Dennis Coates

The Growth Effects of Sport Franchises, Stadia and Arenas

This paper investigates the relationship between professional sports franchises and venues and real per capita personal income in 37 Standard Metropolitan Statistical Areas in the United States over the period 1969-1994. Our empirical framework accounts for the entry and departure of professional football, basketball and baseball franchises; the construction of arenas and stadia; and other sports-related factors over this time period. In contrast to other existing studies, we find evidence that some professional sports franchises reduce the level of per capita personal income in metropolitan areas and have no effect on the growth in per capita income, casting doubt on the ability of a new sports franchise or facility to spur economic growth. We also find evidence that results obtained from estimating reduced form relationships, a common practice in the literature, are not robust to alternative statistical model specifications.

The effect of professional sports on earnings and employment in the services and retail sectors in US cities

Abstract This paper explores the impact of professional sports teams and stadiums on employment and earnings in specific sectors in US cities. Previous research focused on aggregate measures of income or employment. We find that professional sports have a small positive effect on earnings per employee in one sector, amusements and recreation, and an offsetting decrease in both earnings and employment in other sectors, supporting the idea that consumer spending on professional sports and spending in other sectors are substitutes. This helps to explain the negative total economic impact of sports found in other studies.

The Economic Impact of Postseason Play in Professional Sports

An empirical examination of the determinants of real per capita income in cities with professional sports teams from 1969 to 1997 shows that postseason appearances are not associated with any change in the level of real per capita income in these cities. However, in the city that is home to the winning team from the Super Bowl, real per capita personal income is found to be higher by about

The Economic Consequences of Professional Sports Strikes and Lockouts

140, perhaps reflecting a link between winning the Super Bowl and the productivity of workers in cities. Overall, economic benefits flowing from future postseason appearances cannot justify public expenditures on professional sports franchises or facilities.

Baseball Strikes and the Demand for Attendance

The National Basketball Association (NBA) lockout of 1998–1999 resulted in the cancellation of a significant number of games. According to the claims made by proponents of sports-driven economic growth, cities with NBA franchises should experience significant negative economic losses from this work stoppage because of the lost spending in and around basketball arenas during this event. Although it will be several years before adequate data exist for a careful ex post evaluation of the effects of the lockout, an examination of the impact of past work stoppages in professional football and basketball can shed some light on the potential impact of the NBA lockout as well as the viability of professional sports as engines of economic growth in cities. The parameter estimates from a reduced-form empirical model of the determination of real per capita income in 37 Standard Metropolitan Statistical Areas (SMSAs) over the period 1969–1996 suggest that prior work stoppages in professional football and baseball had no impact on the economies of cities with franchises. Further, the departure of professional basketball from cities had no impact on their economies in the following years. These results refute the idea that attracting professional sports franchises represents a viable economic development strategy.

Game Attendance and Outcome Uncertainty in the National Hockey League

Determinants of attendance at major league baseball games has been a question of some interest as a result of the recent labor unrest in the sport. This article estimates the demand for attendance using a panel data set covering the years 1969 through 1996 and all the teams based in the United States. The analysis finds that even lockouts and strikes that do not result in lost games have significant effects on average attendance, unlike results in the literature. In addition, the results of the major strikes are found to be much smaller than some of those reported in the literature. Finally, using instrumental variables techniques to account for measurement error and endogeneity in the price variable, attendance demand was found to be price inelastic, regardless of how the basic ticket price variable was computed.

Property tax competition in a repeated game

We analyze the relationship between attendance, outcome uncertainty, and team quality in the National Hockey League (NHL). Based on the results from a reduced form model of attendance at 6,054 regular season NHL games from 2005-2006 to 2009-2010, we find evidence that attendance increases when fans expect the home team to win, but holding this constant, attendance falls for games expected to be close. An asymmetric relationship exists between expected game outcomes and attendance, suggesting the need for an expanded definition of the Uncertainty of Outcome Hypothesis that includes aspects of consumer decision making under uncertainty.

Additional incumbent spending really can harm (at least some) incumbents: An analysis of vote share maximization

Abstract Models of interjurisdictional tax competition have focused generally on the effects of competition on the supply of public goods in a single-period model. One clear result is that head/ benefit taxes lead to the efficient quantity of public good and that the optimal property tax rate is zero when benefit taxes are available. This paper shows if head taxes are available in a repeated game setting that property tax competition among jurisdictions leads to negative property tax rates; that is, subsidization of mobile capital by local governments. This result, which is not possible in the single-shot setting, results because capital which enters a jurisdiction in response to a subsidy remains there into the future generating greater output in more than just one time period. It is also shown in this context that collusion by local governments will be welfare enhancing.

Mega-Events: Is Baylor Football to Waco What the Super Bowl is to Houston?

The literature on the effects of campaign expenditures on electoral outcomes implicitly suggests that incumbent spending cannot have a negative marginal impact on the incumbents vote share. Indeed, that literature has spent a great deal of effort finding positive and significant effects of incumbent spending. This paper shows that there are circumstances under which theory predicts zero and even negative impacts of incumbent spending. Estimating equations derived from the theory provide strong support for the base model, though only weak support for the extensions which predict nonpositive marginal products for incumbents.

An inventory of learning at a distance in Economics

Using monthly data describing 23 cities in Texas from January, 1990, through December, 2008, the net impacts of various professional and collegiate sporting events on sales tax revenues are estimated. Contrary to the rhetoric offered by those who argue in favor of public subsidies to host professional sports franchises and mega-events, the authors find that regular season and many postseason games actually correspond with net decreases in economic activity in the host city, from which we infer that a professional sports franchise generates considerable substitution effects for the local population. The authors find that college football games have a positive impact on local host-city tax revenues and that the relative impact of a season of college football might be roughly equivalent to the relative impact of the Super Bowl.