Positive Externalities from Professional Football Clubs in the Metropolitan Rhine-Ruhr, Germany: Trickle-Down Effects Associated with Promotion and Relegation

Hyunwoong Pyun,Luca Matto,Jeeyoon Kim,Torsten Schlesinger

doi:10.3390/su12208638

Hyunwoong Pyun, Luca Matto + Show 2 more

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https://doi.org/10.3390/su12208638

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Abstract

Hosting sport events is costly, but the positive impact of hosting sport events has not been studied well. We consider the promotion of physical activity, known as the trickle-down effect, to be a new dimension of this kind of impact. Using exogenous variations in promotion and relegation in the Bundesliga 1, we test the effect of the presence of a Bundesliga 1 club on local non-profit football club membership. Using German city-level annual non-profit sport club membership data from the metropolitan Rhine-Ruhr, we group cities with experience of either promotion or relegation as treatment cities and other cities as the comparison group. Difference-in-difference analyses show that promotion (using a strict definition of promotion) of local professional football clubs increases non-profit football club membership by 14% while relegation does not affect membership. The presence of Bundesliga 1 clubs in a city increases non-profit football club membership by 11%. Falsification tests support the idea that the impact of promotion on membership results in a net increase in membership.

Highlights

Hosting a professional sport club can be costly for a city
We argue that exogenous variations from promotion and relegation cases will generate the most accurate estimates of the causal impact of a city hosting a professional football club on mass sport participation
We test whether the presence of a professional football club in Bundesliga 1 increases mass sport participation

Summary

Introduction

Hosting a professional sport club can be costly for a city. Evidence indicates that professional sporting events cause negative externalities, such as crime, traffic congestion and adverse impacts on newborns through environmental damage [1,2,3,4], resulting in substantial costs for the host city. Cities subsidize the funds for stadiums; for example, Duesseldorf financed the Merkeu Spiel Arena for 240 million Euros. These costs are borne with the expectation that the positive externalities of the professional sport club will outweigh the costs. Cities should pay attention to new, positive externalities to justify the costs and negative externalities of hosting a professional sport club

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