EconBuff #44 with Cristian Sepulveda
Dr. Cristian Sepulveda talks with me about how sports teams impact their local economies. Dr. Sepulveda lays out why cities agree to fund stadiums to attract sports despite the consensus of the economic literature on the subject. .Dr. Sepulveda walks us through cost benefit analysis and how it applies to local development from sports teams and stadiums. Dr. Sepulveda introduces two key ideas in understanding “hidden costs” of sports teams to their local economies, leakages and substitution effects. Dr. Sepulveda addresses the role of player income and owner profits on their local economy, arguing that most of their income does not stay in the local economy. We discuss the multiplier effect, both how it effects the eventual impact of a team on its city, and what the empirical evidence suggests the multiplier effect is in practice. Dr. Sepulveda evaluates the impact of sports teams on job creation and destruction, as well as the type, and quality, of jobs in the local economy. Finally, Dr. Sepulveda discusses his estimates of the total effects of an “average” team on their local economy in each of the four major North American sport leagues.
Photo by Derek Story on Unsplash