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Professional Sports as Catalysts for Metropolitan Economic Development

March 1, 1996

This paper, written by Lake Forest College economics professor Robert Baade, examines sports stadiums’ impact on cities’ economies, attempting to use Bureau of Labor Statistics data to estimate how professional sports teams affect income.

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This paper, written by Lake Forest College economics professor Robert Baade, examines sports stadiums’ impact on cities’ economies, attempting to use Bureau of Labor Statistics data to estimate how professional sports teams affect income and employment levels in the surrounding metropolitan areas.

Baade writes that empirical data shows professional sports team and stadium creation have nearly no effect on employment rates or consumers’ spending levels.

“In the presence of these variables for the ten sample cities taken collectively, adding professional sports teams and stadiums has no statistically significant impact on job creation in the city’s amusement and recreation industry,” Baade wrote. “Apparently, adding a professional sports team or stadium to a city’s economy does not increase aggregate spending in the city, through increased exports or import substitutions, in an amount sufficient to increase the city’s share of employment in the amusement and recreation industry.”

Baade writes that new stadiums and sports teams only shifts around existing spending, instead of prompting new consumer spending.

“This result suggests two things,” Baade wrote. “First, adding a professional sports team or stadium to a city’s economy appears to realign leisure spending rather than adding to it and is, therefore, neutral with regard to job creation. Second, the fan base supporting professional sports appears to be insufficiently foreign to the city to contribute significantly to metropolitan economic activity. The exportation of the services of the teams or stadiums and/or the import substitution created is generally insufficient to induce job growth that is measurably different from zero.”

Author
Robert A. Baade, Ph.D., is the A.B. Dick Professor of Economics and Business at Lake Forest College in Lake Forest, Illinois.
baade@lakeforest.edu