Author: Siddharth Yerapotini and Aadit Bhavsar
Topic: Sports Economics
The sports industry is one that is growing in influence, and as a result, it is common to see substantial financial impact on the economy. From increased tourism to local business expansion, sports as a whole is now big enough to greatly impact a city’s economy, but even further, it can also alter an entire country’s economy.
There are several questions surrounding this topic, all of which will be investigated throughout this article. These questions can include doubts surrounding how large prestigious sporting events impact the economy in the short term and the long term, as well as how cities are impacted by the introduction of entirely new sports franchises over time.
In the sections to come, we investigate the impact of sports on local economies, examining job creation, venue construction, impact on local businesses, and more from the perspective of newly integrated sports franchises as well as individual mega-events in sports.
Sporting Events
First, let’s investigate the impact of major sports events around the world. Sporting events play a major role in the economy of many countries, leveraging the deep passion and everlasting loyalty of fans to peak excitement and hype during major events. Aside from the thrilling entertainment, many businesses see this as an opportunity to greatly expand on their profits, and many potential workers find lasting job opportunities. In this section, we investigate two of the greatest shows in the world – the Super Bowl and the World Cup!
Super Bowl LVI in LA
The 2021 Super Bowl LVI at SoFi Stadium in Inglewood delivered a mix of short-term economic gains and enduring debates about the value of mega-events. Hosted for the first time in Los Angeles since 1993 and featuring the hometown Rams – something that has only occurred twice in the Super Bowl – the game generated an estimated $234–477 million in regional economic activity, driven by visitor spending on hotels, dining, and entertainment. Over 150,000–225,000 hotel room nights were booked, contributing $12–22 million in local tax revenue, while small businesses in sectors like hospitality saw a much-needed post-pandemic boost.
The “Super Bowl LVI Teammate Program” created 2,200–4,700 temporary jobs in logistics, hospitality, and event operations, prioritizing local hires. While these roles provided immediate income, critics highlighted their short-lived nature and limited impact on systemic unemployment. Infrastructure investments centered on the $5 billion SoFi Stadium, a privately funded project expected to generate $670 million for Inglewood’s general fund over 25 years. However, public costs emerged through municipal coordination for transportation and security, which diverted resources from other community needs.
The Rams’ historic home-field victory amplified local engagement, with merchandise sales and watch parties spurring significant spending. This “home team effect” bolstered Los Angeles’ reputation as a sports hub, aligning with its 2028 Summer Olympics preparations as well. However, studies have noted that Super Bowls rarely produce sustained economic growth, as tourist spending often displaces regular visitors rather than creating net new revenue – after the Super Bowl and celebrations are over, much of this revenue goes away, decreasing to the levels of the regular NFL season for several years until the Super Bowl returns to that stadium.
Dr. Dre and Snoop Dogg’s halftime show celebrated L.A.’s hip-hop legacy, driving a 600% streaming surge for performers and pop-up events in affluent areas like Hollywood. However, smaller businesses in underserved neighborhoods saw minimal gains, underscoring persistent inequities in event-driven economic distribution. Particularly in areas such as L.A., where there are a widespread range of neighborhoods in terms of economic status, this is a persistent issue.
Academic analyses reveal consistent gaps between NFL projections and reality. Economists Brad Humphreys and Victor Matheson estimate net impacts closer to $92–150 million, far below league claims, due to substitution effects and revenue leakage. In Los Angeles, where tourism already generates $40 billion annually, the Super Bowl’s contribution represented a modest 1.2% sectoral increase.
While the game provided visibility and short-term stimulus, its legacy hinges on SoFi Stadium’s ongoing use for concerts, soccer matches, and other events. As Los Angeles eyes the 2028 Olympics, in which flag football will make its first Olympic appearance, balancing mega-event investments with community-driven development remains critical to ensuring equitable, long-term prosperity.
World Cup 2022 in Qatar
The 2022 World Cup in Qatar is another case of a major sporting event having a major impact on a local economy in the short term and the long term. Spending in preparation for the World Cup is estimated to be $200 billion across a decade. This money was used in developing every aspect of soccer that a nation can have. Qatar did not have stadiums that were able to handle the capacity of a single World Cup game, let alone an entire tournament’s worth of games. The stadium construction costs alone were $6.5 billion.
