Why Do Government Fund The Construction Of Professional Sports Stadiums?

Professional sports are a growing entertainment industry in the United States. It is projected that the North American sports market will be valued at 73.5 billion dollars in 2019, with an annual growth rate of 4% (PWC, 2015). A large part of this value can be attributed to the construction of large and expansive stadiums. From 1989 to 2009, it is estimated that 31 billion dollars was spent on venue construction for the five major professional leagues in the US (NFL, MLB, NBA, NHL, MLS) (Marquette University, 2009). This is due to constant construction and renovations. Of the 118 venues used by the five professional leagues, 103(87%) have been through newly built or have been renovated. This demonstrates an industry wide interest in new construction

Not only do they spend billions of dollars to fund these projects, stadium construction can come at the price of other public services. In Hamilton County, Ohio, 805 million dollars were spent on football and baseball stadiums (Gordon, 2013). While this happened, police and education budgets were slashed to pay for these stadium improvements. So why do governments still fund these stadiums? Decisions to construct sport stadiums are made because of implied economic benefits arising from stadium construction and professional franchise presence. However, in many cases, the promised economic benefits do not come to fruition. Many experts, such as Roger Noll, a senior economics fellow at the Stanford Institute for Economic Policy research believe that “stadiums do not generate significant local economic growth, and the incremental tax revenue is not sufficient to cover any significant financial contribution by the city” (Parker, 2015). With such dissent among the decision and advisory groups relating to sport stadium construction, there is a need for certainty of results. City governments have been shown to have made poor decisions in the past, such as the case in Hamilton County. To make better decisions regarding construction, there is a need for a method to predict whether a sport stadium would be beneficial before construction begins. This could save millions or even billions of dollars of public,

However, not many mention or explain why the effects of sport stadiums vary. Why did this stadium in the city fail but another succeeded? Based on this inquiry, it was asked whether certain characteristics of cities impact future success. By looking at existing literature analyzing the after, the effects of sport stadiums, and comparing them to the before, a general sense of what factors can impact differences in economic success can be reached. It is wondered the extent to which specific municipal impact the success of stadiums, and if so, which specific factors affect economic development the most. Furthermore, based on the conclusions of these questions, a set of guidelines can be made to apply this knowledge in a format that can be used to predict success in other cities than the ones analyzed in this