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Working paper

Growth Effects of Sports Franchises, Stadiums, and Arenas: 15 Years Later

Mercatus Working Paper. Mercatus Working Paper. George Mason University, 2015
A 1999 study by Dennis Coates and Brad R. Humphreys found the presence of major sports franchises to have no significant impact on the growth rate of per capita personal income and to be negatively correlated with the level of per capita personal income for a sample of all cities that had been home to at least one franchise in any of three professional sports—baseball, basketball, and football—at some time between 1969 and 1994. This paper returns to the questions Coates and Humphreys asked using an additional 17 years of data and a number of new stadiums, arenas, and franchises. The data cover 1969–2011 and add hockey and soccer franchises to the mix while also including all standard metropolitan statistical areas rather than just those that housed franchises in the major professional leagues. The analysis also adds two new dependent variables: wage and salary disbursements and wages per job. The results here are generally similar to those of Coates and Humphreys; the array of sports variables, including presence of franchises, arrival and departure of clubs in a metropolitan area, and stadium and arena construction, is statistically significant. However, individual coefficients frequently indicate harmful effects of sports on per capita income, wage and salary disbursements, and wages per job.