Reference no: EM133367524
The promotional literature suffers from a long list of methodological and theoretical problems, all of which have been well-documented in the literature. Economic intuition suggests several of these problems:
1. The redistributive implication of moving a franchise from one city to another also applies to the context of moving a stadium from one part of a city to another. If a new stadium is built in the downtown area to revitalize that section of town, then at least a portion of any such vitality naturally comes from the part of the city around the original stadium.
2. Much of the consumer spending associated with professional sports comes out of the entertainment budgets of local residents. When a new sports franchise appears in a city, local entertainment spending on sports increases and local entertainment spending on other activities like movies, bowling, etc. decreases. The effective "local spending mul- tiplier" on activities like bowling and attending plays or concerts is high- er than the multiplier on professional sporting events because the own- ers of bowling alleys, theatres, and restaurants, as well as the employees of these establishments, live in the community while the owners and highly paid players (who receive a majority of team's expenditures) on professional sports teams generally do not. Since spending on profes- sional sports teams substitutes for other local consumer entertainment spending and has a lower local spending multiplier, professional sports can reduce local income rather than increase it.
3. Sports are one of many cultural activities within the city. For every in- dividual who derives enjoyment from the presence of the sports fran- chises in the community, there are likely to be other individuals who are uninterested in sports or even resent being taxed to subsidize an activity they have no use for. Others argue that sports culture diverts people from more socially beneficial interests and pursuits. Before accepting that sports teams generate external benefits, a careful and thorough look at "external costs," and the alternative uses of resources devoted to subsidies-uses that might also have "external benefits"-is clearly warranted. Unfortunately, such debate quickly leads public discourse and policymakers into a briar patch of unpriced values that are easily misrep- resented. Thus, economists generally urge that society steer away from government sponsorship of cultural activities not related to education.
4. Government expenditures on stadium and arena subsidies carry oppor- tunity costs which are never addressed. Tax collections used to pay sta- dium debt, for example, could have gone for other public projects with higher social rates of return than a stadium. One never knows what the returns to alternative uses of the funds might be because alternatives are never discussed. These alternative uses could be construction or maintenance projects, on highways, mass transit systems, hospitals, or schools. Or, the alternative could be to reduce taxes.
5. Whatever inefficiencies might exist in a system without sports subsidies, economic intuition suggests that government subsidization introduces new distortions and imperfections, including the excess burden and ad- ministrative costs of raising and spending tax monies.