Charlie Morgenstern 11 a.m., June 25
Hallelujah! NFL Admits Football Has No Economic Impact
For decades, the National Football League, and other professional sports organizations such as Major League Baseball, have claimed that a new sports facility generates huge economic activity for a community. Making this claim has been one essential part of the strategy to get governments to subsidize the stadiums, ballparks or arenas. All along, economists have said it isn't so: if people don't spend money on a game, they will spend it elsewhere -- the substitution effect. Pro games don't bring in much money from the outside. Now, a brilliant article by Bill Briggs of MSNBC reveals that NFL owners have finally confessed: their claims were bogus.
The confession emerged from the NFL's current lockout of players. The National Football League Players Association, the players' union, took the owners' own estimates -- generated while begging for subsidies -- and stated that a city will lose $20 million per game and $160 million per season if the 2011 games aren't played. NFL spokesman Greg Aiello denounced the union's figures as "fairy tales" and "unattributed research," and emailed to MSNBC.com an article from the Atlanta Journal Constitution that concluded "there will be little economic impact if there is no NFL action next season...[P]eople will find other ways to spend their money." That's the substitution effect.
Economist Victor Matheson, who has long debunked mendicant sports teams' claims that a stadium will generate huge economic activity, says, "For years, [NFL owners] have commissioned bogus economic-impact studies that produce inflated claims...in order to justify taxpayer subsidies for new and improved stadiums. Now that [the players association] is using these same studies to put public pressure on the owners and league, the owners and league are now disavowing their own impact studies as unreliable." Matheson figures that the economic impact of losing a season would be $16 million for a city -- one-tenth of what the union, using the NFL's own studies, claims.