Impact study puts all facts on the table about sports facility
Published April 1, 1994 | April 1994 issue
The following column originally appeared in the Twin Cities Star Tribune, February 28. It was reprinted in the fedgazette with permission of the Star Tribune Co.
An economic impact study is a good idea for any public takeover of a large professional sports facility. Such a facility has value to the community as well as the professional sports organization.
The community value comes from its economic base, which depends on the "new dollars" received by its residents from visitor spending and other income payments. Professional sports have other values and costs to local residents that are not part of the economic impact study.
The additional dollars professional sports bring into the community are important. They help support local social services and other tax-supported activities like any other income payments originating from sources outside the community.
An economic impact study starts with the new dollars brought into an area and their impact on the local economy. The results show up in higher local sales, income, property values and state and local tax revenues. Visitor spending always generates activity among suppliers and support services for the local businesses, and that, of course, is part of the total impact. The study tracks the new dollars through the local economy in arriving at the value and importance of the sports facility to the community.
We sometimes look to sales tax collections that are reported months later to check on impact study findings. These obviously fail as a check on current visitor spending when local residents make adjustments in their trips to downtown restaurants, theaters and stores during a major sports attraction. Each increase in visitor spending, however, contributes to a new base for expanding services that satisfy both visitors and local residents and that add value to the community's tax base.
Critics of the use of public funds for subsidizing professional sports argue that every national study of the effects of professional sports on local income shows little, if any, benefit. An economic impact study of the Target Center would come to the same conclusion. If it does not, they say, something is wrong with the study. Rather than document what is wrong, the response is to question the motive of those doing the study.
What is wrong is the same stock response to every local issue. Even the national studies gloss over the special qualities of each metropolitan area that plays host to a professional sports team.
The most recent study by Robert Baade has nothing more than the number of stadiums less than 10 years old and the number of professional, major-league sports franchises to account for year-to-year changes in per-capita personal income. This is far from a credible measure of visitor spending nor is the measurement sharp enough to detect small changes, given that professional sports account for only a small part of total income in each area.
Put any activity to the same test, and the results will be about the same: nothing. A metropolitan area's economic base is much more than a count of its sports facilities or franchises.
Even if the economic impact study shows a positive contribution of professional sports to an area's economic base, this is no reason, we are told, for a public takeover of its professional sports facility. The money is better spent on education and transportation.
We can believe this with all our heart and soul. There is no reputable study, however, to tell us that more spending results in improved educational outcomes and more economic growth. These are complex issues. When we put all spending proposals to the same test, the simple answers clearly fail us.
Whether we like it or not, we could not have the social services we want with a strong economic base and the new dollars that contribute to it. This is exactly where an economic impact study would help us.
We still could assert our strong opinions about the findings. At least we would have some important facts on the table for public scrutiny.
Wilbur Maki, a former Minnesota state economist, is also president of the North American Regional Science Association.