team will generate any tangible positive economic impact on a city. There is no evidence that the departure of a football team ever harmed a city’s economy.

[Peter] Von Allmen[, president of the North American Association of Sports Economists]: There is a substantial body of economic research indicating that funding stadiums is not a successful economic development strategy.

[Victor] Matheson[, sports economist and professor at College of the Holy Cross]: I would advise them to let the teams go. I don’t think these teams are worth that amount of money. We don’t spend that sort of money on anything else. Way more people go to movies every year than go to NFL games, yet we don’t have the government build movie theaters.

All of the economists noted that if you want to go ahead and build a stadium just because you think sports are keen and not in search of elusive economic benefits, go right ahead. Which is where I kind of wish SI had reached out to Centre College economist Bruce Johnson, who conducted surveys to determine how much monetary value residents typically put on the joy they get from the presence of a pro sports franchise, and came up with a number under $40 million — which, needless to say, is typically way less than cities are spending on most new sports facilities.

Still, good article to take note of for the next time you need evidence that economists do occasionally agree on something. Elected officials not so much, but hey, maybe some of them read SI.


34 comments on “Five out of five economists agree: Letting Rams, Chargers leave is a fiscal win for cities

  1. Yep. It is sad that so many people try to convince themselves of the economic benefits of sports. At best you can say the benefit is extremely concentrated and I am glad that more people are seeing past the bald assertions and into the economic reality.

    I would agree that any real accounting of “joy” would not be a good stadium/arena line of reasoning either. When you account for the “joy” one gets for sports stuff and not the joy of all the other things that could bring that elusive joy–your are engaging in the “fallacies of boosterism” (the one-sided deep dive into what could be good about the one thing you want while not noting all the alternatives– the “joyportunity costs”). I get tremendous joy out of my town having good schools, good conduits for water and electricity, good road systems, beautiful public vistas, and public pizza ovens. I am not saying everyone would get joy out of the same things I would get joy out of but there seems to be a dearth of imagination when sports is on the frontline of joy creation.

  2. Wow. I’m shocked that a magazine that blows with the cultural winds found a pack of econ profs to say that sports teams suck. I’m sure that will be of great comfort to San Diego bar & restaurant owners.

  3. I dunno what “blows with the cultural winds” means (swimsuit models are trendy in 2016?), but I’ve been looking hard for two decades for economists who disagree with this conclusion, and haven’t been able to find five yet.

    As for San Diego restaurant and bar owners, I’m pretty sure people there will still eat and drink, they just might do less of it during football games.

  4. Would these 5 out of 5 economists offer the same opinion regarding an MLB team that plays 81 games per year in their venues vs. a maximum of 10 for an NFL team?

  5. Ben, so you believe there is justification for the public financing of sports stadiums?! Bar/Restaurant owners in San Diego are going to be just FINE should the Chargers leave S.D.
    A better concern would be for the public at large ending up being on the hook for millions of dollars for a shiny new stadium for a professional sports team that can certainly finance a new stadium themselves. 10 games a year is NOT an economic benefit by any measure.

  6. @scott Absolutely. The amount of activity generated by economic spinoff from 81 games is nowhere near the amount of investment that cities ply into these things. It may seem counter intuitive when standing in front of a ballpark as people stream into it on a busy day but when standing there you can never see the results of the substitution effect, and you never see the lack of activity during dark days.

    The only facilities that even come close to rationalizing civic investment are arenae, which can be in use (or booked) 300 days a year. Even then, as these things get to be more expensive, they start to go over to top of the curve. We’re seeing that now with the Barclays Center in brooklyn.

    Again, if the rationale is “sports are awesome and stadiums are cool!” then the investment is worth it…but it never covers the cost.

  7. I can’t speak for the two economists cited who I don’t know personally, but Matheson, Humphreys, and Zimbalist would undoubtedly all say the same for MLB teams. (And probably NBA/NHL as well, though the numbers are bit better there because of multiple uses of the venue.)

  8. David and Neil,
    Thanks for answering my question. I easily understand the substitution effect, but may there be a corner case situation, where a team in a desirable location does poorly, thereby making it attractive for fans of the visiting team to travel to that poor team’s city where there will never be any problem getting tickets to attend the game. I’m thinking of the Tampa Bay Bucs, for example. Does that tilt the argument in any way?

