Rather than simply roll-over to self-serving, bought-and-paid-for economic impact studies calling for a massive subsidy for a billionaire team owner seeking remodeled stadium, two Portland City Councilors convened a webinar with the most knowledgeable experts in the field. The full hour-long webinar is available on youtube. Here are some of the highlights:
Economists (actually) agree: Over 100 peer-reviewed academic studies demonstrate that publicly funded sports venues generate virtually zero net gains in local employment, GDP, or taxable receipts.
The Substitution Effect: Sports spending merely reallocates existing local entertainment dollars away from other area businesses rather than creating new economic activity.
Consultant Reports are unscientific shilling: Team-commissioned “economic impact” studies are unscientific, un-peer-reviewed tools designed to press public officials into transferring taxpayer funds to private owners.
Portland is contemplating a $600 million (and perhaps a good deal more) subsidy to pay to keep Trailblazer owner Tom Dundon happy with the status of the city’s Moda Center arena. On August 5, two City Councilors sponsored an advanced academic seminar on the real economics of sports. The two national experts in attendance–JC Bradbury of Kennesaw State University and and Victor Matheson of the College of Holy Names–thoroughly debunked claims that public subsidies for sports facilities make any difference to local or regional economies.
Economists Agree: Stadium Subsidies are Waste
Economists are a famously fractious group, and in general you can easily find economists on either side of any major policy question. Strikingly, as Bradbury and Matheson pointed out, stadium subsidies is one of the few areas with nearly unanimous consensus among economists. Matheson led off:
There is absolute economic consensus about stadiums. We’ve been studying this since the late 1980s, early 1990s. At this point, we have well over 100 peer-reviewed studies on the economic impact of stadiums on local economic conditions on communities. We’ve looked at all sorts of stuff. We’ve looked at employment. We’ve looked at GDP. We’ve looked at taxable receipts. We’ve looked at all sorts of things. And this is one of these weird things that economists actually agree on because we don’t always agree on everything, and the agreement is these public expenditures on professional sports stadiums seem to have little or no impact on all types of economic variables.
Matheson explained that they’ve done careful work to evaluate whether or not building new stadiums (or expanding them, or relocating sports teams produces noticeable ecnomic impacts. The conclusion is clear:
. . . what the data is telling us is very simple: is that we’ve looked at hundreds of stadium deals. We’ve looked across dozens, many dozens of U.S. cities. We’ve looked at international events. We’ve looked at international stadiums, and it just seems to come back again and again to be the same answer: is we just don’t see any detectable gains in most cases from building these new stadiums.
And Bradbury cleaned up:
We have all these empirical studies, and . . . it’s very clear what they show: The reason why economists have such a strong consensus is because the theoretical reasoning behind it makes so much sense to us, and that is when you see people going to see the Portland Trailblazers play basketball. Most of those people live in Portland, and so when they’re spending their money at the stadium or at restaurants near the stadium, they’re just simply reallocating their spending from other places within the city. And so, when we look at communities in which lose teams or gain teams or open new venues, we don’t see any changing economic activity because all we’re really doing is reshuffling existing economic activity. So, not only does the empirical evidence show it, but it’s exactly what economists expect to see.
This is the consensus of nearly a hundred published, peer-reviewed studies. Sports teams simply reallocate local spending, and their presence or absence has almost nothing to do with the growth of the local economy. As we pointed out at City Observatory months ago: both Seattle and Vancouver have run the experiment of having their local NBA franchise re-locate to another city, with no perceptible change in the either region’s economic trajectory. If anything, NBA franchises exist to extract wealth from local consumers, they don’t create or add to the productivity of the local economy.
Phony, consultant-generated “impact” studies
Like seemingly every pro sports franchise, the Blazers have offered up a b0ught-and-paid-for consulting report purporting to document and quantify the “economic impact” of sports teams and sport facilities. The report offers all kinds of gaudy, inflated numbers, but is neither peer-reviewed, nor does it cite the extensive peer-reviewed research in the field. JC Bradbury was highly critical of these studies:
Bradbury didn’t hold back in his condemnation of these studies
They simply just throw numbers in a barrel and roll out bigger numbers, . . . These people are just shills. They’re just that they make a living doing this, and we need to start calling them out for doing that. I mean, they’re they’re lying to people, and I don’t appreciate it, and the people of Portland shouldn’t appreciate it. And it’s interesting that they put out another study. It’s a slide of numbers, I should say, study, but they won’t show us the numbers. They don’t want people like Victor or me to look at it because they know we’re just going to laugh at it and expose them for the frauds that they are. They should be absolutely embarrassed. It’s unethical, to be honest with you.
As we’ve said at City Observatory, economic impact consulting reports are an example of “hagiometry“–painting a fawning portrait with numbers to flatter a paying subject. No business uses these purported “studies” to make their own business decisions: They invariably wield the studies as cudgel to pummel city and state officials into writing checks to sports team owners. The whole process stinks of likely illegal monopoly power and plain, old-fashioned extortion. And economic impact reports serve as the sharply pointed blade held to the ribs of city officials to get them to hand over their wallets. It’s hardly surprising that a careful scholar should be so angry and scornful of the ethics of those who craft these so-called studies.