Surname 1

James Jones

Professor Stephanie Gregg

ENG 1403 Research and Composition

Date:

The Impact of Professional Sports on Local Economies

Professional sports have long been known to boost local economies. Cities, counties, and

states are often willing to pay high sums to capitalize on the appreciation and recognition of

having a professional sports team in their region, allowing them to host competitions regularly

(Kloow 2). However, there are mixed results regarding the actual economic impact of

professional sports on local economies. The lack of congruence in relevant past studies

necessitates the conduct of research that fills in the gaps that exist in the literature.

Preliminary Research

Most research into the economic impact of professional sports falls into two categories:

analytical studies, which use statistical analysis to measure the relative economic impact of one

team versus another (or another set of investments), and secondary research, which looks at post-

hoc economic impacts. Analytical studies typically look at job creation, industry concentration,

and tax revenues, while secondary research often examines sentiment, public policy, and

taxation. Analytical studies of the economic impact of professional sports have generally found a

positive but often minimal effect on local economies. Some researchers have argued that the

overall effect is too small to be significant (Bradbury et al. 1395). In contrast, others have

disputed this conclusion, suggesting that the impact may be much more significant than initially

thought. Secondary research into the impact of professional sports provides a more nuanced

picture.
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On the one hand, professional sports can boost local pride and a sense of community,

providing an intangible benefit to a city or region. On the other hand, it can also lead to

disparities in spending for different types of amenities and services, gentrification, and inequality

(Pierro 4). Ultimately, the literature on the economic impacts of professional sports is complex

and varied. While some studies have found a positive effect, others have found a more limited

economic impact, with significant caveats and qualifiers (Wassmer et al. 260). Further research

is needed to understand better how professional sports influence local economies.

Research Question

The research question for the proposed study is as follows:

What is the overall economic impact of professional sports on local economies?

The research will focus on accomplishing the following objectives:

 To analyze the level of economic growth impact experienced by cities that hold

professional sports competitions regularly

 To identify factors affecting the economic impact of professional sports on local

economies

 To identify which professional sports competitions have more economic impact on local

economies in comparison to others

Thesis

Professional sports in a locality can have a positive overall economic impact on local

economies. Still, this impact is often more limited than initially thought and depends on various

contextual factors.

Relevance of The Project

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It is essential to understand the impact of professional sports on local economies. First, it

provides a more comprehensive picture of the economic impact of professional sports than has

been available to date. Many studies have focused on specific angles of the economic impact

(Agha and Rascher 185). The proposed research aims to fill in the gap and answer many

questions regarding the overall economic impact of professional sports on the local environments

in which the competitions are held. It also provides insight into the more intangible benefits these

sports can provide, such as increased civic pride and community engagement (Walker and Enz

149). Finally, it brings a much-needed specificity to the research in this area, which can inform

future policy decisions and investments in professional sports (Lertwachara and Cochran 253). In

sum, this project has the potential to provide valuable insight into how professional sports

influence local economies and better equip public leaders to make informed decisions about the

future of professional sports.

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Annotated Bibliography

Agha, Nola, and Daniel A. Rascher. "An Explanation of Economic Impact: Why Positive

Impacts Can Exist for Smaller Sports." Sport, Business, and Management: An

International Journal, vol. 6, no. 2, 2016, pp. 182-204.

This article seeks to answer why some sports have positive economic impacts while

others do not and to identify a standard set of explanatory factors that lead to this difference. The

authors review the economic impact literature, identify nine conditions, and then use them to

explain the empirical results between significant and minor league baseball. The authors also

explain the existing controversy and provide a comprehensive guide to understanding the sports

industry's economic impact. This research provides insight into when economic impact can

benefit stakeholders, such as government officials and business owners. This article is relevant to

researchers aiming to comprehend the economic benefits of sports and is a valuable resource for

understanding the nuances of economic impact in the sports industry.

Bradbury, John Charles, Dennis Coates, and Brad R. Humphreys. "The Impact of

Professional Sports Franchises and Venues on Local Economies: A Comprehensive

Survey." Journal of Economic Surveys, vol. 37, no. 4, 2023, pp. 1389-1431.

This article discusses the research literature related to the impact of professional sports

teams and stadiums on local economies. It begins by exploring the history of the literature, from

early empirical analyses of tangible economic impacts to more recent studies focusing on sub-

local and nonpecuniary effects, and finds a general consensus of limited economic benefit from

hosting professional sports teams and stadiums. The authors address the conundrum of local

governments continuing to subsidize these venues, and propose future studies and policy
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decisions based on research findings. This article provides an up-to-date comprehensive survey

of the literature on this subject, making it a useful resource for scholars and policymakers.

Coates, Dennis. "Growth Effects of Sports Franchises, Stadiums, and Arenas: 15 Years

Later." The Economic Impact of Sports Facilities, Franchises, and Events:

Contributions in Honor of Robert Baade. Cham: Springer International Publishing,

2023. 59-87.

