From public goods theory to municipal capitalism: Evaluating investments in sport venues from an urban entrepreneurial perspective

Abstract

ABSTRACT Using public goods theory as a guidepost, scholars have correctly observed that subsidies for sport venues are a product of the monopolistic structure of major sport leagues. Without challenging the observation that economic rent is being extracted from cities, we utilize the municipal capitalism framework to explore the ongoing appeal of teams to cities. We note that rising levels of economic segregation required local officials to aggressively pursue partnerships to offer competitive club goods that deflect regional economic activity into their taxing jurisdictions. After reviewing 116 published academic papers to establish the two frameworks (public goods and municipal capitalism), we use three previously studied case studies to assess outcomes in light of a municipal capitalism perspective. This permits us to provide insights into the use of various sources of public capital to deflect economic activity with the potential to enhance economic development and tax revenues. The work also identifies the need for additional research to compare and contrast classical public goods theory, municipal capitalism, and local government initiatives in an era of “fend for yourself federalism.”