Journal of Sport Management. 1995. 9. 14-35 O 1995 Human Kinetics Publishers. Inc. Economic Impact Analysis of Sports Facilities and Events: Eleven Sources of Misapplication John L. Crompton Texas A&M University Many sports events, facilities, and franchises are subsidized either directly or indirectly by investments from public sector funds. The scarcity of tax dollars has led to growing public scrutiny of their allocation; in this environ- ment there is likely to be an increased use of economic impact analysis to support public subsidy of these events. Many of these analyses report in- accurate results. In this paper, 11 major contributors to the inaccuracy are presented and discussed. They include the following: using sales instead of household income multipliers; misrepresenting employment multipliers; us- ing incremental instead of normal multiplier coefficients; failing to accurately define_l_heimpactedarea;-in~l~ding106aIfpeetttter-4+f~~~e- . . - - - switcherslLanCmsuaI~sing~fudged~lti~~ff~g total instead of marginal economic benefits; confusing turnover and multi- plier; omitting opportunity costs; and measuring only benefits while omitting costs. In 1991, 65 of the 84 stadiums and arenas used by major league sports teams (77%) were publicly owned (Quirk & Fort, 1992). Only 4 of the 29 stadiums built since 1960 were constructed privately, and all domed stadiums, which have become the preferred facility, were built with public funds (Baade & Dye, 1990). A similar situation prevails in the minor leagues. For example, professional baseball at the minor league level is played in nearly 200 communities in the U.S., Canada, and Mexico. Over 90% of these teams play in stadiums that are publicly owned and operated (Johnson, 1989). The argument for the substantial public subsidization,which occurs with the characteristically favorable facility rental agreements negotiated with franchise owners, is strongly influenced by their ability to generate commensurate economic benefits to the community in excess of associated costs. For example, when city managers were asked to identify the benefits that their communities derived from minor league professional baseball, 85% cited economic benefits (Johnson, 1989). Thus, Baade & Dye (1990, p. 5) in the context of stadiums note, "In attempting John L. Crompton is with the Department of Recreation, Park and Tourism Sciences, Texas A&M University, College Station, TX 77843-2261.