All you journalists and editors out there who like man-bites-dog ledes, check it out: There’s a new contrarian dog in town, and it’s Reason’s A. Barton Hinkle, who starts off an article with this monster of a sentence:
Is everything we know about sports stadiums wrong? Not really. But it might not always be right, either.
Boom! Time to step up your game, #slatepitches!
So, what exactly is the not-always-right thing that we don’t know about sports stadiums? In short: Minor-league baseball teams might actually have a small but positive impact on local economies.
The work comes from Nola Agha, an assistant professor of sports management at the University of San Francisco. It appears in the Journal of Sports Economics and arrives at what Agha terms “an unexpected outcome”: Certain types of teams and facilities can produce gains in regional income (albeit small ones: about $67 to about $117 per capita). This contradicts “the vast majority of academic research” on big-league sports, which “has found nonpositive effects on income…employment…sales tax revenues…and spending.”
I haven’t read Agha’s paper yet (it’s on my list), but this finding isn’t exactly surprising: Since one of the main complaints about sports facilities’ alleged economic benefits is that they mostly reshuffle spending in a region (the “substitution effect”), and minor-league teams tend to play in small cities and towns where reshuffled money is more likely to come from outside the city limits, you absolutely should expect to see a bigger economic gain.
Of course, minor-league teams come with their own pitfalls, first among them that they don’t stay put very long, raising the risk that any small boost in economic activity will be short-lived. (Hinkle notes that affiliated minor-league teams stick around for an average of 16 years, far better than the four-year lifespan of the average independent league team, but still pretty crappy if you’re paying off 30-year stadium bonds.) And Agha didn’t make any attempt at a cost-benefit analysis, meaning that even if per-capita income does creep up, it may not be enough to make the expense of building a new stadium, even at a minor-league price tag, worth it.
It’s a nice addition to the pile of stadium economic impact research, anyway. Coming on the heels of Geoffrey Propheter’s exhaustive research on NBA cities, it shows promise that economists are starting to be able to refine their view of stadium and arena subsidies from “not worth a damn” to “sometimes worth a fraction of a damn, depending on the circumstances.”
This is not a surprise to me either. I suspect you are also right about the minor league franchises not producing enough new revenue to pay for the stadium bonds (or whatever).
What I would say about minor league sport is this, though: If you believe that at least some part of the role of municipal government is to try and create opportunities for business (on a level playing field, thank you… not cherry pick which businesses should succeed or not) to be created and to at least provide an opportunity for entertainment options to be enhanced in the community, Minor League sports certainly qualifies.
As with any business/entertainment/job subsidy possibility, the question is what is the cost of providing the option and how many people are interested in taking advantage of it?
The town I live in just built a new aquatics centre, for example. I’m told it’s nice, really nice. But it would have been cheaper for the local government to give every household $15k toward building their own private pool.
What benefit at what cost?
“… create opportunities for business (on a level playing field, thank you… not cherry pick which businesses should succeed or not) to be created…”
But you’re really not creating a business when you bring a minor-league team to town. You’re just moving one around. The number of minor league teams (I’m assuming we’re talking baseball here) is very static.
What I was referring to was the opportunity to create a new business or entertainment option in a particular community where, presumably, that particular one (baseball, soccer, hockey etc) did not exist before.
The number of teams in MiLB affiliated leagues is relatively static. That is not the case in other sports or independent baseball leagues.
I believe it is the role of local governments to try and bring in attractions and entertainment options. That should not extend to building facilities in their entirety and then paying teams to play in them, obviously. There has to be a balance.
Long time reader and fan of this blog. I’ve even purchased and read the book. Minor league parks bring the same problems addressed in the book and on this blog. I live in Fort Wayne, where five years ago the city ponied up for a new downtown ballpark (Parkview Field) for our minor league baseball team. Parkview Field replaced Memorial Stadium, a serviceable but forgettable stadium that was built all the way back in 1993.
The city financed the project primarily through TIFs. The TIFs aren’t bringing in the expected tax dollars to cover the bonds due in part to a number of subsidies the city is providing the businesses in the TIF districts. Fort Wayne gets some funds to offset stadium maintenance expenses through ticket sales at Parkview Field, but an x amount of tickets need to be sold in order for the city to start seeing that money. That’s the only real money they see of the dollars spent inside the ballpark.
New economic development is nearly non-existent other than a cigar/wine bar across the street. All the other businesses (a bar, credit union and a hotel) have received subsidies from the city to keep afloat.
Some readers seem to struggle with understanding substitution, but I can see it in my spending. Despite my carping, I enjoy games at Parkview Field and go to several games a year there. It’s a lovely park. Since it opened, I no longer take piano lessons or go to summer movies because of the money and time I spend at Parkview Field.
” (Hinkle notes that affiliated minor-league teams stick around for an average of 16 years,”
My city must be a outlier in the statistics, the local Triple-A team has been here since 1963, granted we are one of the larger cities without a MLB team and have a good reputation for supporting most sports