In 2004 the residents of Wichita, KS (my home town) voted to approve the building of a new multi-purpose arena. There was quite a bit of back and forth discussion on the economic and cultural impact of the project. Now, 14 years late, the project seems to be a success. This year the mayor announced that we would be constructing a new baseball stadium and signing a contract with a minor league baseball. This has led me to wonder: How much have minor league sports—baseball, hockey, arena football—grown in small-and medium-market cities? What is the local economic impact when these municipalities build stadiums and arenas? In an effort to answer this question a found a paper that offers an economic model for calculating the economic impacts of sports stadiums.
The basic method of the model is to use multipliers taken from the US department of Commerce and apply these to the distinct phases of the project. These multipliers are available for different businesses, industries and regions. Once the appropriate multipliers are obtained, the next step is to determine which aspects of the project to measure.
The authors of the paper split the impact into two categories: one time impacts from the construction and recurring impacts from annual operations. The Annual operating impact was then further divided so that impact from outside of the city could be counted, as impact from inside of the city was considered a shift of expenditure rather than new expenditure.
All in all, this paper provides an effective method for considering the plausible economic impact of building a new sports stadium. Even though the paper was published twenty-four years ago, the methodology remains sound.
Works Cited
Colclough, William G., et al. “Estimating the Economic Impact of a Minor League Baseball Stadium.” Managerial and Decision Economics, vol. 15, no. 5, 1994, pp. 497–502. JSTOR, JSTOR, www.jstor.org/stable/2487998.
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