New Horizons in the Economics of Sport series
Edited by Plácido Rodríguez, Stefan Késenne and Jaume García
Chapter 10: Estimating economic impact using ex post econometric analysis: cautionary tales
Since the seminal work of Baade and Dye (1988) over twenty years ago, the analysis of the economic impact of sports teams, stadiums and major athletic events on host economies has elicited significant attention from sports economists. There are two main reasons. First, the topic has considerable public finance implications. Over the past two decades over100 stadium and arena construction projects have taken place at a cost totaling in excess of $30 billion in the US and Canada alone (Baade and Matheson, 2011). Since over half of this cost has been borne by state and local governments, it is reasonable to ask whether taxpayers are getting a good return on their investment. The second reason for the consideration is the clear difference between the ex ante economic benefit estimates provided by economists working in a consulting capacity at the behest of sports organizers and the ex post estimates provided by economists working in a scholarly setting. Ex ante economic impact numbers are typically generated by predicting the number of visitors to an event and the average spending per visitor.
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