Professional Sports Subsidies and Urban Congestion Externalities: Assessing 50 Years of Failed Urban Economic Development Policies

For the past 50 years, state and local governments in North America heavily subsidized the construction of professional sports facilities despite the fact that only private activity takes place in these facilities. Proponents of these subsidies frequently claim that they are justified because they represent viable local economic development projects. A proponents claim a new facility will “pay for itself” by generating large tangible economic benefits, including increases in tax revenues. This paper summarizes the existing literature that contains no evidence supporting these claims, along with a new literature containing evidence that professional sports events cause a number of negative urban congestion externalities like increased crime and traffic. The paper also documents trends in subsidization over the past 50 years and discusses reasons why these subsidies persist. The paper emphasizes the role played by my research in this area.