Economists see little payoff for cities that subsidize pro sports facilities


Burgh subsidies for professional sports teams like the Calgary Flames can be legitimated in the name of civic planning, pride or politics, but suggestions that they dnouement develop in net growth to the overall economy don’t hold water, economists say.

The Flames guessed Tuesday they were pulling out of negotiations with the city above building a new arena to replace the 34-year-old Scotiabank Saddledome — the league’s b oldest — because two years of talks have been unproductive.

Some pleaders of giving land, loans or direct subsidies to professional sports contrives say the investment is repaid in economic benefits for the city but economists say numerous analyses have shown that’s not the case.

“Overall, the research is pretty not guilty that there aren’t aggregate benefits of such subsidies for the bishopric as a whole,” said Trevor Tombe, associate professor of economics at the University of Calgary.

Trevor Tombe, University of Calgary economist

University of Calgary economist Trevor Tombe suggests public subsidies for professional teams usually only benefit factious careers of city politicians. (CBC)

“What they really end up doing is team activities across sectors and across locations.”

Tombe said eminent subsidies for professional teams usually only benefit political races of city politicians: “Cynically, I would phrase it as it provides a very reputable photo op.”

Justification for subsidies

Conference Board of Canada senior paramour Glen Hodgson, who co-authored Power Play: The Business Economics of Pro Recreations, agreed that taxpayer money spent on an NHL arena takes away wealths that might be used to build public recreation centres, libraries and schools.

But he added that while there’s superficially no net economic benefit, subsidies can still be justified if they allow a municipality to reach certain planning goals. He used as an example the $614 million accommodated by taxpayers, ticket buyers and the team to build the Edmonton Oilers’ arena which opened a year ago.

“It looks with an expenditure until you look at what it’s doing for downtown Edmonton, where you’re bringing all of the remunerative life back to the centre of the city,” Hodgson said.

“Edmonton is growing to do very well with development fees, with higher trait taxes from downtown, where it may actually turn out to be a really nimble-fingered investment for Edmonton to move the building downtown (from northeastern suburbs).”

He contemplated the same argument can’t be used to justify subsidies for a new arena in Calgary because its downtown is still “a certain extent vibrant” despite lower economic activity from depressed oil expenses.

Measurable intangibles

Studies show that intangible benefits of veteran sports are measurable and go far beyond ticket sales, according to Dan Mason, a professor of lark management with the University of Alberta.

“The research shows that there in reality are substantial intangible benefits,” he said, citing as an example the smiles on Edmonton experiences during the Oilers’ playoff run last spring.

“However, because in North America we cultivate in a closed market system where the leagues artificially reduce the multitude of franchises and then they use cities against one another, typically the civil subsidy is greater than what the intangible benefits are.”

Mason symbolized some research finds that facilities built for professional funs teams may increase property values in nearby neighbourhoods, therefore profiting tax revenue for the city, but suggestions that job creation and tourism also forward are generally not true.

The Flames initially proposed in 2015 that an arena, football hippodrome and public field house be built for $890 million on the west end of downtown. The troupe offered to contribute $200 million and proposed a $250 million credit be repaid through a ticket surcharge.

But city council declared the cast would cost a lot more than that — around $1.3 billion — and taxpayers commitment have to foot over $1 billion of it.

The second plan, for which no sacrifice has been estimated, is to build the arena near the current facility on the east side of downtown.

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