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Why Sports Stadiums Do Not Spur Economic Growth?

Not surprising but many economists have in the past traced the root-cause of the current Greek crisis to its hosting the historic Olympics in 2004. Greece went beyond its means to host the massive event putting up new infrastructure in place with stadiums to hold 301 events.

Athens Olympics Stadium turned around Greek economy.

But never did the country recovered from the economic loss it suffered as stadiums do not reap benefits either in the form of post-event employment generation nor spur any economic activity.

Reiterating the viewpoint, Stanford economist Roger Noll says professional sports stadiums do not generate local economic growth as advertised and says the stadium costs that NFL teams expect local governments to contribute have fallen in recent years due to increased political resistance to subsidies for sports teams.

The San Francisco 49ers’ new Levi’s Stadium, which opened last year in Santa Clara, has played host to several other events, boosting financial viability. When an NFL team wants to build a new stadium, it often argues that the facility would boost the local economy.

But that is not true, says Roger Noll, a Stanford professor emeritus in economics, an expert on the economics of sports.

“NFL stadiums do not generate significant local economic growth, and the incremental tax revenue is not sufficient to cover any significant financial contribution by the city,” said Noll, a senior fellow at the Stanford Institute for Economic Policy Research.

Currently, stadium proposals for NFL teams are circulating in St. Louis, Los Angeles, San Diego and Cleveland, while San Francisco and other cities and states like Wisconsin are considering public funding for new sports facilities and local officials are weighing the response in Oakland, California to a “Coliseum City” proposal in August with a December deadline for closing any deal.

Noll said that because football stadiums are used not frequently, say just two preseason games, eight regular season games and possibly a couple of playoff games, which means they donot reap enough economic benefit. Realizing this, the San Francisco 49ers’ new Levi’s Stadium, which opened last year, has played host to several other events, including concerts and college football, soccer and hockey games.

“By comparison, other billion dollar facilities – like a major shopping centers or large manufacturing plants – will employ many more people and generate substantially more revenue and taxes,” Noll said. Basketball and hockey arenas are a better deal for cities, he said. “Arenas are used more often.”

Noll said that for both football stadium proposals for Los Angeles, the public contribution is accounted for by providing the site, infrastructure, and tax forgiveness, as Santa Clara did for the 49ers’ Levi’s Stadium.

“These items account for about 20 percent of the cost. In addition, the stadium authority, which is owned by local government, takes on debt that is used to finance stadium construction,” he said.

He explained that the financial plan calls for the debt to be repaid from the sale of stadium naming rights, personal seat licenses, rights to concessions and profit from operations.


In other words, if public subsidies for sports facilities continue, they will be used for multi-use developments like the Coliseum City (Oakland) and Hollywood Park (Inglewood) proposals, rather than stand-alone, football-only facilities like Levi’s Stadium, Noll said.



Interestingly, the city of Pasadena turned down a proposal to convert the Rose Bowl to an NFL stadium – which would have meant adding luxury boxes and fancier concession areas, and reducing the number of seats by 20,000, he noted. “In recent years, several cities have simply decided the price is too high,” he said.

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