Public Funding of Professional Sports Stadiums: Public Choice or Civic Pride?

Many state and local governments have subsidized the construction of arenas and stadiums for the use of professional sports teams. They often justify the subsidies with claims that the stadiums generate positive externalities, including public goods. Some research using Contingent Valuation Method surveys has shown that such public goods may be valuable, but no published research has yet found a case in which the value of the public goods alone could justify public construction of a new stadium or arena. This suggests that the public choice argument for public subsidy of sports may play a role. This paper uses a bivariate probit model to extend the analysis of data from a previous study to show that, while public goods may contribute to a community's willingness to subsidize sports, public choice factors also play a role. The analysis clarifies the genesis of civic pride and its relationship to sports and other cultural amenities in a city.