Letting Teams Walk: Exploring the Economic Impact of Professional Sports Franchises Leaving Cities

Cities often use public funding to help construct and renovate the facilities of large, private sports franchises. As the major sports leagues grow in popularity and revenue, cities have had to offer increasingly competitive incentive packages to owners in order to keep their team from relocating to more profitable markets or cities willing to issue public funding for new facilities. Much literature has been conducted on the economic impact of sports teams with a general consensus that there is usually no positive economic effect for cities that serve as homes for these teams from the largest leagues (NFL, MLB, and NBA). However, little research has been focused on whether there is an economic impact of a team leaving a city. This paper seeks to fill this research gap by analyzing the effects that team relocations have on per capita income and unemployment employing two different models. The first, a fixed treatment effect, shows a statistically significant, positive relationship between team relocations and per capita income, while no relationship was found between the move and unemployment. Subsequent analysis using a dummy shift technique clarifies that while there is an upward trend in per capita income over the six years studied for each city, this trend is not caused by the team relocating. Furthermore, the dummy shift confirms the initial results that franchise relocations had no observable effect on unemployment rates in the cities studied. Given the findings of no impact on either variable, the paper recommends policymakers not offer public funding packages for teams to remain in the area on the grounds of economic development