The Relationship Between Big-Time College Football and State Appropriations to Higher Education

I investigate the relationship between big-time college football programs and state appropriations to public institutions of higher education. Estimation of a linear reduced form model of the determination of state appropriations to higher education, using a panel of financial, athletic, and state-specific economic data from 570 public institutions of higher education at the Baccalaureate level or higher from 1976-1996 shows that schools with Division I-A football programs receive about 6% more in state appropriations than schools that do not field a Division I-A football team. Institutions with successful football teams receive 3% to 8% increases in state appropriations the following year. Defeating an in-state rival in a prominent football game is also associated with an increased level of appropriation in the following year. These results support the predictions of the model of competition for political influence among pressure groups developed by Becker (1983) and suggest that the total economic benefit associated with big-time athletic programs may be larger than previously thought.

Caught Stealing: Debunking the Economic Case for D.C. Baseball

District of Columbia mayor Anthony Williams has convinced Major League Baseball to move the Montreal Expos to D.C. in exchange for the city's building a new ballpark. Williams has claimed that the new stadium will create thousands of jobs and spur economic development in a depressed area of the city. Williams also claims that this can be accomplished without tax dollars from D.C. residents. Yet the proposed plan to pay for the stadium relies on some kind of tax increase that will likely be felt by D.C. residents. Our conclusion, and that of nearly all academic economists studying this issue, is that professional sports generally have little, if any, positive effect on a city's economy. The net economic impact of professional sports in Washington, D.C., and the 36 other cities that hosted professional sports teams over nearly 30 years, was a reduction in real per capita income over the entire metropolitan area. A baseball team in D.C. might produce intangible benefits. Rooting for the team might provide satisfaction to many local baseball fans. That is hardly a reason for the city government to subsidize the team. D.C. policymakers should not be mesmerized by faulty impact studies that claim that a baseball team and a new stadium can be an engine of economic growth

Do Economists Reach a Conclusion on Subsidies for Sports Franchises, Stadiums, and Mega-Events?

This paper reviews the empirical literature assessing the effects of subsidies for professional sports franchises and facilities. The evidence reveals a great deal of consistency among economists doing research in this area. That evidence is that sports subsidies cannot be justified on the grounds of local economic development, income growth or job creation, those arguments most frequently used by subsidy advocates. The paper also relates survey evidence showing that economists in general oppose sports subsidies. In addition to reviewing the empirical literature, we describe the economic intuition that probably underlies the strong consensus among economists against sports subsidies.sports, subsidies, stadiums, arenas

Assessing the Economic Impact of Sports Facilities on Residential Property Values: A Spatial Hedonic Approach

This paper estimates the intangible benefits of a two sports facilities in Columbus, Ohio on residential property values. We estimate a spatial hedonic model that avoids biased and inconsistent estimates in the presence of uncorrected spatial autocorrelation. The results suggest that the presence of sports facilities in Columbus have a significant positive distance-decaying effect on surrounding house values, supporting the idea that professional sports facilities generate important intangible benefits in the local economy. OLS overestimates the hedonic model parameters compared with Maximum Likelihood and Spatial Two Stage-Least-Squares.Economic Impact, Residential Property Values, Sports Facilities, Hedonic Model, Spatial Dependence, Spatial Hedonic Model

The Effect of On-Field Success on Stock Prices: Evidence from Nippon Professional Baseball

A growing literature examines the relationship between the on-field success of sports teams and prices of securities traded on stock exchanges. While much of the literature focuses on the effect of national teams on aggregate stock price measures, for example the relationship between the performance of a national team in World Cup competition and the aggregate stock price index in that country, some recent papers have examined the relationship between specific team performance and the price of the shares of the team's owners. We add to this literature by examining the effect of on-field success by baseball teams in Nippon Professional Baseball and the price of the shares of the companies that own these professional baseball teams.

Professional Sports Facilities, Franchises and Urban Economic Development

Local political and community leaders and the owners of professional sports teams frequently claim that professional sports facilities and franchises are important engines of economic development in urban areas. These structures and teams allegedly contribute millions of dollars of net new spending annually and create hundreds of new jobs, and provide justification for hundreds of millions of dollars of public subsidies for the construction of many new professional sports facilities in the United Sates over the past decade. Despite these claims, economists have found no evidence of positive economic impact of professional sports teams and facilities on urban economies. We critically review the debate on the economic effects of professional sports and their role as an engine of urban economic redevelopment, with an emphasis on recent economic research.

Novelty Effects of New Facilities on Attendance at Professional Sporting Events

We investigate the possibility that new facilities affect attendance - the "novelty effect" - in professional baseball, basketball, and football from 1969-2001 by estimating the parameters of a reduced form attendance model. Our results indicate a strong, persistent novelty effect in baseball and basketball and little or no novelty effect in football. Our estimates of size and duration of the novelty effect imply that, in a new facility, at a minimum, a baseball team would sell an additional 2,561,702 tickets over the first eight seasons, a basketball team 446,936 over the first nine seasons, and a football team 163,436 over the first five seasons. This increase in attendance also suggests a corresponding increase in revenues that could be tapped to help defray the large public subsidies that state and local governments frequently provide to new stadium and arena construction projects.Professional Sports, Attendance, Novelty Effect

Game Attendance and Competitive Balance in the National Hockey League

We examine the relationship between attendance, uncertainty of outcome, and team quality in the National Hockey League. Based on results from a reduced form model of attendance at 6054 regular season NHL games from 2005/06 to 2009/10, we find evidence that attendance increases when fans expect the home team to win by a large margin. Attendance increases for home team underdogs, but the extent of that boost declines as the underdog status worsens. An asymmetric relationship exists between expected game outcomes and attendance, suggesting the need for an expanded definition of the Uncertainty of Outcome Hypothesis.Uncertainty of Outcome Hypothesis; Attendance demand ; NHL

The Effect of Professional Sports on the Earnings of Individuals: Evidence from Microeconomic Data

This paper explores the impact of professional sports teams and stadiums on the wages of individuals employed in several narrowly defined occupational groups in cities in the United States. The occupational groups examined are among those that proponents of public funding of professional sports claim will benefit economically from these stadiums. Our analysis uses data from the March Supplement to the Current Population Survey (CPS) for the period 1983 to 1998. Previous research focused on aggregate measures of income whereas here the focus is on the wages of individual workers. The results of the study conform conclusions of earlier research that the overall sports environment is frequently statistically significant as a determinant of earnings.

Booms, Busts, and Gambling: Can Gaming Revenues Reduce Budget Volatility?

Over the past 20 years, state and provincial governments in North America have expanded legal gambling opportunities to consumers. One of the primary policy goals of this expansion of gambling opportunities has been to increase government revenues. Gambling is an attractive source of new government revenues because consumers are relatively insensitive to the implicit “tax” rate imposed on gambling activities and gambling is a voluntary activity; only those who chose to gamble are subject to this implicit tax. In this paper, we document the contribution that gambling revenues make to state and provincial tax receipts, and the extent to which variation in gambling revenues contributes to the volatility of tax revenues over time. We adopt an approach from the finance literature. In finance, the relationship of the return to an individual stock to total return in a portfolio, or total return the entire stock market, is often summarized by a “Beta” which can be estimated from actual returns on portfolios and individual stocks. We investigate the contribution of gambling revenue, and revenue from other sources, to variation in total government revenues, by estimating a beta for various government revenue sources in states and provinces in North America over the period 1989-2009. The estimated betas for gambling revenue in many provinces and states are negative, indicating that variation in gaming revenue has negative correlation with variation in own source revenues, reducing the variation in total state and provincial revenue over time.gambling, lottery, public finance