Well, the hockey season has wrapped up. The biggest hockey talk of the summer will probably be about the purchase of the Nashville Predators by Jim Balsillie. There has already been much speculation that he will move the team to Canada, providing contractual stipulations are met. Is this a good idea?
According to an article in the Journal of Sports Economics, it isn't. Kaveephong Lertwachara and James J. Cochran did a study to determine what economic effect team relocation or expansion had on metropolitan areas (note: U.S. cities). The result: universally negative. Specfically, hockey towns suffered a loss of $1116.96 GDP/capita in the team's first year, and $13901.08 over a 10-year period.
It can be argued that the results in Canada would be different, as hockey is the Canadian game. However, the negative results covered the MLB and NFL as well, with the NBA, decidedly American suffering the worst.
Their conclusion:
$1:
Municipalities compete fiercely for professional sports franchises,offering con-
cessions and incentives in the hundreds of millions of dollars to entice an existing
franchise to relocate or convince a league to award them an expansion franchise.
This competition continues despite strong economic evidence that a professional
sport team does not have a positive impact on the local economy. However,the
research that has produced this evidence fails to consider some important factors:
inflation,causality,overall economy,specific characteristics of local areas,and
events’ages. Our article takes inflation into account and employs the model of the
event study to mitigate these concerns.
The results of our research confirm prior research findings—we find that a pro-
fessional sport team does not have a positive economic impact on the local com-
munity. The results indicate that estimated local income in the presence of a
professional sports franchise is lower than what would be estimated in the absence
of a professional sports franchise.
Hockey horniness aside, how can any local government justify the movement of a team onto their premises? Especially when concessions and benefits are usually offered in order to attract a team in the first place.
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