  9. Not that many people travel even then, and they just don’t spend that much. Hell, the *Super Bowl* only has a limited economic impact, and that’s entirely out of towners.

    Geoffrey Propheter, the economist currently at the NYC Independent Budget Office who has been doing some of the most groundbreaking work in this area, tried to find out if there were exceptions for any NBA cities a while back, and found pretty much that it helps a little if you’re a city where the NBA is your only pro sports team (so people are less likely to come downtown without it) or where money could be siphoned off from the surrounding suburbs. But it doesn’t help that much, and in other cities the impact of an NBA team appears to be negative, so overall I’m guessing he’d make it six out of six:

    http://www.fieldofschemes.com/2012/08/09/3636/study-nba-arenas-just-as-lousy-for-local-economies-as-other-sports-venues/

  10. Scott –

    I wonder that too. Whenever the Cleveland Indians play a team within driving distance of Cleveland (Toronto, Detroit, Chicago) there are thousands of fans from those cities in town. The county chipped in $84 million for that stadium, I can’t imagine that they haven’t earned that back in 22 years since it opened.

  11. The Indians sold out like seven years in a row to their own fans, so that would have put a dent in their out-of-town sales. Though now you have me wondering if maybe hosting a terrible team is more beneficial to the local economy, because nobody local wastes their money on them…

  12. Ben:

    Attack the messenger. Not a particularly compelling argument.

    Positing that San Diego restaurants will not be able to survive the ruthless, NFL-less market for meals, less compelling.

  13. Hi Neil,
    Regarding hosting a terrible team, well at least on a personal level it is beneficial. I have a friend who is a season ticket holder of the Bucs, and every year he sells all the tickets, including pre-season, to a broker, for more than double face value. Certainly no local sucker is going to buy those tickets. Those tickets have to be going to out-of-towners.

  14. “Build one stadium in Las Vegas and let all the NFL teams play there” is sounding better and better.

  15. Yeah in the first few years that was the case. I am a Jays fan so I only go when the Jays are in town and there are thousands of people from Toronto in for the game. Now while I like Cleveland, I doubt we would get thousands of people from Toronto for something other than sports other than possibly the Rock Hall (Toronto has everything). The thing is you can’t track every dollar. There is no data source that will isolate 4000-5000 people that were in town for a weekend series that wouldn’t otherwise be there and how much they spent.

  16. I think the study leaves out a reason. Usually these situations cite a combination of three reasons:

    1. Sports as an economic driver of urban development (through people buying stuff)
    2. Sports as an enhancer of a city’s prestige (business relocate)
    3. Team competitiveness (“we can’t win here without this”)

    Naturally, the default is always “build a new stadium for a billion” but this leaves out a lot of public policy options. If it really mattered politically, cities could fund the signing of a quarterback or third baseman in order to “get a winner on the field” or just send a check annually. That doesn’t often seem to be proposed, thought it might actually more closely relate to the value the public actually placed on the team. I wonder why.

    Ben–I don’t think you go to many NFL games. I can think of maybe three NFL stadiums where going to a restaurant or bar before the game is a real option–and one of them (tSt. Louis and Atlanta) have been declared not fit for purpose. Most of the time, fans are left with about a mile walk across a parking lot, so they just end up parking and drinking beer or doing the same inside the stadium.

    Maybe you should save your sympathy for the stores that sell six-packs of beer in one of the most beautiful cities in America.

  17. Aqib – There is an issue with your analysis, it forgets to count the negative drag of fans that travel the other way and the money they spend while out of town. There will be Indians fans traveling to Toronto to see games instead of spending that money locally so it’s most likely a wash economically.

  18. On a sample of one, I know the “home team sucking” benefit for the Rams was only a couple games a year. Pittsburg and Chicago fans would pack the place, but even then, they’d arrive Saturday, and leave Sunday after the game, so you’re looking at one night of hotel restaurant revenue. Of course STL doesn’t have the weather of Miami and Tampa.

  19. aqib: How did you come up with “thousands” of people from Toronto? Did you count license plates, interview fans, or just notice a lot Toronto apparel in the stands? Maybe they were just local blue jay fans like yourself. Yes, there are die hard, driving distance, traveling fans, but their economic impact is probably a rounding error amount.

