THE STUDY JULY 13, 2011
Last night, the National League defeated the American League 5-1 in the eighty-second MLB All-Star Game, posting its second consecutive victory after more than a decade of losses to the AL. Last night’s game took place at Chase Field, the home of the Arizona Diamondbacks. (For those of you questioning the wisdom of holding the All-Star Game in Phoenix at this time of year, remember that the field has a retractable roof and massive cooling system, which lowered the game-time temperature to a pleasant 72 degrees.) But what did the event mean for Phoenix? Does hosting the All-Star Game bring any economic benefit to a city?
Apparently not, according to a 2001 article in the Journal of Sports Economics. Two economists, Robert A. Baade and Victor A. Matheson of Lake Forest College, evaluated the MLB’s claims that the All-Star Game is a significant economic boon to host cities–that it brings in fans and national media, draws attention to the hosts, and spurs economic activity at surrounding restaurants, hotels, and other businesses. For instance, the MLB predicted that this swarm of activity would bring Boston $62 million for hosting the 1999 All-Star game, and it estimated Milwaukee would see $70 million in economic benefit for hosting the 2002 game. And such estimates aren’t just predictions—they’re often cited to entice cities to build expensive new stadiums, on the understanding that an All-Star Game will arrive soon after the expensive new facilities are completed.
Contrary to the MLB’s claims, Baade and Matheson reviewed the economic impact of All-Star Games between 1973 and 1997 and found that “the economic impact of the All-Star Game on the host city could be negative and is certainly likely on average to be much lower than the magnitude of the most recent MLB estimate.” The authors surmised that “spending by All-Star visitors simply crowds out other spending that would have taken place in the absence of the game,” and they reported that host cities did not just experience worse employment growth than predicted—they actually experienced lower employment than they would have if they hadn’t hosted the game at all. If the economy is still sputtering along this time next year, the next host—Kansas City, Missouri—might want to brace itself for the surprisingly adverse effects of playing host to the big game.