Cost–Benefit Analysis of an “Average” Professional Sports Team or Stadium in the United States

Abstract

Abstract Professional sports teams commonly reevaluate their location decisions based on the prospect of building new, more attractive, stadiums. Even though a large economic literature warns about the modest (and possibly negative) effects on the local economy of hosting a professional sports team, the economic effects of professional teams and stadiums remain blurry for the general public, and cities in the United States continue to compete to lure teams with generous public subsidies. This article integrates several contributions of the literature into one cohesive and simple framework based on cost–benefit analysis, and provides estimations of the average local economic effects of teams in the four biggest professional leagues in the United States. If professional sports games do not attract visitors from other cities, or if players and owners do not spend a significant share of their income in the area, hosting a team can negatively affect the local economy.