Skip Navigation

Stadiums and Arenas: Economic Development or Economic Redistribution?

October 29, 2007
By Dennis Coates

This paper reviews prior research on the politics and public-sector issues involved in taxpayer-funded subsidies for sports stadium construction.

magnifying glass on top of documents

This paper, written by University of Maryland, Baltimore County economics professor Dennis Coates, reviews existing research on the economic effects of sports stadium subsidies on the outcomes for host communities.

There are often large differences between the predictions made by economic impact studies before stadium construction and economic studies reviewing the actual effects of construction, Coates writes.

“The most basic question in the research about stadiums, arenas, and sports franchises is the extent to which these contribute to the vitality of the local economy,” Coates wrote. “The literature on this issue is of two basic types: the ex ante economic impact study and the ex post econometric analysis. The economic impact studies invariably suggest that there are large benefits from stadium and arena construction. The consensus of the ex post studies is that there is little convincing evidence for large income and job creation benefits attributed to stadiums; rather the evidence largely points to there being none of those benefits.

The few ex post analyses finding positive economic benefits to stadium construction are too limited to detect the geographic redistribution of prosperity caused by sports stadium construction, Coates writes.

“The evidence that exists for positive effects on local economies tends to be focused on small geographic areas,” Coates wrote. “Rather than being evidence of development effects, these results indicate redistribution from one area to another within a region. Calls for stadiums and arenas to be studied in the context where they will be most effective, in the central city, are implicit arguments for redistribution. Results suggesting that stadiums and arenas are successful in anchoring downtown development are often accurately interpreted as evidence that redistribution has occurred.”