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Professional Sports Provide Needed Economic Stimulus in St. Louis

Presidio Economics | Tuesday January 10th, 2012 | 0 Comments


3p is proud to partner with the Presidio Graduate School’s Macroeconomics course on a blogging series about “the economics of sustainability.” This post is part of that series. To follow along, please click here.

By Erik Distler

In St. Louis, MO, city employees were bracing for the fourth straight year of mandatory furloughs designed to help mitigate budget issues caused by the economic downturn. Mayor Francis Slay had established the furloughs and expected to save the city $2.8 million this year.

Enter: Superman in a redbird jersey.

The St. Louis Cardinals were the unlikely winners of the World Series, and the win has resulted in benefits unimagined. St. Louis hosted nine postseason games (the maximum allowed), which generated an estimated $3.5 million in direct spending tax revenue for the city of St. Louis. This additional revenue allowed the city to avoid furloughs this year. This raises an intriguing question: Can Major League Baseball and other professional sports leagues assist local governments and businesses by stimulating economic growth?

Conservative estimates show roughly $500,000 in extra city tax revenues from a single World Series game. According to ESPN Sports Business‘ Kristi Dosh and the St. Louis Regional Chamber & Growth Association, the World Series overall generated roughly $52 million total economic activity. Local businesses benefited from the estimated $15 million of direct spending in the St. Louis region. These figures are astonishing given they do not account for spending and economic stimulus from the Cardinals’ late season wildcard push or the first two rounds of the playoffs.

A baseball team in the play-offs means rewards across the city. Local restaurants, hotels, and casinos saw October figures alone as cause for jubilation, as revenues reached heights last experienced as long ago as 2008. The public transportation provider, MetroLink, reported near double and triple rider numbers for a single World Series game and the Sunday victory parade. MetroLink officials are encouraged by the spike,  as it could lead to increased consistent ridership and reduction to highway congestion, traffic, and hazardous environmental affects.

As the recession looms and continues to take a toll on cities and local communities, the stability and popularity of the local sports teams should be leveraged to promote growth. Sports maintain income multipliers of staggering effect on local economies. Los Angeles Sports Council’s 2010-2011 Community Report indicates Southern California sports are responsible for $5 billion in annual economic impact and roughly 14,000 jobs. When sports are halted, as with the recent NFL and NBA lockouts, the effects are shattering to local economies. Thankfully avoided, the NFL lockout was expected to cost each team’s home city $160 million in local spending and 3,000 jobs. Studies show the average per game economic impact in each market as roughly $20 million. Now partially salvaged, the entire upcoming NBA season was in peril and some estimates show a basketball team’s local, annual economic impact in excess of $200 million.

Furloughs for the city of St. Louis were avoided due to tax revenues from unexpected baseball games, but the intentional establishment of programs and partnerships between cities and sports teams to address such issues seems logical and sensible. It’s not uncommon for public-private partnerships to exist amongst government and local small businesses and corporations. Why not professional sports? After all, professional teams are used to sharing. Team revenues are distributed and taxes are levied in accordance to league guidelines as measures designed to maintain competitive balance amongst all teams.

However, local economic assistance wouldn’t have to mirror revenue sharing. Teams can offer subsidies, discounts and promotions to entice fans to stadiums, travel on public transportation, shop in area businesses and dine at nearby establishments. Rather than government initiated strategies resulting in increased taxes to local professional teams, perhaps teams can provide direct, additive assistance to local government through economic incentive plans. Additionally, many cities such as St. Louis have established long-term sustainability initiatives and local sports teams are perfect partners. Sports capture an important segment of community and citizen engagement. Teams foster a dedicated, respondent fan base and can serve as a platform for cities to communicate initiatives and enlist support and community involvement.

In a city proudly boasting and assuming the title, “Best Fans in Baseball,” it’s perhaps fitting the that the uniformed men of Busch Stadium have played a critical role in providing economic relief to the faithful who adorn red and white for half the year. The baseball team has given the city a reason to smile, bringing together a community in easing the stress of troubled times. Smiles need not rely upon the win/loss columns or fade with the arrival of November. The recipe is replicable and the meal can be lasting.

The St. Louis Cardinals and other professional sports teams have a responsibility to play an instrumental role in the revitalization and resurgence of communities across the Nation. Whether in-play or off-season, the time to act is now.

Erik Distler is an MPA candidate at Presidio Graduate School. His professional interests include public policy, sustainability in sport, urban regeneration and design and sustainability curriculum in education. He can be reached at erik.distler@presidioedu.org


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