NHL Lockout Economics

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The Economic Impact of an NHL Lockout

What happens to a local economy during a sports lockout? What happens when a sports team moves away? A paper authored by Dennis Coates and Brad Humphreys at the University of Maryland (.pdf link here) investigates:

The parameter estimates from a reduced form empirical model of the determination of real per capita income in 37 SMSAs over the period 1969-1996 suggest that prior work stoppages in professional football and baseball had no impact on the economies of cities with franchises. Further, the departure of professional basketball from cities had no impact on their economies in the following years. These results refute the idea that attracting professional sports franchises represents a viable economic development strategy.

The idea is that despite the Leafs disappearing most people consider the Toronto Maple Leafs an entertainment expense. If you're not buying Leafs tickets, a new Morgan Rielly jersey or a Carlton the Bear painting for your foyer you're spending that money on other things you like such as books, movies, alcohol to drown your sorrows (which offsets buying alcohol to drown your Leafs related sorrows you sad sack).

Tyler Dellow mentioned this before, but this is interesting:

In fact, the models showed that cities saw a very slight increase in real per capita income during years with a work stoppage. - Time

An increase in per capita income? How? It's actually pretty simple: if you spend your entertainment dollars locally instead of on professional athletes who don't live in your city it benefits the economy more.

Still not sold? The Time article (about the above linked UMBC paper) cites another study:

Robert Baade, a sports economist from Lake Forest (Ill.) College, led a 2006 study that examined sales tax data (.pdf link) in Florida. The study found that the lockouts and strikes since 1980 had no statistically significant effect on sales tax receipts in the metropolitan areas that house pro sports franchises.

The economic evidence suggests that a lockout / strike / team departure / etc. doesn't hurt the economy, to which the corollary is that a team arriving doesn't help your economy. Say no to public financing of sports stadiums (even if you really like the team) because just like the current NHL lockout it's public posturing as millionaires try to get even richer.

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