An Event Study of the Economic Impact of Professional Sport Franchises on Local U.S. Economies

It is common for a city to use expensive incentives such as a state-of-the-art stadium or tax exemptions to induce a major professional sport team to relocate to or remain in its area. A city does so because it expects a professional sport team to enhance the local economy. In this article, the authors use an event study approach to evaluate the advisability of this strategy. Their results suggest that major league sports franchises from the four major U.S. team sports (baseball, football, basketball, and hockey) have an adverse impact on local per capita income for U.S. markets in both the short and long run.