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    Las Vegas Economic Club

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    Jon Ralston
    The document summarizes research on public subsidies for sports facilities and economic impacts. It finds: 1) Public subsidies for sports facilities have increased dramatically over time, averaging over $200 million per facility from 2000-2009, with the public share typically over 50%. 2) Economic impact studies by consultants generally predict positive impacts but have limitations and do not consider negative effects. 3) Empirical studies find no significant impacts on jobs, income or property values from new sports facilities compared to other cities, and money often leaks out of the local economy. 4) While Las Vegas has some factors like hotel taxes that could enhance local impacts, there is no evidence of demand for large events, and it is speculative

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    © All Rights Reserved
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    Las Vegas Economic Club

    Uploaded by

    Jon Ralston
    94 views7 pages
    The document summarizes research on public subsidies for sports facilities and economic impacts. It finds: 1) Public subsidies for sports facilities have increased dramatically over time, averaging over $200 million per facility from 2000-2009, with the public share typically over 50%. 2) Economic impact studies by consultants generally predict positive impacts but have limitations and do not consider negative effects. 3) Empirical studies find no significant impacts on jobs, income or property values from new sports facilities compared to other cities, and money often leaks out of the local economy. 4) While Las Vegas has some factors like hotel taxes that could enhance local impacts, there is no evidence of demand for large events, and it is speculative

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    The document summarizes research on public subsidies for sports facilities and economic impacts. It finds: 1) Public subsidies for sports facilities have increased dramatically over time, averaging over $200 million per facility from 2000-2009, with the public share typically over 50%. 2) Economic impact studies by consultants generally predict positive impacts but have limitations and do not consider negative effects. 3) Empirical studies find no significant impacts on jobs, income or property values from new sports facilities compared to other cities, and money often leaks out of the local economy. 4) While Las Vegas has some factors like hotel taxes that could enhance local impacts, there is no evidence of demand for large events, and it is speculative

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    94 views7 pages

    Las Vegas Economic Club

    Uploaded by

    Jon Ralston
    The document summarizes research on public subsidies for sports facilities and economic impacts. It finds: 1) Public subsidies for sports facilities have increased dramatically over time, averaging over $200 million per facility from 2000-2009, with the public share typically over 50%. 2) Economic impact studies by consultants generally predict positive impacts but have limitations and do not consider negative effects. 3) Empirical studies find no significant impacts on jobs, income or property values from new sports facilities compared to other cities, and money often leaks out of the local economy. 4) While Las Vegas has some factors like hotel taxes that could enhance local impacts, there is no evidence of demand for large events, and it is speculative

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    © All Rights Reserved
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    of 7

    Presentation to the Las Vegas Economic Club, 23rd September

    2016

    Sports Franchises and Stadia:


    Independent Insights to Economic
    Benefits and Costs toLasVegas
    Stefan Szymanski
    University of Michigan

    Public subsidies for major league


    facilities
    Table 2.2: Reported Public Cost1 by Decade, 1900 to 2010
    (2010 Dollars, Millions)

    1900- 1910- 1920- 1930- 19401909 1919 1929 1939 1949


    All Facilities
    No. of Facilities Opened
    Avg. Reported Cost
    Avg. Reported Public Cost
    Avg. Public Share
    Median Public Share
    Weighted Avg. Public Share
    MLB
    Facilities Opened
    Avg. Reported Cost

