Spectator sports are an important part of our national culture in no small part due to the positive “community pride” effect from having a team Indeed Noll and Zimbalist go so far as to assert, “The cultural importance of major league team sports in American society most assuredly exceeds its economic significance as a business.” In an economic framework this cultural importance derives from a professional team’s positive consumption externalities that manifest themselves through civic pride, the “big league” status of a city, or the simple happiness when a fan’s favorite team wins. These intangible benefits have value.
When a new stadium or arena is desired, teams negotiate with states and municipalities to determine how they will be funded. This typically comes from an increase in sales and tourism taxes, as well as the sale of bonds to be paid back over time. Other methods of funding include surcharges on parking and ticket costs.
The Tennessee Smokies are the Double-A affiliate of the Chicago Cubs. Members of the ten-team Southern League, Smokies baseball has been entertaining families and fans of America’s national pastime in the East Tennessee region for over 100 years. To learn more about the Tennessee Smokies, visit www.smokiesbaseball.com
First, building the facility creates construction jobs. Second, people who attend games or work for the team generate new spending in the community, expanding local employment. Third, a team attracts tourists and companies to the host city, further increasing local spending and jobs.
The expanse of the project is quite large. Randy Boyd owns the land which is primarily where the Lays Meatpacking Plant formerly operated. Under the deal, he would donate the land to the city and county and they would build the $65 million stadium, designed to seat 7,100 fans. Boyd also owns surrounding properties and, as part of the agreement, would develop that property by building 630,000 square feet of residential and commercial property, meaning shops, restaurants and apartments would be constructed close to the new stadium. Willow Avenue would end as it approached the stadium and would resume on the other side.
The idea of relative effects is not new to sports research. Because minor league baseball is extremely heterogeneous in population Measurement of these intangible benefits is important because minor league baseball teams seek subsidies from state and local governments for construction of new stadiums.
While these subsidies are generally far smaller than those sought by major league franchises, they can be substantial, especially for the smaller communities that host lower level minor league teams. For example, since 2002 the average cost of a new ballpark at the highest level of the minor leagues (AAA) is $53 million, and at the lowest level of minor league baseball (rookie league) a new stadium costs $8.5 million. Of the eleven AAA and rookie stadiums built in this time period, all except one were 100% publicly financed. If the cost of the stadium was distributed equally to the residents of 4 these metro areas, the per capita cost would be $53.16 in AAA markets and $71.42 in rookie markets. By comparison, the per capita cost of Major League Baseball (MLB) stadiums built since 2002 was $77.91. Thus, minor league cities throughout the U.S. face a problem identical to that of major league cities – determining the best use of public funds based on the tangible and intangible effects of minor league teams and stadiums. While the tangible benefits of minor league teams have been estimated (Agha, 2013), the intangible effects have not.
Stadiums generate revenues in many ways. The main components are gate receipts, which include many different types of seats, concessions and advertising. However, you still must fill those seats. There is some study on the impact of outside events and forces on attendance at sporting events.