Economic Impact of a Pro (or any) sports team

[JeffDFD]

Thinking of Phoenix moving and how people were saying the area they built the arena in would be abandoned, etc, etc got me thinking about the true economic impact of a sports team. Is there anything anyone has come across that breaks this down for a region?

Local and State tax comes out (as well as federal) of all their paychecks, right? Is there any rules regarding foreign players and what they may have to pay if they are citizens of another country?

I believe local is 1% and PA is around 3%, isnt it? So Crosby alone, if making 10 million is giving 0.3 mill to PA and 0.1 mill to (Pittsburgh or Sewickley?) a year? Now add up the Steelers, Penguins, and Pirates...this is before anyone even talks about anythign else like:

Surcharges/tax on tickets (anyone know about how much?)
Taxes on food/alcohol (beer is pricey)
Merchandise sales tax
Staff payroll
...and so on.


That would be a fairly significant number just because the team is located here...all of that before you even begin to factor in the impact on regional business, which was the main concern I heard about Phoenix about how all of those business/restaurants near the arena (and all of their tax revenue) may disappear.


Just curious if anyone has any articles or combined data that not only includes impacts to regional business and tax revenue...but also the ticket sales and player salaries.

Approximate player payrolls:

Steelers: 80 million
Penguins: 65 million
Pirates: 62 million


= 207 million a year (and rising)

[Penspal]

There was a few pretty detailed economic pieces written around the possibility of another hockey team in Southern Ontario (Hamilton, London, Toronto 2nd team). I'm sure if you put your Google skills to use you can find them.

[pressure=9Pa]

There was a Baseball Prosepctus article on this about 4-5 years ago you might look up, and it concludes that the economic benefit isn't really that great. It looks at cities during the 1994? baseball strike, and what was different in 1993 and 1995. Obviously bars and restraunts next to the stadiums were hurt, but many movie theatres, water parks, museums, etc. throughout town had record years. It basicly said that cities overpay for sports teams to make themselves feel like big league cities, and because the positive effects of franchices are more measurable than the other "investments".

I do not believe it factored in tax revenues from the players. It's important to note that visiting team players get taxed as well in most cities. Laws are written to tax "income earned" in a city to make squeeze every dollar they can.

[no name]

I

It basicly said that cities overpay for sports teams to make themselves feel like big league cities, and because the positive effects of franchices are more measurable than the other "investments".

So very true, anytime your city name is mentioned on TV its like a free advertisement to marketers and investorys to come into your city, look we are a "big city" we got sports teams and stuff. I think it really does help in a round about way with things like that. So if you can give the big city impression you would have a better chance at landing a company willing to brign jobs to the region. I would think This might be the case. Austin TX and El Paso TX and Las vegs and Fresno are the top 4 cities without a pro sport franchise so i wonder what people view thoes cities like compared to a city like Pittsbugh??? I really wonder?

[MRandall25]

I

It basicly said that cities overpay for sports teams to make themselves feel like big league cities, and because the positive effects of franchices are more measurable than the other "investments".

So very true, anytime your city name is mentioned on TV its like a free advertisement to marketers and investorys to come into your city, look we are a "big city" we got sports teams and stuff. I think it really does help in a round about way with things like that. So if you can give the big city impression you would have a better chance at landing a company willing to brign jobs to the region. I would think This might be the case. Austin TX and El Paso TX and Las vegs and Fresno are the top 4 cities without a pro sport franchise so i wonder what people view thoes cities like compared to a city like Pittsbugh??? I really wonder?

The problems with the cities you mentioned, IMO:

Austin/El Paso: Dallas and Houston markets pretty much own Texas. Adding more would dilute the fanbases.

Vegas is Vegas. Too much going on there. I don't think a sports team would be a good idea logistically for Vegas.

Fresno is similar to El Paso and Austin. You have the LA, San Fran, and maybe throw in the San Diego markets. Again, dilution. Plus, California's economy is pretty bad. Adding another sports franchise wouldn't really be the best move.

[dman66]

There was a Baseball Prosepctus article on this about 4-5 years ago you might look up, and it concludes that the economic benefit isn't really that great. It looks at cities during the 1994? baseball strike, and what was different in 1993 and 1995. Obviously bars and restraunts next to the stadiums were hurt, but many movie theatres, water parks, museums, etc. throughout town had record years. It basicly said that cities overpay for sports teams to make themselves feel like big league cities, and because the positive effects of franchices are more measurable than the other "investments".

I do not believe it factored in tax revenues from the players. It's important to note that visiting team players get taxed as well in most cities. Laws are written to tax "income earned" in a city to make squeeze every dollar they can.

That was always the argument a professor of mine would always make when I was taking sports management classes at RMU. A season ticket holder may take their chunk of money to another place, but a fan that only goes 3-5 times, or however many, a year will likely just redistribute the money back into the region. Most people won't just flat out save the money.

[TheHammer24]

There has never been a peer-reviewed Econ article that said its a net gain. Basically, people in the city just spend their money on other things so there's no real change in money spent in the economy.

[BurghersAndDogsSports]

There was a Baseball Prosepctus article on this about 4-5 years ago you might look up, and it concludes that the economic benefit isn't really that great. It looks at cities during the 1994? baseball strike, and what was different in 1993 and 1995. Obviously bars and restraunts next to the stadiums were hurt, but many movie theatres, water parks, museums, etc. throughout town had record years. It basicly said that cities overpay for sports teams to make themselves feel like big league cities, and because the positive effects of franchices are more measurable than the other "investments".

I do not believe it factored in tax revenues from the players. It's important to note that visiting team players get taxed as well in most cities. Laws are written to tax "income earned" in a city to make squeeze every dollar they can.

That was always the argument a professor of mine would always make when I was taking sports management classes at RMU. A season ticket holder may take their chunk of money to another place, but a fan that only goes 3-5 times, or however many, a year will likely just redistribute the money back into the region. Most people won't just flat out save the money.

Well, the problems with those studies though is they do not take into account everything. For example there are the staples:
1. player salary taxes
2. employee salary taxes
3. Ticket tax
4. Parking tax
5. Standard businesses (around facilities)
6. And so on.....

But they miss a lot too. For example - a real study would have to show the economic hit of ALL surrounding area and not limited. Every bar is packed on Steelers and a lot of Pens AWAY games. Beer distributors, merchandise, those who travel to the city, hotel rooms and so forth.

No events means no out of towners (including in Pgh with 3 sports 135 + playoffs nights of visiting teams taking up rooms/spending money) visiting fans and so on). There is no replaement for hotel rooms, fans, visitors coming to your city or fans dropping hundreds of dollars.

They compare the mean to fans that spend a bit. But my investment in the Pens is huge and trust me, I am not replacing that money in totality if the Pens left. My tickets, parking, food you name - added with how much money I spend at bars, beer distributors, grocery stores for away games and parties - even just the playoffs alone for AWAY games AND home games I dont have tickets too.

They also leave out general economic growth just from having a building. For example - the Penguins are the only reason we have a nice facility which has already gotten us a draft, NCAA, Winter Classic (to a point more the team and not CEC), we have a frozen four on the way and I imagine more down the road.

We also get TONS of decent concerts we wouldnt get without a team to support a nice facility. So you have to add the economic growth of say the Pens or Steelers allowing for venues to draw big national acts. Without them it doesnt exist.

Too many variables are missed in these studies that I have seen.

And then onto sposors. Not sure how much Consol drops but lets say its $5 million. If the Pens left would they and all the other sponsors turn and drop that money, plus money on food, parking, tickets, suites or whatever else into our city/state overall budgets or would it be towards more of a global advertising appeal that doesnt help growth?