In addition to stadium construction, they had to do a full overhaul of the entire infrastructure of major cities to support tourism that would result from a World Cup. Qatar also put billions into the development of the players that would ultimately represent Qatar at the World Cup. They funded the Aspire Academy that went on to produce 18 of the 26 players that would play for the Qatar National Team in 2022. Needless to say, an immense financial burden was taken on by Qatar to hold the honor of hosting a World Cup. The benefit to the country is most visible in its increased prestige, but the true economic impact to the local economies is yet to be seen.
Financial costs previously mentioned were not the only cost that Qatar would face to host this tournament. The human labor required to prepare Qatar for the World Cup resulted in unfair treatment, dangerous working conditions, and, in many cases, death. While the exact death count is unknown, it is estimated to be around 6,000 while some news outlets claim an even higher figure. Conditions for all workers were very poor with many facing delayed or unpaid wages and were unable to leave the country to find work due to their status as workers. Others noted forced labor combined with hours of work in temperatures soaring above 100°F. The costs of preparing the country for the World Cup go far beyond just the monetary expenses.
In the short term, the Qatar World Cup made a significant positive impact on the economy. Tourism spiked, advertisement revenue came in, brands flew in from all over the world, and local businesses had more customers than they could ever handle. Neighboring nations also saw a temporary benefit as tourism spiked in these countries as well. The UAE saw a significant increase in tourism as a result of this World Cup. Tourism spending and other related revenue is estimated to be almost $4 billion accounting for 1% of Qatar’s total GDP for 2022. The rate of hotel bookings was up 276% from the previous year. Overall GDP grew by 4% and the construction industry grew 20%. A total of $20 billion was put towards the economy as a result of all factors surrounding the Qatar World Cup, showing that the money made is a major financial injection.
Understanding the long term impact of the World Cup on Qatar is not so simple. Building and maintaining infrastructure to accommodate a temporary tourism spike that results from an event such as the world cup, is not sustainable. Qatar is planning on tourism tripling in order to be able to justify the costs of having such infrastructure. While this goal is not impossible, it is unlikely and if it is not met then it makes these costs unreasonable. The stadiums used to host all the World Cup games are now out of commission and essentially serve no purpose. Qatar was hoping the World Cup would lead to a spread of soccer in the culture of Qatar but it has not had such an effect meaning the sport is still stagnant in the country despite the billions of dollars poured into it. The effect of the World Cup long term looks marginally negative—with the cons outweighing the pros more year by year.
Relocation of a Team
Another major sporting occurrence that can drastically change the local economy is the relocation of a franchise. The relocation of a franchise can dramatically impact the local economy and there are many factors that go into deciding where a team will go. Data is analyzed about how much of the population is in the target demographic, the median income of the area, whether or not there are other sports franchises in the area and more.
Furthermore, there are two big factors of the city that can impact how much the relocation of a franchise affects the local economy and that is whether it is a big market or small market city. Big market teams are teams in densely populated cities like Los Angeles, New York City or Boston. These teams are often better money makers as they have more of a population with more spent on merchandise, more advertising revenue and broader reach.
Small market teams are teams in less populated areas with less mass appeal like Oklahoma City, Charlotte, Green Bay and Buffalo. In these cities, the culture is often built around the team and the fans are very loyal as it feels more personal in these smaller areas. With that foundation in mind, we can begin to understand how the impact of sports franchises in these two types of cities can differ with two cases examining each situation. The Oklahoma City Thunder being the small market, and the Las Vegas Raiders being the big market.
Oklahoma City Thunder
In 2008 the Seattle Supersonics underwent a complete rebranding and relocation moving from seattle to Oklahoma City becoming the Oklahoma City Thunder. Being a small market team, fans in Oklahoma welcomed this move with open arms, even voting in a tax that allows public funding to contribute to the building costs of a new stadium. The fans are loyal and care deeply about the team and it shows in attendance and in the numbers.
The impact of this franchise on the city is not to be taken lightly. Moving out of Seattle cost the city more than $12 million directly from the loss. Seattle lost revenue that was directly picked up by Oklahoma City and it has completely changed the way Oklahoma City identifies itself culturally and through their economic output. As a result of the operations of the Thunder and the maintenance of Paycom Center, the Thunder’s arena, we see an economic impact of $590 million. This includes over 3,000 jobs created with nearly $300 million in labor income being supported. Tax revenue created alone is $30 million through arena, county, school district, and state taxes. The annual impact from tourism and visitor spending is estimated at $77 million, bringing substantial tourism revenue to a place that previously would receive very little.
