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Stadiums Raise Taxes: That's About It
Interview with economist Andrew Zimbalist
Q: Talk for a moment about the impact of sports on
regional and local economies. How have sports altered
the social development of communities?
A: The independent economic research that's been done
on the question of whether sports teams and sports facilities
have an economic impact on an area has uniformly found
that there is no positive impact. By having a sports
team or a new stadium or arena, you don't increase the
level of per capita income, and you don't increase the
level of employment. There's no direct economic development
benefit.
Q: And yet cities have been following the pattern,
in recent years, of building new stadiums and arenas
in the heart of the community, and demolishing the cookie-cutter
facilities along outlying freeways. It would seem, to
a layman, that there's an economic connection.
A: Well, it might strike a layman that way, but it's
still not true.
To say that it doesn't benefit an economy is different
from saying it doesn't have any value. There are economic
interests, particular private interests, that do benefit
from having a team or new stadium. I'm thinking, certainly,
of construction companies, general contractors, architectural
firms, investment bankers who float the bonds to finance
new stadiums, lawyers who work for the investment bankers,
maybe restaurant and hotel interests. And, of course,
there's the team owner.
Q: We don't have a sports ministry in this country,
no national endowment for sports as we have for the
arts and humanities. What are the pros and cons of government
subsidy of sports, and to what degree do we see it here?
A: Well, there is a lot of subsidy, and tax preferences.
At the local level, there is financing for things like
stadiums. At the national level, you have tax exemptions
for localities, municipalities when they float bonds
to build stadiums. For college sports, you have various
kinds of scholarship programs that go directly or indirectly
to athletes. That, too, involves public money. But in
terms of a controlling ministry, we don't have one,
as it exists in other parts of the world.
Q: What are the downsides to government controls?
A: Certainly it's always possible that when you add
government to the equation that it would invite some
forms of corruption and malfeasance - for example, the
regulated becoming the regulators - and nothing very
effective would get done. But this doesn't necessarily
have to happen.
Q: To sum up, then, do sports contribute to economically
healthier communities?
A: I don't think sports contribute to economic viability
in a community.
Andrew Zimbalist, professor of economics at Smith College,
Northampton, Massachusetts, is an analyst of economic
trends and issues in American sports. He is the author
of several books on sports economics, including, most
recently, May the Best Man Win: Baseball Economics and
Public Policy (coauthored with Bob Costas). These excerpts
were taken from a dialogue with State Department writer
Michael J. Bandler.
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