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The Impact of Stadiums and Professional Sports on Metropolitan Area Development

April 1, 1990

This paper, written by Lake Forest College economics professor Robert A. Baade and assistant professor Richard F.

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This paper, written by Lake Forest College economics professor Robert A. Baade and assistant professor Richard F. Dye, examines how professional sports stadium construction correlates with changes in cities’ economic activity, by comparing construction data with United States Census Bureau economic data.

Baade and Dye found that professional sports construction does not affect cities’ economic growth in the ways claimed by supporters of government sports subsidies.

“After controlling for the effect of population and time trend, the presence of a new or renovated stadium has an insignificant impact on area income for all but one of the metropolitan areas,” they wrote. “For four of the metropolitan areas analyzed, stadium construction or renovation is significantly correlated with a reduction of that metropolitan area’s share of regional income.”

Baade and Dye write that stadium construction shifts labor output from high-skilled, high-wage work, towards low-skilled, low-wage work.

“The impact of stadium construction or renovation on the metropolitan area’s share of regional income is negative and significant,” Baade and Dye wrote. “This result is consistent with the kind of economic activity that stadiums and professional sports spawn. Professional sports and stadiums divert economic development toward labor-intensive, relatively unskilled labor activities. To the extent that this developmental path diverges from less labor-intensive, more highly-skilled labor activities characteristic of other economies within the region, it would be expected that the sports-minded area would experience a falling share of regional income.”

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