This column is to appear in the Augusta Business Chronicle (October 2000).  On the Economics of Sports As I write this column, the Sydney olympic games have not yet begun; as you read this column, they are already over. Everywhere sports is exciting and, in many instances, it is fairly big business, too. In the US, one of the more puzzling aspects of professional sports is why there are so many politicians willing to pour hundreds of millions of taxpayers' dollars into building new stadiums or substantially renovating old ones. The teams are, after all, for-profit enterprises, with millionaire players and billionaire owners. Shouldn't they be able to finance new facilities themselves? Another interesting question is: why do the team owners and players get away with having their profits and incomes subsidized by taxpayers? On the supply side, the answer is pretty straightforward. The owners of the big professional sports -- basketball, baseball, football, and hockey -- form owners' cartels and severely restrict the number of new teams within their league. League expansions are just sufficient to prevent formation of rival leagues or to contribute to their early demise. Thus, the owners control the supply side and are, essentially, monopoly suppliers of sports entertainment.  But even if I have the greatest monopoly in the world, but no customers, I won't be able to charge monopoly prices. The question then becomes, what drives the demand for sports? And here the interesting empirical observation is that the demand by private sports fans is not nearly enough to charge prices justifying the high costs of team salaries and new stadiums. After all, sports fans don't have to watch baseball; they can get sports entertainment by following another sport. In a word, the empirical evidence is that team owners and private investors find new stadiums to be bad investments -- unless they can somehow hook the taxpayer. And so they do. How? In large part because of the great myth that a city that hosts its own slew of professional sports teams somehow benefits economically. Consulting firms hired by team owners, chamber of commerce officials, and elected public officials purport to show that a new team lured to town (or to stay in town) with a fancy, new taxpayer-paid stadium provides an economic stimulus that eventually more than offsets the initial subsidy. Sadly, economists have conclusively shown that such is not the case: the empirical evidence shows otherwise. For example, stadium planning, architecture, engineering, and construction are often awarded to outside firms so that the public money spent on the stadium leaves the city and provides an economic stimulus elsewhere. The millions the players and owners earn are seldom spent in town because the players and owners rarely live in town. Indeed, despite fancy cars and flashy clothes, much of their earnings goes to the financial markets around the world, and do not stay in St. Louis or New Orleans or Green Bay.  How about extra dollars from visitors that come to town to see a game? Again, the empirical evidence suggests that the effect is very slight. Most out-of-towners would have come to town in any case, on business or to visit family, and would have spent entertainment dollars in any case. The evidence suggests that relatively few people make the trip to the big city solely to see a game in person.  Moreover, for a medium-sized city such as St. Louis it turns out that its baseball team accounts for only less than 0.3 percent of overall economic activity in the city. In New York City, make that less than 0.03 percent per baseball team. In may sound strange, but big-business sports is actually small business in the context of our larger cities. In 1999, the average team revenue was only $55 million in the NHL, $75 million in the NBA, $85 million in MLB, and $100 million in the NFL. To boot, employment effects are minimal. Teams employ around 100 people in the front office and, on game day, say 1,000-1,500 personnel for four hours that day. For example, for an NFL team with 10 home games (including preseason) that comes to 20 or 30 full-time equivalent jobs. For all this, taxpayers were asked to kick in an average subsidy of about $275 million per new stadium for the 41 new stadiums under construction or planned in 1999. The bad news get worse, much worse -- for instance, most sports fans watching the games in person turn out to be high-income earners, so that their enjoyment is subsidized by poorer taxpayers. But the upshot simply is that if cities want to have (or keep) big-time professional sports teams, fine, but let them not make their case on economic grounds. Dr. J. Brauer is Professor of Economics at Augusta State University's College of Business Administration. He can best be reached via his web site (http://www.aug.edu/~sbajmb).