If the Thunder reach the playoffs, the fans show out arguably more than any other fan base in the league. In the 2012 NBA Finals, the Oklahoma City Thunder took on Miami Heat and the fans showed out in such strong fashion they earned a reputation for being a very tough crowd to play in due to being the loudest fans in the league. Despite the Thunder losing that series, the fans showed their strength through the aforementioned crowd environment and economic benefit. In home playoff games, they experience an economic boom of $1 million per game as a result of stadium attendance, merchandise sales and visitor spending. Being a team in a small market, you may not generate the mass appeal but one thing is for sure, your local fans will be loyal to the bone and that will bring you sustainable revenue.
Long term, this relocation decision continues to be an undeniable success for Oklahoma City. Oklahoma City has seen a 7% increase in economic activity compared to pre-Thunder numbers and this figure is expected to continue to grow as the team becomes more established in the community. The introduction of the Thunder has benefited the community in different ways including the retention of young high earners, and the expansion of local businesses.
With substantial economic growth we see talented young workers opt to stay in Oklahoma City making the city a more appealing destination for other young workers and companies. Previously, the city had a problem of top talent consistently leaving the city in pursuit of more lucrative cities to live and work but that is being solved, in part, by the Thunder. With rising tourism, local businesses see sustainable growth in revenue leading to more businesses being created and more economic impact. All these factors snowball together to completely change the economic status of Oklahoma City making it more impactful, both financially and culturally as a residential and commercial hub.
Las Vegas Raiders
The relocation of the Las Vegas Raiders from Oakland to Las Vegas has brought about a significant economic transformation for both cities. Las Vegas has experienced a considerable economic boost, primarily driven by the $1.9 billion Allegiant Stadium. The stadium’s construction phase generated approximately 18,700 job spots, and its ongoing operations are projected to sustain or create around 6,000 permanent jobs in Southern Nevada. This job growth has contributed to an 11.7% increase in Las Vegas’s resident population between 2018 and the end of 2022. Although other factors may have contributed to this immense increase, it cannot be denied that the job creation by the Raiders played a significant role.
Tourism in Las Vegas has also surged. Allegiant Stadium ranked as the top stadium in the U.S. and second globally for live events in 2024. In the past year, it attracted 657,000 fans across 15 major events, generating $119 million in ticket sales. Since opening to full capacity in July 2021, the stadium has been linked to $2.29 billion in revenues and out-of-town visitor spending. This includes direct spending at the stadium and visitor expenditure at hotels, casinos, and restaurants. Overall visitor volume to Las Vegas reached 41.7 million in 2024, a 2.1% increase from the previous year. Hotel occupancy rates averaged 83.6% in 2024, which is among the highest figures in the nation.
In contrast, Oakland has faced economic setbacks. Following the Raiders’ departure, the labor force population in Oakland’s accommodation and food services sector decreased by 9.68%. By June 2020, Oakland still had nearly $190 million due from the Raiders for an unpaid loan from 1995 . While the immediate economic impact was negative, Oakland is focusing on redeveloping the Coliseum site, with a potential $5 billion project that includes housing, a convention center, hotel, restaurant, and a sporting arena . The city sold its 50% stake in the Coliseum to the African American Sports and Entertainment Group (AASEG) for $105 million, with plans for AASEG to acquire the remaining 50% from the Oakland A’s. With the departure of the Raiders, the Oakland Athletics, and the recently-dominant Golden State Warriors, Oakland’s sports scene has taken a dramatic hit, and the city has a lot of work to do to regain the revenue they previously earned through sporting events.
The long-term implications suggest continued growth for Las Vegas, aiming to diversify its economy beyond tourism by leveraging its new status as a sports and entertainment capital. Oakland, while facing an immediate economic void, is looking towards redevelopment and attracting new businesses to revitalize its economy. The Raiders’ move has undeniably created a tale of two cities, with diverging economic trajectories.
Conclusion
Sport is at the heart of culture in America. We play sports as kids and we love the game far into our adult lives. The love for the game is something that will persist in America and as a result, it will always have significant financial impact. It is clear that sporting events are significant enough to people that it causes a substantial spike in jobs, revenue and the overall economy in the short term. For events like the Super Bowl where the infrastructure to host is already in place, we can see that these short term benefits to the economy tend to be the main impact left behind even in the long term. In these cases, the prestige is worth the cost because there is also significant financial return.
