The Park Place Economist / vol . IX 62 Professional Sports Attendance as a Proxy for New Stadium Spillover Benefits

One of the most interesting issues in state and local public finance over the last 10-15 years has been the debate over state and local contributions to professional sports stadiums. Despite a large amount of empirical evidence indicating that state and local governments receive very little, if any economic benefit from the stadiums they help build, for some reason they keep building them (Bade, Rosentraub). Much research has gone into this issue, and essentially the same result was found each time: stadiums are poor investments for governments. Good financial investments though, are not the only things governments spend money on. Certainly no one would argue that parks are good financial investments for cities, yet they are built. Counties participate in a variety of activities that probably do not have the financial return of a U.S. Government Bond or some other form of investment. Very little research though, has been done evaluating other possible gains from a new stadium, otherwise called spillover benefits, similar to those coming from a park or other public goods. This paper attempts to identify and to a certain degree quantify these benefits through stadium attendance levels, with the hope of giving cities a way to refute stadiums as being poor investments. Section two of this paper will explore why stadiums are bad investments. Section three will examine research to date on this topic. Section four will explain my theory in attempting to quantify these spillover benefits and examine my research design. Section five will present my results. And Section six will conclude the paper and offer any implications it might have.