    9
    114
    0
    0%
    0%
    0%

    11
    42
    0
    0%
    0%
    0%

    8
    114

    10
    42

    1
    n/a

    2
    188

    n/a

    Avg. Public Share

    0%

    Median Public Share


    Weighted Avg. Public Share

    Avg. Reported Public Cost

    NFL
    Facilities Opened
    Avg. Reported Cost
    Avg. Reported Public Cost

    19601969

    4
    73
    47
    50%
    50%
    64%

    11
    70
    49
    71%
    100%
    70%

    3
    86

    12
    200

    188

    86

    0%

    n/a 100%

    100%

    0%

    0%

    n/a 100%

    100%

    0%

    0%

    n/a 100%

    100%

    83%

    5
    80
    50

    n/a

    n/a

    17
    9
    148
    98
    43
    79
    20% 67%
    0% 100%
    29% 81%

    19501959

    10
    112

    5
    80

    86

    77

    1970- 1980- 1990- 20001979 1989 1999 2009

    28
    27
    194
    246
    116
    203
    73% 89%
    100% 100%
    60% 83%

    14
    195
    114
    61%
    90%
    58%

    55
    265
    142
    54%
    74%
    54%

    44
    417
    241
    61%
    71%
    58%

    7
    486
    189
    60%
    64%
    39%

    9
    237

    3
    376

    12
    300

    13
    541

    1
    559

    167

    232

    165

    209

    247

    430

    86%

    97%

    46%

    70%

    54%

    77%

    100% 100%

    47%

    80%

    68%

    77%

    98%

    44%

    69%

    46%

    77%

    9
    194

    12
    234

    3
    179

    12
    295

    15
    550

    2
    888

    193

    226

    80

    225

    314

    225

    Source:
    Long,
    Avg.
    Public Share

    J.G., 2012.Public-Private
    for Major
    40% 75% Partnerships
    75% 100%
    89% League
    50% 76%Sports
    58%
    Facilities. Routledge.

    Median Public Share

    0% 100%

    100%

    2010

    100% 100%

    61%

    90%

    64%

    40%
    40%

    $10.6 billion
    over 20002009

    The measurement of economic


    costs and benefits: Method 1
    Forecast
    Forecast economic
    economic effects:
    effects:
    Direct
    Direct effects
    effects money
    money spent
    spent on
    on a
    a project
    project to
    to a
    a
    supplier,
    supplier, e.g.
    e.g. payments
    payments to
    to construction
    construction companies
    companies
    Indirect
    Indirect effects
    effects expenditures
    expenditures by
    by suppliers
    suppliers on
    on
    goods
    goods and
    and services,
    services, e.g.
    e.g. equipment
    equipment purchase
    purchase by
    by
    construction
    construction companies
    companies
    Induced
    Induced effects
    effects -- expenditures
    expenditures by
    by project
    project
    employees
    employees on
    on goods
    goods and
    and services
    services of
    of other
    other
    businesses
    businesses
    The
    The indirect
    indirect and
    and induced
    induced effects
    effects produce
    produce a
    a
    multiplier,
    multiplier, which
    which in
    in theory
    theory can
    can cause
    cause a
    a small
    small
    investment
    investment to
    to generate
    generate a
    a large
    large economic
    economic impact
    impact

    The measurement of economic


    costs and benefits: Method 2
    See what actually happened to:

    Employment
    Wages
    Total income
    Property values
    Rental values

    Compared to other cities,


    controlling for relevant
    differences

    What do we find? : Method 1


    Published forecasts predict positive
    effects
    Studies conducted by economic
    consultancies
    Use costly, complex input-output models
    such as IMPLAN
    By definition, any expenditure produces a
    positive impact
    Have limited capacity to incorporate
    negative feedback loops

    What do we find? : Method 2


    No systematic, significant impact from building sports
    facilities
    Main reasons
    Multiplier effects are small money leaks out of the region
    Facilities struggle to achieve regular use- often too big
    Investment crowds out other opportunities- diversion rather
    than creation

    Could Vegas be different?


    (+)
    Hotel tax levied on visitors, not
    residents- enhances local
    impact

    (-)
    Very large subsidy for the
    stadium, potential liability for
    local taxes if visitor growth
    does not materialize

    Potentially many events that


    could be accommodated in a
    larger venue, without diverting
    events from existing locations

    No evidence of demand for


    large scale events in Vegas

    If Vegas grows, then new


    facilities needed anyway

    Could well be better


    infrastructure investment e.g.
    transport

    Conclusion: its a speculative investment is there a compelling reason to use


    public money for speculation?

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