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What are the benefits of hosting a major league sports franchise?


  • Jordan Rappaport
  • Chad R. Wilkerson


Over the last few decades the number of U.S. metropolitan areas large enough to host a franchise from one of the four major professional sports leagues has soared. Even as major league baseball, football, basketball and hockey have expanded to include more franchises, demand by metro areas continues to exceed supply. Metro areas have thus been forced to compete with each other to retain and attract franchises. ; The resulting large public spending on new sports facilities has been quite controversial. Usually these costly projects are justified by claims that hosting a sports franchise spurs local economic development by creating numerous new jobs and boosting local tax revenue. Independent economic studies suggest, however, that such benefits are much smaller than the outlay of public funds. ; Does this mean that public funding of sports franchises is not justified? Perhaps not. Rappaport and Wilkerson review the current rush by metro areas to build sports facilities. They lay out the arguments both in favor of and against using public funds to do so. They show why the job creation and tax revenue benefits from hosting a major league franchise fall far short of typical public outlays on constructing a new sports facility. Finally, they argue that the large quality-of-life benefits associated with hosting a major league team may justify the public outlays.

Suggested Citation

  • Jordan Rappaport & Chad R. Wilkerson, 2001. "What are the benefits of hosting a major league sports franchise?," Economic Review, Federal Reserve Bank of Kansas City, issue Q I, pages 55-86.
  • Handle: RePEc:fip:fedker:y:2001:i:qi:p:55-86:n:v.86no.1

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    References listed on IDEAS

    1. Stacey L. Schreft & Raymond E. Owens, 1991. "Survey evidence of tighter credit conditions: what does it mean?," Economic Review, Federal Reserve Bank of Richmond, issue Mar, pages 29-34.
    2. Raghuram G. Rajan, 1994. "Why Bank Credit Policies Fluctuate: A Theory and Some Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 399-441.
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    Cited by:

    1. Andrew K. Rose & Mark M. Spiegel, 2011. "The Olympic Effect," Economic Journal, Royal Economic Society, vol. 121(553), pages 652-677, June.
    2. Carlino, Gerald & Coulson, N. Edward, 2004. "Compensating differentials and the social benefits of the NFL," Journal of Urban Economics, Elsevier, vol. 56(1), pages 25-50, July.
    3. Roberto Gásquez & Vicente Royuela, 2014. "Is Football an Indicator of Development at the International Level?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 117(3), pages 827-848, July.
    4. Jordan Rappaport, 2005. "The shared fortunes of cities and suburbs," Economic Review, Federal Reserve Bank of Kansas City, issue Q III, pages 33-60.
    5. Carolyn A. Dehring & Craig A. Depken & Michael R. Ward, 2007. "The Impact Of Stadium Announcements On Residential Property Values: Evidence From A Natural Experiment In Dallas-Fort Worth," Contemporary Economic Policy, Western Economic Association International, vol. 25(4), pages 627-638, October.
    6. Philip K. Porter & Daniel M. Chin, 2012. "Economic Impact of Sports Events," Chapters,in: International Handbook on the Economics of Mega Sporting Events, chapter 15 Edward Elgar Publishing.
    7. Lasse Steiner & Bruno Frey & Simone Hotz, 2015. "European Capitals of Culture and life satisfaction," Urban Studies, Urban Studies Journal Limited, vol. 52(2), pages 374-394, February.
    8. Bruce Johnson & Mike Mondello & John C. Whitehead, 2004. "Contingent Valuation of Sports Stadiums and Arenas: Temporal Embedding and Order Effect," Working Papers 04-15, Department of Economics, Appalachian State University, revised 2005.
    9. Pelnar, Gregory, 2007. "Antitrust Analysis of Sports Leagues," MPRA Paper 5382, University Library of Munich, Germany.
    10. Bruce K. Johnson & Michael J. Mondello & John C. Whitehead, 2005. "What is the Value of Public Goods Generated by a National Football League Team: A CVM Approach," Working Papers 05-10, Department of Economics, Appalachian State University.
    11. Sparvero, Emily & Chalip, Laurence, 2007. "Professional Teams as Leverageable Assets: Strategic Creation of Community Value," Sport Management Review, Elsevier, vol. 10(1), pages 1-30, May.
    12. Brown, Matthew & Nagel, Mark & McEvoy, Chad & Rascher, Daniel, 2004. "Revenue and Wealth Maximization in the National Football League: The Impact of Stadia," MPRA Paper 25741, University Library of Munich, Germany.
    13. Xia Feng & Brad R. Humphreys, 2008. "Assessing the Economic Impact of Sports Facilities on Residential Property Values: A Spatial Hedonic Approach," Working Papers 0812, International Association of Sports Economists;North American Association of Sports Economists.
    14. Dennis Coates, 2007. "Stadiums And Arenas: Economic Development Or Economic Redistribution?," Contemporary Economic Policy, Western Economic Association International, vol. 25(4), pages 565-577, October.
    15. Kavetsos, Georgios & Szymanski, Stefan, 2010. "National well-being and international sports events," Journal of Economic Psychology, Elsevier, vol. 31(2), pages 158-171, April.
    16. Friedson, Andrew I. & Bogin, Alexander N., 2013. "Winning pays: High school football championships and property values," Journal of Housing Economics, Elsevier, vol. 22(1), pages 54-61.
    17. Brooke Crutchfield & Jonathan Willner, 2016. "Football in Greater Manchester: Growth Effects of Premiership Status Teams," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 22(4), pages 447-456, November.

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