The City Of Los Angeles

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A great example is the city of Los Angeles, which after 21 years of absence lured their football team back into town, which was relocated from St. Louis. The crucial factor for the return of the LA Rams was that a brand new facility is being build, in which they can expect to play their first game in 2019. This state of the art facility called City of Champions Stadium has estimated construction costs of over 2,5 billion dollars (CNN 2016). In most cases however, the actual construction costs of facilities exceed the estimated costs considerably. The City of Champions Stadium is set to hold the Super Bowl in 2021. Additionally, due to it enhancing the overall appearance of sports facilities in Los Angeles it is supposed to increase the chance of Los Angeles winning the bid for the Olympics of 2024. According to ex ante studies the Olympic Games can have a total economic impact of around $5 billion (Kasimati 2003). Porter (1999) conducted research on the economic impact of six Super Bowls and found that one had a slightly positive effect on commercial sales, two had a negative effect on commercial sales and, whilst three showed no effect at all on the economy of the respective region. Still the NFL claims that hosting a Super Bowl will have an economic impact on the region of up to $400 million dollars (National Football League 1999). But even if these claims were to be true the research by Coates and Humphreys (2002) show no statistically significant impact of hosting the Super Bowl, as they conclude: “Hosting the Super Bowl has no measurable impact on real per capita income in the host city”. The most plausible explanation for this result is crowding out as Porter (1999) already suggested and Coates and Humphreys (2002) as well a... ... middle of paper ... ...enefits could lead to results that could justify public subsidies for sport facilities. Especially considering the fact that local governments and public referenda, keep authorizing subsidies for sport facilities, despite the univocal fact that they have an economic impact on a geographic region that is negative in nature. To take a future look, it is not unreasonable to presume that the economic impact of professional sport franchises on a geographic region in the U.S. could shift from negative to positive, as new facilities will not have the sole purpose of giving a sport franchise a game 28 venue, but will also contain extensive entertainment, shopping and lodging complexes, similar to the upcoming City of Champions Stadium in Los Angeles. Additionally, the sports industry and thus the revenues of which grow constantly, while no decelerating effect is in sight. 29
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