I agree with this, actually! Those economic incentive packages are also really, really bad, and for the same reasons, and we should stop offering them. They don’t suddenly become good when the corporations are sports teams.
This is the substitution effect that economists are very well aware of. Yes, restaurants right by a big event can have a good day of business. But that doesn’t create any new spending. It just diverts the spending from other restaurants (or businesses) dispersed across the area to ones closer to event in ways that are much less conspicuous, but easy to see in the data.
I swear, I did not come here planning to spend even one paragraph arguing about a parade. I did not post a comment about baseball expecting people to want to talk about a hockey parade, but other people keep bringing it up and are utterly fixated on how many people showed up for it. Yes, the parade was nice, people love parades, and I’m glad people had fun at it. Truly.
I don’t know how you quantify the value of a individual’s time or personal enjoyment. If you assume 150,000 people there at the parade for an average of 2 hours each, assign $20/hr as the value of someone’s life, then the region collectively decided that celebrating the team on that one day was worth at least $6M.
An economic analysis should be a part of the discussion on any spending decision, but using it to determine the value of sport and community is a very cynical approach.
This is the substitution effect that economists are very well aware of. Yes, restaurants right by a big event can have a good day of business. But that doesn’t create any new spending. It just diverts the spending from other restaurants (or businesses) dispersed across the area to ones closer to event in ways that are much less conspicuous, but easy to see in the data.
Does that matter? I’d rather people spend in downtown Raleigh than wherever they are from. Is that not the point? Another team would bring in out-of-town visitors, who would have otherwise spent money elsewhere. Some would be from Wake County, some from North Carolina, and some from out-of-state. I’d prefer they choose to spend their money here than somewhere else.
LOL that might be too high, depending on the person! (kidding)
You make a good point that is often overlooked. There’s intangibles of having fun, nice things in our community, and it shouldn’t just be a financial calculation.
Yes, it does matter. In The Economics of Sports, the literal textbook typically assigned to college students studying sports economics, it notes: “economists have consistently found little or no evidence that facilities and teams affect the level of employment, tax receipts, incomes, or wages in a city.” (Source) Now, it is true that people would come to a baseball game in Raleigh from Holly Springs, Apex, Garner, etc.. Many of them will go straight to the stadium, watch the game, and go straight home, but some might eat dinner in Raleigh instead of Apex or wherever. So why doesn’t that spending show up in the data? Most likely, the increased spending is just too small to show up in the data. It’s just literally too small to measure compared against the number of people dining out in Raleigh each year.
Now, if sports stadiums were free, then, no, it wouldn’t really matter. But they’re not. The Journal of Economic Surveys published a review of more than 130 studies looking at this very issue which concluded that “even with added non-pecuniary social benefits from quality-of-life externalities and civic pride, welfare improvements from hosting teams tend to fall well short of covering public outlays.” I’m not against factoring quality of life into the consideration. I think that’s worth including in an analysis, and should be included. But because the costs of a team/stadium are so high, the value you assign to people’s enjoyment needs to be sky-high to even get close to the costs involved. But if the teams were free, I’d say grab a shovel and start digging, sure.
There are very few subjects in the entire field of economics that generate as much unanimity among economists – a group of people known to disagree about almost everything else – as whether sports stadiums generate any measurable economic benefits for the cities that host them. And the consensus is that they don’t.
David Donovan is mostly right about the economic benefits.
Me wanting the MLB in Raleigh has nothing to do with economic benefits. I want it for the same reason I want a strollway or a gondola to Dix. Primarily, because it’s cool.
Limiting what we do in Raleigh to what provides a tangible economic output is, quite frankly, dumb. That’s Charlotte’s brand and energy.
BOOM. That’s what we are talking about. I think. And it is a domino effect kind of thing. One thing feeds off of another. It all leads to more name recognition (which Raleigh sorely needs). And more hipe and more enthusiastic good press. Which leads to more good things coming to Raleigh and more money spent. You gotta pay to play baby. Just my two cents. If you expend more on of what people care about, other good things start happening. Not everyone agrees with that. But either Raleigh moves ahead or it falls backward. There is no such thing as status quo.
There are always things that people are opposed to paying, and they are usually specific or particular & are often tied to a political POV or strategy.
The argument against publicly paying for something is also usually tied to either something not paying for itself or being a waste of tax payer money. This one is not any different. Opposing how we spend money public money at the municipality/county/state level is practically a national pastime. This includes projects that run the gamut from transit, to parks, to bike lanes, to sports facilities in this case, etc.
How many times do we hear that transit needs to pay for itself?
How many times do we hear that it’s a waste of money to put in bike lanes?
How many times do we hear people complain about spending money on cultural institutions?
How many times do we hear people complain about corporate subsidies or incentives to bring business to the city or state?
Hell, we literally vote on parks and school bonds to see if voters are willing to spend the money, and the results are never unanimous.
We cannot expect that any discussion around publicly funding a stadium won’t have its fair share of opposition.
The issue around the value of where our money is spent is complicated and quantifying its value is often subjective, and messaging is tailored depending on a point of view that’s either for or against it. In the case of stadium funding, we can all be assured that there will be both pro and con POVs and messaging.
A lot of my would-be Amazon purchases were diverted into spending on Canes gear, Canes tickets, and watching the Canes at bars and restaurants the last few months. Bezos will shed some substitution effect tears if Raleigh gets an MLB team.
Andersen is moving to the Oilers. Glad he was able to help carry the Canes to the Stanley Cup.
“The Oilers shuffled goalies by acquiring Buffalo’s minor league prospect Devon Levi in a trade and added veteran Frederik Andersen on a $2.8 million contract for next season. Andersen was Carolina’s goaltender on the way to the Cup final before getting injured and exiting the series.”
Anderson is nearing the end of his career, but good for him for pocketing another 2.8M for another year. Maybe he can find his way back to Raleigh after his playing days are over? He’ll have a lot of alumni players to build a network here.
The OP was about the economic impact of a hypothetical professional baseball team in Raleigh, and someone else thought a one-time parade for a hockey team was relevant to that…the area is still growing right? meaning additional incomes are entering the area, mo’money, iow, not just hot dog at stadium instead of a wrapped sub sandwich at Publix? the one time parade with a Stanley Cup victory generates excitement for the ‘black hole’ of MLB that NC currently is? even if the crowd was 130k…people look at things, remember signs…some think, “ill come back and try that place out…at present im in a stanly cup parade crowd” i do.
(kidding)
