Written in an academic style Major League Winners by Mark Rosentraub examines the use of sport stadiums and cultural districts as tools of economic development in a number of American cities. Providing in depth case studies from a number of US cities that have attempted to use Sports and Entertainment facilities as a tool of economic development and revitalization for their communities the book highlights the costs, outcomes and results of their ventures before offering some general recommendations for communities interested in undertaking this form of development. To be honest, this book was a bit of a grind but that is because it is probably not written for general public consumption, rather academics and nerds like myself.
For me there are several points that I takeaway from this work and they all bleed together to on extent or another. First, development of sports and cultural facilities cannot be exclusively the activity of local/state government. Sports and Cultural facilities for the most part are used by local residents in a city/community. Those residents regardless of their income, have a budget that they are able to spend on recreational activities whether a night out at the movies, going to a sporting event or a trip to an amusement park. As a result the construction of a new facilities by local government is in general not going to create new economic activity within a community, rather redistribute that activity from other facilities or events. In many cases, there may actually be less sports and entertainment spending due to the impact of increased ticket, parking and other prices that are often associated with new facilities.
This transfer of spending amplifies the impact of some communities giving developers large incentives to build facilities and/or surrounding districts to spur economic activity. Again the majority of the economic impact of activities (after the construction) are simply transfers within the city/regional economy. The incentive value paid upfront to encourage the construction, dilutes any tax revenue growth that may occur as a part of the development as the value of the subsidy must first be recovered before the local government sees any new revenue. Unlike some of the examples in the book where local sales/entertainment taxes are a tool available to municipalities, in Canada (and I believe Michigan) cities do not have the power to levy these taxes so these revenue sources would not be available to counter act the impact of waiving property taxes or development charges. Note: Assuming that there is some external income sources brought into the city as a result of the development.
Another key point the book points out is the negligible impact of providing facilities for one time events. Although these events have a “reputation changing” impact on a community, the value of this change in many ways is difficult to quantify. Although the book uses Superbowls as its primary example for this type of event, which is often a “reward” from the NFL for building a new stadium. Although many communities feel a sense of pride and are able to use the event to potential brand the city, the long term economic impacts are mixed at best. The economic impacts of a single event often leaves a community with an underutilized facilities that it then struggles to use over the following years, while having only a modest short term impact on the economy of a community.
Arguably the most important point that the book makes is that if sports/cultural/entertainment facilities are going to be used as a source of economic development, it needs to be apart of an “Uber plan”. Meaning that the development needs to be a government, private sector partnership that specifically targets underdeveloped neighbourhoods or other development needed areas. Government dollars are tied directly to a commitment from the private sector for direct investment and job creation in new development and/or the surrounding areas. These plans would then be overseen by joint public/private stakeholder committees that bring together residents, interest groups, business, investors and government to the same table to not only manage the initial construction but also the long term governance of the new area or district.
These were some of my takeaways from Major League Winners, if you are interest in an academic review of sport and entertainment facilities and their usage on economic development I would encourage you to take a look. It’s not the easiest read in the world but it certainly is informative.