Academic journal article International Journal of Sport Finance

NASCAR as a Public Good

Academic journal article International Journal of Sport Finance

NASCAR as a Public Good

Article excerpt

Abstract

This paper looks for evidence that either a NASCAR track or NASCAR-sanctioned event influences the monthly rents on residential units. The evidence is mixed, varying with the treatment of housing units located in or out of central cities of standard metropolitan statistical areas (SMSAs), as well as the manner in which missing housing and community characteristics are treated in the analysis. The results are reasonably clear that the presence of a track by itself has little effect, especially on housing units outside the central city of an SMSA. Specific types of races largely appear to have no impact, though in some specifications, the central city and non-central city impacts are about equal but have opposite signs. Overall, we must conclude that our results reject NASCAR as a source of either large benefits or costs to residents of the host community.

Keywords: economic impact, hedonic regression, NASCAR

Introduction

When the National Association for Stock Car Auto Racing (NASCAR) began in 1948, it organized a sport based almost entirely in the Southeastern United States. Some of the first tracks on which NASCAR competed were in North and South Carolina, Alabama, Georgia, and Florida. Almost 50 years later, NASCAR had seen little change in its relatively small fan base and began to search for ways to gain mass appeal.

One of the most successful endeavors used by NASCAR to expand its fan base during the mid- and late-1990s was the introduction of additional race tracks in large metropolitan areas, including those in Homestead, Florida; Las Vegas, Nevada; and Fort Worth, Texas. Although largely abandoned in the past five years, track construction by NASCAR has recently enjoyed a resurgence in popularity. The organization has approached, in regards to building a new track, areas such as Seattle, Washington; Staten Island, New York; and Denver, Colorado. Unlike in the past, however, proposed funding for the ventures has involved the use of a significant amount of public funds. For example, the proposed track in Kitsap County, Washington, would have cost state taxpayers almost $190 million.1

Like all large building projects, race track construction faces opposition from local residents. There are a growing number of people convinced that the only things an automobile race track brings to an area are event-day traffic and the unpleasant roar of 30,000+ horsepower. Traffic and noise and the congested streets associated with thousands of visitors affect everyone in the community. These circumstances are non-rival in consumption, meaning that no one's experience with them is reduced by anyone else experiencing them. This is the key attribute of what economists describe as a public good, though in this case it is really a public "bad." Proponents of new tracks, however, point to economic welfare as a reason to build. They argue that a race track would boost the local economy by providing jobs and introducing new tourist revenues. In addition, the track and the hosting of prominent racing events may produce community pride, a sense of identity, and free advertising for the community. These are also public goods attributable to the track. The question for policymakers is, "Do automobile race tracks really generate enough local economic welfare from increased jobs, incomes, and from beneficial public goods to overcome the losses in welfare generated by harmful public goods and justify their publicly funded construction?" This paper seeks to answer that question.

The nature of NASCAR events also allows us to separately address two issues related to sports-led development. First, NASCAR-sanctioned tracks hold only a small number of races, each of which could be likened to a mega-event. For example, the Daytona International Speedway, one of the most well-known NASCAR tracks, holds only two events each year in the Cup Series, the most prominent division in NASCAR, and only five total in the top three NASCAR Series (Cup, Grand National, and Truck). …

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