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

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  • Jordan Rappaport
  • Chad R. Wilkerson

Abstract

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, vol. 86(Q I), pages 55-86.
    • Handle: RePEc:fip:fedker:y:2001:i:qi:p:55-86:n:v.86no.1
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