Stadium Games: Publicly Financed Stadiums and Their Impact On Gate Revenue Forecasts



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Over the course of the last two decades there has been a great period of stadium construction amongst the four major American sports leagues. The bulk of the funding for said construction has come from public sources. Amongst politicians, taxpayers and economists there has been significant debate as to whether the public financing of these stadiums is a prudent public policy decision. Arguments in favor of public financing for sports stadiums have hinged on the assumption that the construction of new stadiums will have a positive impact upon revenues. Our study looks to investigate the validity of this assumption. We seek to determine the best methods of forecasting gate revenues both in the wake of a newly built stadium as well as in a period many years after their construction. From these results we hope to glean some useful information regarding the impact of newly constructed stadiums on demand for professional sports. Our results suggest that new stadiums provide a significant and positive shock to gate revenues. However, these shocks are not permanent and tend to wane over time.



Forecasting, Structural Breaks, Stadium, Publicly Financed Sports Stadiums