I was having round 1 of (Canadian) Thanksgiving dinner with my father on Saturday night and we inevitably started talking about the Blue Jays.
As I write this post, the Blue Jays are down 2-0 in the ALDS, but by the time you read this email in your inbox (assuming you subscribe), game 3 will have already happened. Either the Jays will be on their way to a great comeback or the season will be over. I am remaining fiercely optimistic.
But in addition to the regular sports chatter, we also started talking about the possible economic benefits of the Blue Jays winning and being in the playoffs for the first time in decades.
We assumed that 50,000 people buying tickets, heading downtown, and spending money on food, alcohol, parking, transit, taxis, and hotels, would be a great benefit to the local economy. And immediately I thought to myself: this would make a great blog post.
But it turns out that the local benefits of professional sports aren’t so clear cut.
There’s been a lot of research on public funding for sports stadiums and a lot of the research suggests that it may not be in the best interest of taxpayers. A considerable amount of the spending does not get retained by the local economy and instead gets siphoned off to the respective league and to concentrated private interests.
But Toronto already has the SkyDome, I mean, Rogers Centre. It’s a sunk cost. So looking forward, there must be some incremental benefits.
Well, a recent article in the Chicago Tribune asked this same question in light of the Cubs heading to the playoffs. And it turns out that it’s also not so clear cut.
Part of the problem is something called the “substitution effect.” When a sports team starts winning (and people jump on the bandwagon), money is simply redirected away from other forms of entertainment towards sports entertainment. In other words, instead of going to see a movie or going to the museum, people go to the game.
In fact, a 2001 study by Dennis Coates and Brad R. Humphreys called, “The Economic Consequences of Professional Sports Strikes and Lockouts”, found that during sports stoppages, 37 metro areas with professional sports franchises actually experienced no negative financial impact. And in many cases they performed better.
Interesting.
Having said all this, there’s a powerful sense of solidarity that takes over a city when everyone is rooting for the same team to win. And that’s hard to attach a value to.
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