For events like the World Cup, however, the infrastructure required for this is very specific to this event and cannot be utilized the same after. This means in the short term there is great financial benefit but in the long term the costs are no longer justified and the impact is less positive. In these cases, it is a double edged sword and the short term financial gain may not be worth the long term loss.
In the case of franchise relocations, we’ve seen that the relocation of a team greatly benefits the recipient city and sees the city that was left behind lose millions of dollars. This was the case in Seattle and Oakland, as we previously mentioned. Sports fans can essentially sustain local economies by passionately supporting their favorite teams because the love for the game does translate to economic benefit, whether it’s a small or big market.
References
CBS News. (n.d.). Report: Super Bowl LVI will bring up to $477 million to LA economy. https://www.cbsnews.com/losangeles/news/report-super-bowl-lvi-will-bring-up-to-477-million-to-la-economy/
LA Super Bowl Host Committee. (2022). Super Bowl LVI economic impact report summary [PDF]. https://lasuperbowlhc.com/wp-content/uploads/2022/01/Super-Bowl-LVI-Economic-Impact-Report-Summary.pdf
International Monetary Fund. (2024). World Economic Outlook Update: January 2024. https://www.elibrary.imf.org/view/journals/018/2024/011/article-A001-en.xml
Kottasová, I. (2022, November 29). Qatar defends World Cup worker death toll amid criticism. CNN. https://www.cnn.com/2022/11/29/football/qatar-world-cup-migrant-worker-deaths-spt-intl/index.html
Tang, Y. (2024). The impact of hosting mega sporting events on local economies: A literature review. International Journal of Social Science and Humanity, 14(5), 203–207. https://www.ijssh.net/uploadfile/2024/IJSSH-V14N5-1225.pdf
Tinkle, C. (n.d.). The Economic Impact of Major Sports Events on Host Cities. University of Arkansas Undergraduate Honors Theses. https://scholarworks.uark.edu/cgi/viewcontent.cgi?article=1000&context=econuht
VelocityOKC. (2023). Annual economic impact of the Oklahoma City arena estimated at $590 million. https://www.velocityokc.com/blog/economy/annual-economic-impact-of-the-oklahoma-city-arena-estimated-at-590-million/
OKC FOX. (2024). OKC expects economic boost as Thunder reaches NBA playoffs. https://okcfox.com/news/local/okc-expects-economic-boost-as-thunder-reaches-nba-playoffs-after-years-oklahoma-city-basketball-thunder-nation-money-boost-sue-hollenbeck-special-projects-manager
BetMGM. (n.d.). How much did Allegiant Stadium cost to build? https://sports.betmgm.com/en/blog/nfl/how-much-did-allegiant-stadium-cost-to-build-sgc/
Review-Journal. (2020, August 11). Allegiant Stadium construction surpasses community benefit goals. https://www.reviewjournal.com/business/stadium/allegiant-stadium-construction-surpasses-community-benefit-goals-2115715/
Review-Journal. (2020, July 31). After 993 days of work, Allegiant Stadium is mostly done. https://www.reviewjournal.com/business/stadium/after-993-days-of-work-allegiant-stadium-is-mostly-done-2085151/
Federal Reserve Bank of St. Louis. (n.d.). Las Vegas-Henderson-Paradise, NV (MSA) population. https://fred.stlouisfed.org/series/LSVPOP
Katsilometes, J. (2024, March 28). Allegiant Stadium named top US entertainment venue of 2024. Las Vegas Review-Journal. https://www.reviewjournal.com/entertainment/entertainment-columns/kats/allegiant-stadium-named-top-us-entertainment-venue-of-2024-3264215/
LVSportsBiz. (2023, December 26). Raiders’ Chief Financial Officer explains how NFL team generated $2.29 billion in economic impact since July 2021. https://lvsportsbiz.com/2023/12/26/raiders-chief-financial-officer-explains-how-nfl-team-generated-2-29-billion-in-economic-impact-since-july-2021/
City of Oakland. (n.d.). Economic Impact Analysis of Sports Teams in Oakland [PDF]. https://cao-94612.s3.amazonaws.com/documents/oakland-economi_52220446-2.pdf
Kingsbarn Realty Capital. (n.d.). Economic impact analysis of Las Vegas events and investments. https://admin.kingsbarn.com/NewsFeed/details/12373