Finance Review
Public Subsidies to Stadiums: Do the Costs Outweigh the
Benefits?
Daraius Irani
Public Finance Review 1997 25: 238
DOI: 10.1177/109114219702500205
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article reexamines the costs and benefits to cities of publicly subsidized stadiums by measuring the welfare gain of a stadium. Previous research has shown that the economic impact of a stadium on a local economy is insignificant compared to the costs of the stadium. However, the literature has ignored the welfare gain generated by a stadium. The annual consumer surplus generated by a stadium is calculated from a simple demand curve for baseball games using 1972 to 1991 data on ticket prices and attendance. Estimates of the consumer surplus are in the range of $2.2 million to $54.1 million per season. Further, the annual net benefit of a stadium exclusive of any induced economic activity ranges from minus $19.1 million to $32.8 million.
This
Abstract
PUBLIC SUBSIDIES TO STADIUMS:
DO THE COSTS OUTWEIGH THE BENEFITS?
DARAIUS IRANI
University of California, Santa Barbara Economic Forecast Project
budgets,
In
of declining federal aid to cities and shrinking state many cities are attempting to acquire professional franchises by subsidizing either the construction of stadiums or sports the renovation of existing
Citations: http://pfr.sagepub.com/content/25/2/238.refs.html >> Version of Record - Mar 1, 1997 What is This? Downloaded from pfr.sagepub.com at TEXAS CHRISTIAN UNIV on November 10, 2013 AUTHOR’S NOTE: This article is a revised version of a paper presented at the Western Economic Association International 69th Conference, Vancouver, July 1, 1994 238 Downloaded from pfr.sagepub.com at TEXAS CHRISTIAN UNIV on November 10, 2013 Baim (1988) calculated the net present value of eight stadiums with baseball franchises and found that the net present value ranged from Downloaded from pfr.sagepub.com at TEXAS CHRISTIAN UNIV on November 10, 2013