Date of Award

Spring 2020

Degree Name

Bachelor of Science (BS)

Advisor(s)

John Fortunato

Abstract

The purpose of this research is to study the effect of a sports franchise and its stadium on the local economy in which the franchise resides. This paper seeks to further expand the research already conducted on this topic by analyzing the effects the departure of the NFL’s Chargers and Rams had on the economies of San Diego and St. Louis, the respective cities for which each franchise previously called home. The paper begins with an introduction to the current state of the sports industry, specifically the NFL, and discusses the relevance of relocation and expansion franchises in the four major sports leagues today. The main research questions of this paper are: Did the local economies of San Diego and St. Louis perform better after the departure of the Chargers and Rams, respectively? Is the departure of the NFL franchises statistically significant on increased positive (or negative) economic activity on the local communities of San Diego and St. Louis? A literature review is then conducted to connect the existing research on the topic and build a hypothesis for the current research. In order to test the impact that the departure of the Chargers and Rams franchises had on their local economies, a quantitative analysis must be conducted. A regression analysis monitoring local economic variables over the time period 2012 to 2018 was run to test my research questions. The goal is to identify if there is any significance of the departure of the franchise on the positive (or negative) economic performance San Diego and St. Louis experienced following the relocation. Overall, the economies performed better over time, following the departure of each franchise. After running a regression model including the economies of San Diego and St. Louis, the results show that the instant effect of the departure of each franchise was negative on the rate of growth of GDP in each economy, meaning the departure slowed economic growth. The estimated coefficient for the dummy variable “Franchise” in the regression model was negative but was not statistically significant. Thus, the departure of the Chargers and Rams was not significantly impactful on the improved economies of San Diego and St. Louis. Possible reasons for not having a significant impact include small data set available, the franchises and city involved in the regression analysis, and the general minute impact of sports franchises on local economies. Professional sports franchises and stadiums are likely not the best way for local governments to jumpstart the economy, but sports franchises provide other local benefits that cannot be measured in the economy.

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