Why does not a professional sport team impact local economy, or does it? : An explanation and extension from earlier studies in Sweden

Sammanfattning: Subsidies to professional sports teams remain a controversial issue, and in most European countries these subsidies have decreased over the past decades. However, in Sweden they are a common occurrence, municipalities are giving generous amounts of money to their local team. To justify these subsidies, proponents of sports team claim their great economic impact on the local area. Nevertheless, in the sport economic literature, most of the researchers cannot find any positive impact and some of them even find negative impact from a hosting a professional sports team. This study will give an explanation and extension to the earlier articles about sport economics written in Sweden by Emelie Värja (2014) and Lars Behrenz (2009). In this essay we will present two models. The idea behind our first model is to investigate if professional sport events should be considered as a substitute to other leisure activities. This model indicates that there is a substitution effect between ice hockey games and cinema admissions in Sweden. The outcome from our other model which studies the condominium market strongly contradicts the generous sport subsidies given by Swedish municipalities. The results indicate that the presence of a professional ice hockey team lowers the condominiums prices.