Are sports teams worth all the trouble?

on Jun 14 in Portfolio by

Originally published in Metro Canada, June 2010.
Read the original article at

With a strong desire to bring an NHL franchise to cities such as Winnipeg, Quebec City and Hamilton, there is often talk of the economic benefits the teams would bring to the communities. It’s Brad Humphreys’ job to tell people the disheartening news.

“I’ve got to basically tell people all the time, ‘Well, I’m sorry if these people have told you that a new hockey team in your community is going to be really beneficial economically. There’s no evidence to support that and it’s a money-losing proposition for the local community and only a money-making proposition for the team owner and players,” says the sports economist who teaches at the University of Alberta.

His 10 years of research indicates this is true for all sports.

Sports economics is a relatively new branch of economics, which takes economic principles and uses them to analyze issues in sports, such as the economic impact of hosting large sports events like the Olympics or the economic impact of having a professional sports team.

In Canada, there are only a handful of sports economists and becoming one is not a short process, with a PhD in economics being only a basic requirement.

When he tells people what he does, he says they’re intrigued. This is because “sports cuts across all dimensions of society and provides people with a common shared experience,” he says.

Not every area of economics has its own section in the newspaper, he adds.

With the recent hosting of the 2010 Winter Olympics in Vancouver, a lot of talk was about the economic benefits it would bring to the city and province. The bad news is the Olympics have a poor track record for this.

“It’s almost certainly not beneficial for a local economy,” says Humphreys. “It probably costs a lot more than whatever return you get back out of it.”

The Olympics are expensive to host because of the specialized facilities and enormous security costs. Other problems can crop up as well, such as the Athletes Village fiasco in Vancouver.

“That blew up on them,” he says, adding that taxpayers are now on the hook for the facility.
Humphreys is no longer the sports fan he once was and this is because of his profession.

“Once I started doing this research on public subsidies for professional sports facilities, it kind of made me less of a sports fan,” says the one-time Baltimore Orioles season ticket holder.

Humphreys used to be able to admire a ballpark for its structure and beauty, but “now when I go to a ballpark, all I can think about is, ‘Well, how badly did local government get hosed out of money when this facility was built?’”

Comments are closed.