Post on 25-Feb-2016
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THE IMPACT OF A PROFESSIONALSPORTS FRANCHISE ON COUNTYEMPLOYMENT AND WAGES
John Jasinaand
Kurt W. Rotthoff
Presented By: Kelly Dallavalle
ABOUT THE AUTHORS John Jasina
Assistant professor in the School of Business at Claflin University
Research includes economic impact of professional sports, organization of sports leagues, and applied microeconomics.
Kurt W. Rotthoff Assistant professor in the Department of Finance at
Seton Hall. Research interests include sport finance, financial
economics, and market efficiency
INTRODUCTION Public funds are often used to subsidize
privately owned professional sport franchises
Politicians claim these teams develop the economy in their cities. Create new jobs Increase average incomes
Past research has shown little or no impact on employment or income
INTRODUCTION Estimated public subsidies
Prudential Center - $200 Million Barclays Center - $500 Million
Demause, Neil. "The Nation: Stop The Subsidy-Sucking Sports Stadiums." npr, 15 Aug 2011. Web. 4 Mar. 2014. <http://www.npr.org/2011/08/05/139018592/the-nation-stop-the-subsidy-sucking-sports-stadiums>.
PREVIOUS STUDIES Baade and Dye (1988, 1990) looked at retail sales
and aggregate income in Metropolitan Statistical Areas (MSAs). 1988 paper -- little support for a link between major
league sports and manufacturing activity 1990 paper -- stadiums had an insignificant impact on
MSA incomes
Baade (1996) examined a professional sports team's ability to create jobs – NO positive correlation.
Baade and Sanderson (1997) studied 10 MSAs Nine had a significant impact Five of those were positive, and four were negative.
PREVIOUS STUDIES
Coates and Humphreys (2003) Small positive effect on earnings and
employment in the amusement and recreation sector However this sector includes the professional athletes
Decrease in earnings and employment in other sectors.
Franchises cause a shift in consumption from one sector to another.
WHY CONTINUE INVESTIGATING?
Sports-related spending is a small portion of overall spending in an MSA. May be difficult to isolate franchise’s impact over such a
large area Could cause the mixed results of previous studies
Using county level data should provide more precise measurement of a franchise’s impact
STUDY FORMULATION County Business Dataset produced by the US Census
Bureau Standard Industrial Classification system for employment
data
58 counties who had a professional sports team between 1986 and 2005 (NHL, NBA, NFL or MLB) Then, variables were set up for the County and for the
Franchise:
MODEL:
…where t is the year, i is the county, and j indexes the three dependent variables (employment, payroll, and avg. wage per employee)
yjit = bjxit + gjzit + mjit
Assuming:
mjit = ejit + vji + ujt
RESULTS: EMPLOYMENT
RESULTS: PAYROLL
RESULTS: AVERAGE WAGE
OVERALL EFFECT:
Average Wage per Employment Payroll Employee
REGRESSIONS
REGRESSIONS
REGRESSIONS
KEY FINDINGS Supports theory that jobs are not created –
just moved between industries
Employment in the liquor sector decreases and in the food sector increases
The presence of franchises has virtually no effect on payrolls, and when it does, the effect is negative
CONCLUSION Claims that stadiums will induce job creation
and revenue expansion are unsubstantiated.
Employment within clothing, drinking, food, hotel, and liquor industries have mixed results when a franchise is present Most of the payroll data is insignificant, but the
coefficients that are significant are all negative. Real per capita income falls when sports franchises
are present
Continued research over longer periods of time could be more telling.
AS UNIVERSITY OF CHICAGO ECONOMIST ALLEN SANDERSON
MEMORABLY PUT IT,
"IF YOU WANT TO INJECT MONEY INTO THE LOCAL ECONOMY, IT WOULD BE
BETTER TO DROP IT FROM A HELICOPTER THAN INVEST IT
IN A NEW BALLPARK."
Demause, Neil. "The Nation: Stop The Subsidy-Sucking Sports Stadiums." npr, 15 Aug 2011. Web. 4 Mar. 2014. <http://www.npr.org/2011/08/05/139018592/the-nation-stop-the-subsidy-sucking-sports-stadiums>.