Building costly museums and stadia are expected to bring with them economic gains, but the evidence tells another story.
This urban myth comes from one of my favourite books, Shoeless Joe by W. P. Kinsella, about an indebted farmer who builds a pristine baseball diamond in the middle of his cornfield in Iowa. Everyone thinks he is crazy, but ghosts of legendary baseball greats come and play on the field, and real people drive for hours and pay real money to see the games, literally saving the farm.
In reality landmark projects are usually grounded in more than just optimism. It stands to reason that people will be drawn to visit cities that have gorgeous new museums, concert halls, or stadiums. They will come, pay real money to local businesses for entertainment and hospitality, and provide a new revenue source to local businesses. The Guggenheim in Bilbao is the poster child for this approach to regeneration.
But the perceived success of ‘the Guggenheim effect’ is both tricky to determine and replicate.
Cities around the world are littered with expensive, iconic projects that promised transformation and failed to deliver. I won’t list them (but you can look here if you can stand it), as they lack in holiday cheer.
The What Works Centre for Local Economic Growth in which Centre for Cities is a partner undertook a comprehensive review of the evidence base on the impact of sports and cultural projects on local economies in 2016 and in summary concluded:
In terms of economic growth, policymakers should have realistic expectations of the impact of major events or new facilities. There are may be many good reasons to support these, but the evidence suggests that lasting economic impacts are minimal.
The review found very few robust evaluations – notably, none of the much-touted ‘Guggenheim effect’. The few robust studies we did find were of sporting facilities, and the only notable impact was on property values near a new facility (a win for homeowners once again).
There are a few other reasons to be extra careful in weighing up the benefits of large sporting or cultural property-based projects:
The take-away from all this: less glamorous investments in people such as better education and training are much less costly and can be targeted directly toward the people who need it most – and won’t leave white elephants behind.
The What Works Centre for Local Economic Growth has a wealth of information and evidence on what can support local economies to thrive.
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