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Public Subsidies to Stadiums: Do the Costs Outweigh the Benefits?

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  • Daraius Irani

    (University of California, Santa Barbara Economic Forecast Project)

Abstract

This article reexamines the costs and benefits to cities of publicly subsidized stadiums by measuring the welfare gain of a stadium. Previous research has shown that the economic impact of a stadium on a local economy is insignificant compared to the costs of the stadium. However, the literature has ignored the welfare gain generated by a stadium. The annual consumer surplus generated by a stadium is calculated from a simple demand curve for baseball games using 1972 to 1991 data on ticket prices and attendance. Estimates of the consumer surplus are in the range of $2.2 million to $54.1 million per season. Further, the annual net benefit of a stadium exclusive of any induced economic activity ranges from minus $19.1 million to $32.8 million.

Suggested Citation

  • Daraius Irani, 1997. "Public Subsidies to Stadiums: Do the Costs Outweigh the Benefits?," Public Finance Review, , vol. 25(2), pages 238-253, March.
  • Handle: RePEc:sae:pubfin:v:25:y:1997:i:2:p:238-253
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    Cited by:

    1. 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.
    2. 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.
    3. Alexander, Donald L. & Kern, William & Neill, Jon, 2000. "Valuing the Consumption Benefits from Professional Sports Franchises," Journal of Urban Economics, Elsevier, vol. 48(2), pages 321-337, September.
    4. Rhodes, M. Taylor, 2013. "Pigskin, Tailgating and Pollution: Estimating the Environmental Impacts of Sporting Events," UNCG Economics Working Papers 13-19, University of North Carolina at Greensboro, Department of Economics.

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