This article by Dennis Coates looks at the economic impact of professional sports,

specifically regarding the growth effectiveness of franchises, stadiums, and arenas. Coates

revisits the questions asked in a 1999 study by him and Brad R. Humphreys, as the current

analysis extends seventeen years later and includes the presence and arrival of hockey and soccer

franchises, as well as all standard metropolitan statistical areas rather than just those that have

housed franchises in the major leagues. The two new dependent variables included in this

analysis are wage and salary disbursements and wages per job. The results show that the array of

sports variables is statistically significant. However, some individual coefficients can hurt

variables such as per capita income, wage and salary disbursements, and wages per job. This is

an essential article for anyone researching the economic impact of professional sports, as it offers

possible findings related to the construction of new stadiums and teams' arrival within

metropolitan areas.

Gratton, Chris, Simon Shibli, and Richard Coleman. "Sport and Economic Regeneration

in Cities." Culture-Led Urban Regeneration. Routledge, 2020. 141-155.

This article examines how the UK used sport to economically regen underdeveloped

industrial cities in the 1970s and 80s and how North American cities are increasingly questioning

the investment of public money into team sports. The authors note that the objective of the
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investment in sports was to transform the images of these cities and turn them into world-

renowned cities. Several cities were awarded National City of Sport status in 1995 due to their

investments. This is an essential article for understanding how cities in the UK and North

America have used sport to help with economic regeneration, and the authors provide a

comprehensive overview of the strategies utilized and their effects. The article is helpful for

anyone hoping to gain insight into the impact of sport on economic regeneration in these regions.

Lertwachara, Kaveephong, and James J. Cochran. "An Event Study of The Economic

Impact of Professional Sport Franchises on Local US Economies." Journal of Sports

Economics, vol. 8, no. 3, 2007, pp. 244-254.

This article provides an event study approach to evaluate the advisability of providing

expensive incentives such as a state-of-the-art stadium or tax exemptions to induce a professional

sports team to relocate or remain in the local economy. The authors apply the study to the four

major U.S. team sports (baseball, football, basketball, and hockey) and examine the short and

long-run impact of a professional sports team on local per capita income for U.S. markets. The

study results suggest that sports franchises hurt local per capita income. The findings are based

on an analysis of 431 franchise events over a two-decade period, and the authors provide

insightful discussions on the mechanisms through which professional sports franchises influence

local economies. This article is valuable because it provides a systematic approach to evaluating

the impact of professional sports teams on local economies. It is helpful for policymakers in

making decisions regarding incentives for sports teams. It is an informative scholarly source

published in the Journal of Sports Economics and can be used for academic and educational

research.
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Wassmer, Robert W., Ryan S. Ong, and Geoffrey Propheter. "Suggestions for the Needed

Standardization of Determining the Local Economic Impact of Professional

Sports." Economic Development Quarterly, vol. 30, no. 3, 2016, pp. 252-266.

In this article, Wassmer et al. provide an overview of the current academic research on

the economic impact of professional sports and the kind of critical questions needed to assess a

private consultant’s economic impact analysis. To exemplify the practicality of the questions

posed in the article, the authors review and ask the same evaluative questions regarding five

different U.S. cities that have had experience with professional sports venues or events. This

article provides a valuable examination of the economic implications of professional sports and

the important implications for local governments when making decisions regarding potential

subsidies. This research would benefit scholars interested in the economic impacts of sports and

those interested in the financial decisions of local governments.

Works Cited

Agha, Nola, and Daniel A. Rascher. "An Explanation of Economic Impact: Why Positive

Impacts Can Exist for Smaller Sports." Sport, Business, and Management: An

International Journal, vol. 6, no. 2, 2016, pp. 182-204. https://doi.org/10.1108/SBM-07-

2013-0020

Bradbury, John Charles, Dennis Coates, and Brad R. Humphreys. "The Impact of Professional

Sports Franchises and Venues on Local Economies: A Comprehensive Survey." Journal

of Economic Surveys, vol. 37, no. 4, 2023, pp. 1389-1431.

https://doi.org/10.1111/joes.12533
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Kloow, Christopher. "The Economics of Sport: The Impact of Professional Sports on The Local

Economy." Jonkoping International Business School, Jonkoping University, 2011.

https://www.diva-portal.org/smash/get/diva2:427339/FULLTEXT01.pdf

Lertwachara, Kaveephong, and James J. Cochran. "An Event Study of The Economic Impact of

Professional Sport Franchises on Local US Economies." Journal of Sports Economics,

vol. 8, no. 3, 2007, pp. 244-254. https://doi.org/10.1177/1527002506286774

Pierro, Jeffrey. "The Impact of Professional Sports Franchises on Local Economies." Bryant

University, 2014. https://digitalcommons.bryant.edu/cgi/viewcontent.cgi?

article=1014&context=honors_mathematics

Wassmer, Robert W., Ryan S. Ong, and Geoffrey Propheter. "Suggestions for the Needed

Standardization of Determining the Local Economic Impact of Professional

Sports." Economic Development Quarterly, vol. 30, no. 3, 2016, pp. 252-266.

https://doi.org/10.1177/0891242416636685

Walker, Sharianne, and Michael Enz. "The Impact of Professional Sports on The Local

Economy." New England Law Review, vol. 29, 2006, p. 149.