The Use and Misuse of Economic Impact Analysis

Economic impact studies have been an important component of the debate surrounding the merits of subsidizing professional sports teams. However, various studies have arrived at remarkably different conclusions about the size of a sports team’s economic impact on the region in which they are located. The purpose of this study is to determine the causes of the wide variance of economic impact estimates between different studies. A meta-analysis was used on the 13 studies to determine the causes of the differing impacts. Although some of the variance is due to understandable differences in the size of the geographical region and sports team in question, differing assumptions about whether the expenditure of locals should be included accounted for a substantial variance in the impact.