It rarely pays to play when sports teams call for cash: Expert
Metro asked economist Andrew Zimbalist, author of Circus Maximus and No Boston Olympics, if it makes sense to subsidize sports.
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With five Canadian teams in the NHL playoffs, there’s lots to like for fans.
There’s less to like on the business side. The Calgary Flames CEO threatened to “just move” if a $1.8-billion arena isn’t built (with $1.3 billion from the city).
Does it ever make sense to subsidize sports?
We asked economist Andrew Zimbalist, author of Circus Maximus and No Boston Olympics. He says the numbers often don’t add up.
Subsidy boosters argue the team is part of the city’s DNA, and brings intangible benefits; in other words, benefits are unknown.
Zimbalist says emotional arguments to subsidize the team can be made, but don’t substitute for a business case. “If you’re concerned at a social or cultural level, then I would say you have to think about subsidies. But don’t think about subsidies because of an economic impact.”
The local economy
Zimbalist says the argument that sports is a boon to city coffers is overblown. Research shows entertainment dollars are still spent in the absence of a team. Also, sports aren’t great at keeping financial activity in the city. Take the NHL: players are paid half of revenues, but most of that is taxed federally, or saved and invested globally. Taking the family to a nice restaurant is a more sound investment in the local economy.
Zimbalist doesn’t oppose all sports subsidies. He says stadiums as redevelopment catalysts can make sense, pointing to San Diego, Calif., and Brooklyn, N.Y. But those are the minority, and “the devil is in the details.” He warns against subsidies by another name, like waiving property taxes, interest-free loans or introducing a special tax or fee to support the team.