Yanks Are Dead, New York Economy Doesn’t Give a Crap


Now that the baseball season for Yankee fans comes down to what-ifs (Why couldn’t Joaquin Benoit have thrown that last pitch just three feet higher?), it seems like adding insult to injury to suggest that a suddenly postseason-free October could batter New York’s fragile economy as well.

Yet that’s the upshot of a report by the New York City Economic Development Commission that, as noted in yesterday’s Daily News, projected that each ALCS home game played at I Can’t Believe It’s Not Yankee Stadium would bring in $12.6 million to the local economy. World Series games came in at $20 million a pop, said the study — which would mean that A-Rod’s feeble hacks last night helped cost the city as much as $110 million.

This is an annual tradition for the EDC, which serves as City Hall’s main development arm (and, not coincidentally, was the lead agency on building the Yankees their new stadium): When the Yankees actually won the World Series two years ago the figures were $11.9 million and $15.5 million. Their methodology is simple: Estimate how many fans come from outside the city limits for the games, multiply by how much they’ll each spend, and hey presto, there’s your “economic activity.”

But does it really turn out that way? In 2002, economists Brad Humphreys and Dennis Coates set out to discover this. The claims of postseason windfalls by city development agencies were so large, they reasoned — the 1995 Super Bowl was projected to be worth 1% of Miami’s entire personal income for that year, for example — that they should show up as a bump in per-capita income for that city. If playoff games mean added money, in other words, somebody should be actually making it.

So Humphreys and Coates took personal income-tax data for MLB, NFL, and NBA cities over a 30-year period, and looked for any sign of a championship-fueled bump. Their conclusion:

In general, the parameters on the postseason appearance variables are not statistically different from zero, suggesting that postseason appearances by the local professional sports team have no beneficial effect on the local economy.

Or in English: Residents of cities whose teams got bounced in the first round had just as much cash in their pockets as those whose teams made it to the final dance.

How is that possible, given all those Rangers fans and Fox camera crews that will now be visiting beautiful downtown Detroit instead of the Bronx? Humphreys and Coates had an answer for that: In a city with a fixed number of hotel rooms, restaurants, lanes of roadway, and so on, an influx of new visitors can “crowd out” visitors who otherwise would have dropped some cash in your city. In other words, if the fear of World Series traffic keeps enough New Jerseyans from heading into town to take in a show, the economic impact ends up being a wash.

The Humphreys and Coates paper is just one a slew of studies that regularly pop up in economics journals, each attempting to describe another facet of the sports-impact elephant: There have been investigations of what happens to sales-tax receipts during strikes and lockouts, and of what happens to local spending the month of a Super Bowl. All have reached the same conclusion: Whether there’s a sporting event on that night or not, people seem to spend roughly the same damn amount on entertainment options. (One study, by economists Robert Baade and Victor Matheson, did find signs of marginally increased spending during the World Series, but noted that 1) the result wasn’t statistically significant, and 2) at best the impact was only a fraction of the claims of sports boosters.)

Some economists, in fact, have concluded that sports seem to have a very slight negative effect on their cities, something that’s been chalked up to either the fact that a high degree of sports spending “leaks” out of the local economy (when you go out to dinner, most of your money goes to employees who live locally; not so much for money spent on Derek Jeter), or to the theory that when local teams are in the playoffs, they generate so much water-cooler gossip that productivity grinds to a halt.

Either way, it seems like the destruction of the New York economy is one thing Yankee fans don’t to worry about today. Instead, they can go out and drown their sorrows by watching robots beat each other up, content in the knowledge that their boxes of popcorn are doing just as much to help the local economy as if they’d munched them in the box seats.


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