Lessons From Buffalo

Ed Glaeser has an excellent piece on the past and the future of Buffalo but the best piece of advice for the economic development folks is:

The truth is, the federal government has already spent vast sums of taxpayer money over the past half-century to revitalize Buffalo, only to watch the city continue to decay. Future federal spending that tries to revive the city will likely prove equally futile. The federal government should instead pursue policies that help Buffalo’s citizens, not the city as a geographical place.

The Editing Floor

My letter to the editor on the stadium can be read here. What I actually wrote is below. Notice the additional reasons to contribute to the stadium which were cut.

If you are planning to donate to the stadium project do so because you like to go to UW-L home football games. Do so because your son has the opportunity to play his high school football games there. Do so because you want the opportunity to watch your daughter compete in the state track meet in her hometown. Do so because you are an alum who takes pride in the appearance of his alma mater, or do so because you enjoy running around the track on your lunch hour.

But do not contribute to the stadium because you think it is going to bring jobs and economic growth to the area or even a return on tourism dollars which “alone will far exceed the investment”. Unfortunately with the latter statement the co-chairs of the UW-L Stadium fundraising campaign fall victim to an economic fallacy economists have been debunking for years. It turns out sports stadiums (and here we are talking about professional sports stadiums) do not tend have a statistically positive economic impact on the surrounding community. And in countless other studies academic economists have been hard pressed to find any evidence that hosting a professional league championship such as the World Series, the Superbowl or an All Star game brings a return through tourism dollars. Even as large as the WIAA state track meet is, I think we can all agree it is smaller than any of the those events.

But surely all of those people who come to town and spend their money must have some impact? The right question to ask is what is their net impact? How many other people would have come to La Crosse but didn’t because the state track meet was happening? How many people left town to avoid the crowds of the track meet? I think you’ll find the answer is that in the end there isn’t a big net change in the number of people in town from what there would have been without the track meet, and that means their isn’t much of a return on investment in terms of tourism dollars.

This is not an argument against donating to the stadium effort. Rather it is merely an argument against some of the arguments made in favor of donating to the stadium. Even so you won’t see my name on the list of donors, unless new plans suddenly include a velodrome, in which case my check book is open.

Economic Impact of Stadiums

Most everyone is aware that donations are being sought for a new stadium at UW-L. The tribune has an opinion piece from the co-chairs of the fundraising campaign.

The new Veterans Memorial Field Sports Complex will enhance the region’s already-strong position as a premier destination. The return on tourism dollars alone will far exceed the investment. Conservatively, the estimated impact of the three-day WIAA track meet alone is $3 million. Many who visit the area for events held at the stadium return to enjoy vacations and day trips.

Economists are in agreement that:

On the sports facility side, numerous researchers have examined the relationship between building new facilities and economic growth in metropolitan areas. (Baade and Dye, 1990; Rosentraub, 1994; Baade, 1996; Noll and Zimbalist, 1997; Coates and Humphreys, 1999) In every case, independent work on the economic impact of stadiums and arenas has uniformly found that there is no statistically significant positive correlation between sports facility construction and economic development (Siegfried and Zimbalist, 2000). This stands in stark contrast to the claims of sports teams and leagues who assert that the large economic benefits of professional franchises merit considerable public expenditures on stadiums and arenas.

And on the issue of the impact of hosting large events:

As in the case of sports facilities, independent work on the economic impact of mega-sporting events has routinely found that the effect of these events on host communities is either insignificant or an order of magnitude below the figures espoused by the sports promoters. In a study of six Super Bowls dating back to 1979, Porter (1999) found no increase in taxable sales in the host community compared to previous years without the game.

Take a look at La Crosse county sales tax revenue, can you find a spike associated with the track meet?

I'd cite the litany of research such as this piece or this one, but the reader can just go to google or google scholar and type the economics of sports stadiums.