  20. Off topic, but since Centre College was mentioned. They went to Ireland a couple of years ago, and played (and hammered) some team called the Dublin Rebels. 90-0. I like the motivational speaker in the video. Who is that T.J. Yakes, or something?

  21. Carl: That’s a cut-and-paste from SI. Guess no one there watched the Cactus Bowl.

  22. *T.D. Jakes is what I was trying to say. Probably not the right guy, anyway. Sorry for messing on your comment section, it ain’t important.

  23. Yeah, I saw that and meant to highlight a sports magazine not knowing something so basic, not you.

  24. Again, you’re using the incorrect term. They’re economics professors, not economists. Economists lose their jobs if they’re wrong and their projections mess things up for their employer. Econ profs keep their tenure no matter how often they’re wrong.

    I do love the argument of, “well, it’s only a little bit shitty for San Diego bars and restaurants”. Lots of hospitality establishments (which many bars and restaurants would qualify as) make their entire year on a single event or a handful of events. The sixteen Chargers games are huge for many bars and restaurants, and will end up making a difference in the number of service industry jobs available in the area.

    But, oh, that’s right. Econ profs don’t give a shit about jobs. They care about wages and tax receipts. That’s the “true” measure of economic activity, right fellas?

  25. “Econ profs don’t give a shit about jobs. They care about wages and tax receipts.”

    Yes, it’s about time somebody stood up for all those people in wage-free jobs.

    It just wouldn’t be FoS without a Ben-rage at every mention of Econ professors.

  26. Ben, I thought you’d at least lay off of Geoffrey Propheter, since he has a non-academic job as a working economist.

  27. Speaking as someone who lives in San Diego, Qualcomm Stadium is located in a 67 acre parking lot, with only a few bars around the area. I can’t imagine that people going to a game at that site generates economic activity, as people usually just drive there and drive home (downtwon may be a different scenario).

    As far as bars go, most bars in San Diego are homes of fans of other teams (ie 49er bars, Patriots bars, etc) and these bars get packed with other teams fans. San Diego is a transplant town and I cant imagine the bars being empty just because the Chargers arent there. They might get MORE business because the 60,000 football fans that would be spending money at the game will be out watching the games at bars.

    I suspect that Ben does not live in SD. If he does, he should visit a SD sports bar and count the Charger jerseys. Saying that it is a 50/50 split between Chargers and other NFL teams would be very generous.

  28. Ben, it’s really hard to take any quantitative argument you make when you overstate the number of games the Chargers play that would affect local businesses by 60%.

    If you’re implying that even away games have an impact, then guess what? With the team gone, there are now 60,000 more people free to go to sports bars to watch the Chargers (maybe less if some trek to LA for games) ten additional weeks of the year. That money is moving from the Spanos’ pockets to the local bars’, so it’s actually a net plus for bars and restaurants.

  29. Ben

    Would that mean that the difference between politicians and political scientists is that politicians lose their jobs when professional sports teams move away? Oh wait…

  30. Ben,

    In case you’re really worried about SD bar and restaurant owners–I want to tell you that–yes–restaurants do really need big events throughout the year to stay open.

    In my experience–some of those events include birthday parties, wedding receptions, Rotary club meetings, even bachelorette parties. Unless SD is overwhelmed by emotion if/when the Chargers leave, these events will all continue to happen whether football is played in the city or not. Most bars/restaurants (and all the successful ones) pay for “marketing” to make their presence known.

    As many have said here, the areas around football stadiums are generally dumb places to build sports bars, so SD would (if anything) be more likely to have good sports bars in better locations. And probably showing better games too.

  31. Hmmmn. So Economists lose their jobs when they are wrong.

    I can’t think of one.

    I can’t even think of a Treasury Secretary or Chairman of the Federal Reserve (or SEC) who lost their job when they turned out to be corrupt, wrong, stupid, incompetent or just utterly oblivious to what was going on around them. Several of the most recent appointees to these jobs seemed to fundamentally ignore the primary role their jobs required of them (regulation), yet still they were not fired.

    As I understand it the President employs several economists… and typically they can’t agree on what has happened or what will happen under a given set of circumstances… so clearly some of them have to be wrong.

    I would argue that economists (or even analysts) are among the least likely people to be fired when they are wrong…