From the Board

          In recent years, many politicians and policy-makers have perceived sport teams and stadiums, casinos, and other sport-related recreation as a way to achieve economic development.  At first sight, it looks as good policy action, since people enjoy sports and, especially in cities, casinos and major sport events are the main agent of people agglomeration and excitement.  However, studies have found that the economic value of investing in stadiums, sport, and casino facilities is much smaller than normally assumed.  In response to that, people for the investment in sport-related activities as an economic development strategy argue that those studies do not take into consideration stadiums and teams as a civic pride and an image of cities.  This kind of reaction is expected since the level of intangibility of gains in civic pride is high, and it is very difficult to measure.  However, it is there, and researches should not ignore that.  Also, investing in sport-related development is a perfect short-term plan that brings to the main state or community officers prestige, popularity, and votes!  In this opportunity, I will talk about that considering recent case studies to determine whether officers should invest in sport entertainment.              The first thing I want to do is to recognize the validity of what researchers have concluded: Most of the sport-related policies applied as an economic development strategy are overvalued and inefficient in terms of allocating the money in a right way.  That means the use of public funds to encourage sport activities, to have a sport team, and so on is not necessary a smart policy.  Typically, stadiums realign economic activity rather than adding something new.  People have a budget designated to entertainment.  They will not increase that budget just because a new stadium is built, or a new franchise team or sport event is attracted.  In that particular case, they may desist to go to the theater and rather go to a baseball game.  That’s it.  The economic activity is realigned, but not stimulated.  Nonetheless, let take a look to those who are is pro of this kind of practice.              

          Generally, public funds offered to build stadiums and facilities, as well as public subsidies offered to sport franchises are used to build the “economic base” and improve the external image of the city.  Arguments in favor of sport franchises include the generation of a tax revenue, direct spending by teams, owners, performers, audience (fans), and relatives in the area, new jobs, and community development (i.e., stadiums can be used for concerts, conventions, festivals, and other non-sport related events).  There is also the fact that stadiums or casinos are more attractive to tourists and shoppers than manufacturing, technology, or any other related industry.  Basically, elected officials believe that sport stadiums are effective at generating economic activity.  In addition to economic benefits, there are other possibly non-countable or –measurable benefits such as the improvement of infrastructure that otherwise could not be possible, the revitalization of the city, the creation of a more pleasant urban environment or atmosphere, and the construction of a venue to accommodate the diverse needs of the area.  Also, as mentioned above, it is believed and conceived that sports strengthen a city’s national or regional image, community pride and solidarity.  You know! If you want to expand your tax base, attract tourists, business, residents, etc., you need to have the best image possible!  Finally, there are political arguments and media pressures; and again, politicians used to focus in short-run policies to gain reputation as a leader, businessman, and a great pro-people officer.  Which politician does not want to self-attribute the retention, attraction, or creation of a new sport franchise to?              

          The arguments for the use of public funds to sport-related economic development are perfectly valid and comprehensible.  However, the success of an economic development strategy like that depends on whether officers and policy makers are able to continuingly attract outsiders to the city that invest in casinos and sport entertainment.  That will bring new economic inputs to the city, getting stable jobs to the local residents, and having a multiplier effect in terms of income and spending.  Otherwise, the strategy will be part of tons of irrational and inefficient policies available out there.  What I am talking about is having your basketball, football or baseball teams, as well as their respective stadiums, but at the same time bargaining outside to attract as much events as possible through the year, either sport or non-sport related.  These are concerts, meetings, boxing, main wrestling events, circuses, festivals, etc.  For example, Wrestlemania 23 (the main wrestling event in the world presented by World Wrestling Entertainment, WWE) was celebrated last Sunday, April 3, 2007 in Ford Field, Detroit, and had a huge economic boost in the Motor City.  More than 80,000 WWE fans assist to the event but the economic impact was not only the day of the event, but days prior with the press conference, the promotional activities, wrestlers and their families and relatives circulating the money there, and fans that arrived few days before the event to attend those related activities and some of them staying longer to spend some time visiting Detroit main attractions.  WWE related events during the weeks prior Wrestlemania included the Fan Axxess, the THQ Challenge, The Condemned premiere and the Hall of Fame Induction Ceremony.  So, hotels, restaurant, bars, retailing, and entertainment venues in Detroit were positively affected.  It is important to mention, that a great amount of the visitors are not local, but come from nearby cities and some of them come from far away.  If you as city officer, policy maker, economic developer, or mayor are able to attract this kind of event frequently to cover the fissure left by sport seasonality or the days when the sport facility is just unused, definitively it will be a great economic development tactic and your city will see the gains.  Globalization of sports is an advantage for this kind of practice.  Nevertheless, this is not always possible since it is practically impossible that every city has the capability to keep the stadiums or sport complexes busy.  It is just a matter of simple arithmetic.  The amount of supply is not equal to the amount of demand.  Therefore, it is necessary to recognize the limits and the barriers of this kind of economic development strategy and understand that a real business climate for your city implies other things rather than stuffs like sport teams and ethereal qualitative benefits within it.