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Abstract
The National Hockey League (NHL) had a lockout that lasted the entire 2004-2005 season. Because this lockout cancelled the season, it provides a unique opportunity to analyze the economic impact on county employment and payroll in the sectors relevant to the sporting world. We test 3- and 4-digit NAICS codes, including Accommodation, Drinking Places, Restaurants, and Spectator Sports. Using the impact found in a county with an NHL team, relative to trends in the surrounding counties, we find no general impact on employment, but we find a decrease in payroll in some sectors.
Keywords: economic impact, NHL lockout, employment effects, public finance
Introduction
Local economies can be devastated when a local company shuts down. The jobs, and subsequent incomes, of those working within the firm are lost, even if the shut-down is temporary. In this study we measure the temporary (one year) shut-down of the National Hockey League (NHL) during its lockout year, 2004-2005, where the entire season was cancelled for the lockout.1 We establish a structure to measure the impact of this lockout, which allows us to separate out locational trends and time trends from the event itself.
The local economic impact of professional sports franchises has been studied by Baade and Dye (1988, 1990), Baade (1996), Baade and Sanderson (1997), Coates and Humphreys (2003), and Jasina and Rotthoff (2008). Most of these papers use Metropolitan Statistical Areas (MSAs) as a unit of observation.2 However, Jasina and Rotthoff (2008) use county-level data to estimate the economic impact of franchises entering or leaving at a more local (county) level, following the MSA analysis done in Coates and Humphreys (2003). Both Coates and Humphreys, and Jasina and Rotthoff find some positive impact, and in some cases a negative impact, of having a sports franchise enter an area (and vice-versa for franchises leaving an area). The general finding is that the area revitalization which occurs is due to a consumption shift from one area of town to another (moving the jobs near the stadium from other areas of town). This explanation is consistent with the story of how some sectors have a positive effect, but are offset by comparable negative effects in other sectors of the economy. We expand the research on the more local,...