The Effect of Public Subsidies to Professional Sports Franchises on Infant Health

In recent decades, all levels of government have provided tens of billions of dollars in public subsidies for the construction and operation of professional sports facilities.  The useful life of sports facilities appears to be declining, so these subsidies may increase in the future; in recent years stadiums and arenas roughly 20 years old have been replaced in Charlotte, North Carolina and Atlanta, and Georgia. Much of the economic research on these subsidies has focused on the (lack of) economic benefits generated by these teams and new facilities, little research has focused on the costs of the facilities to communities. Costs generated by professional sports teams include increased crowding and traffic, trash, noise, and increased crime, and increased need for policing, around the facilities.  Government subsidies also have costs.  Chief among these is the opportunity cost of government funds devoted to the subsidization of new professional sports facilities. If a local government heavily subsidizes the cost of building a new stadium for the local team, then funding for some other government provided service might be reduced.

We look for evidence of negative outcomes associated with this opportunity cost among new born children.  A growing body of evidence suggests that health endowment at birth has long-lasting effects on outcomes throughout childhood, adolescence, and adulthood,  and that \emph{in utero} events can affect birth outcomes (Currie,2011).  We analyze birth outcome data from the confidential version of the CDC's Natality Public Use Files from 2003-2011.  Since we know the county of residence for each mother we can link birth outcomes to the county and year in which new sports facilities opened. We contribute to the growing literature showing that specific adverse economic events, like plant closings (Carlson, 2015), and individual job loss (Lindo, 2011) can affect birth outcomes like birth weight.

Our regression models control for observable maternal characteristics and unobservable county and state level heterogeneity, and our results indicate that birth weights are lower in metropolitan areas in years when new publicly funded sports facilities opened, compared to births in metropolitan areas that did not provide these subsidies, and compared to birth weights in these same metropolitan areas in years when no professional sports facility subsidies were provided.  The results indicate that, in a metropolitan area the size of Los Angeles, if a $1 billion subsidy for the construction of a new sports facility were provided, between 75 and 161 additional low birth weight infants would be born in the metropolitan area in the year the new facility opens.  The mechanism through which these adverse health outcomes occur stems from the opportunity cost of $1 billion in new government spending. These estimates help to highlight the exact nature of opportunity costs associated with the subsidization of new professional sports facilities.