Do Professional Sports Franchises And Professional Sports Stadiums Have Any Effect On Employment In A City?

Abstract

With the increasing involvement of state and local governments in the professional sports industry over the last quarter of a century, the debate has arisen over whether the luring of a professional sports franchise or the construction of a stadium for a professional sports franchise provides any type of significant economic stimulus to a city. There are those who have engaged in this debate who believe the potential impact of these events to be significant and positive for a city. There are others who believe the potential impact of these events to be insignificant and/or negative for a city. The goal of this thesis is to add to the debate by presenting an econometric analysis of whether or not introducing a professional sports franchise and/or constructing a stadium for a professional sports franchise has any effect on a city's employment level.

Our research based on taking data for each of the four major professional sports (Basketball, Baseball, Football, and Hockey) for various cities from 1979 to 1999 provides some very interesting results. The results of our econometric analysis suggest that building a new football stadium in a city or luring a basketball or hockey franchise into a city has a negative impact on a city's employment growth rate. However, our results also indicate that building a new basketball or hockey arena in a city for a current franchise or attracting a new football franchise to a city has a positive impact on a city's employment growth rate. Our research concludes that depending on the professional sport and the event involved the impact on employment in a city may be positive, negative, or not significant at all. Results that to a certain degree contradict previous econometric studies on the subject.