A couple of weeks ago I was contacted by John Miller about a story he was writing on the Phoenix Coyotes. As readers of The Sports Economist are well aware, evidence that sports franchises and stadium and arena construction generate large impetus to economic growth and urban development exists only in the minds and reports of consultants to sport franchises and their rent-seeking employers. Subsidies for such activities is especially troubling when city and state budgets are in disarray with service reductions and layoffs of public employees from teachers to police and firefighters. Miller’s story, Taxpayers take the puck, describes how the Goldwater Institute in Arizona is a thorn in the paw of the NHL as the hockey league tries to get Arizona taxpayers to bail out the failed Phoenix franchise.
It would be nice if the NHL recognized that ice hockey in the sun belt is probably not likely to be a successful venture, at least not without massive public subsidies. Brad Humphreys and I presented a paper on hockey attendance at the 2011 Western Economic Association meetings in which we estimated the impact of game uncertainty on attendance; a revised version is forthcoming in the Journal of Sports Economics. The working paper version includes a table of the home team fixed effects which was dropped from the forthcoming JSE paper. After accounting for home and visiting team quality at the time of the game, the home team effects strongly suggest that hockey attendance in the south and southwest, Atlanta, Carolina, Nashville, Florida, Phoenix, Tampa, and southern California, is substantially lower on average than in most of the more northern locations. Of the ten smallest home city attendance impacts, the New Jersey Devils, New York Islanders, and Columbus Blue Jackets are the only ones not from the south. No southern team ranks in the top ten in largest home team effect on attendance.
It would also be nice if more state and local politicians resisted the urge to provide corporate welfare to sport franchises. It’s unusual for the opponents of public subsidies for professional sports to be as well funded and high profile as the Goldwater Institute. Maybe the combination of terrible public finances and well-regarded opponents will help the Arizona politicians to resist the rent-seekers.