10.1177/152700202237501 JOURNAL OF SPORTS ECONOMICS / November 2002Siegfried, Zimbalist / SPORTS EXPENDITURES A Note on the Local Economic Impact of Sports Expenditures

Public subsidies for sports stadiums and arenas are often justified as a means to boost the local economy. The argument relies on historical local economic impact multipliers that misrepresent the effect of consumer expenditures on professional sports. Sports expendi-tures are subject to extraordinary consumer substitution away from other local expendi-tures, and they suffer unusually large first round leakages from the local economy because, inter alia, players export their earnings to the locale of their permanent resi-dence. This note illustrates the extent of such leakages using information about the perma-nent residence of players in the National Basketball Association. While 93 % of average employees live in the area where they work, only 29 % of NBA players do the same. The illustration shows that a standard local economic impact multiplier exaggerates the stimu-lative effect of sports expenditures by over 400%. Since 1990, more than $15.6 billion of state and local tax revenues has been spent or is planned to be spent on 73 new stadiums and arenas (Rappaport & Wilkerson, 2001; Siegfried & Zimbalist, 2000). The beneficiary teams also receive conces-sionary lease terms, allowing them to pay little rent and to receive the lion’s share o