Here in the States, the major sports leagues (MLB, the NBA, NFL, and NHL) are all closed leagues. League membership is determined by league membership. If a league is to expand, it has to be voted on by the incumbent members. It has been argued that because of this closed format, leagues limit the number of cities that have teams and limit the number of teams in cities.
The theory of monopoly leagues says leagues will limit output (i.e. the number of cities with teams and teams within cities) in order to maximize the local market power held by each team. This allows the teams to charge higher ticket prices/fees*, obtain higher local media rights fees, and to extract higher subsidies from willing pols. Those pols, playing with other people's money, are afraid of their appearances to voters if a team leaves or if they fail to obtain a team. Teams, knowing this full well, milk it for all it's worth. They then engage in a prisoners' dilemma game to try to try to get/keep from losing teams. From NPR:
It's a story that could have been told in almost any American city over the past two decades. Owners of teams in the "big four" sports leagues — the NFL, MLB, NBA and NHL — have reaped nearly $20 billion in taxpayer subsidies for new homes since 1990. And for just as long, fans, urban planners and economists have argued that building facilities for private sports teams is a massive waste of public money. As University of Chicago economist Allen Sanderson memorably put it, "If you want to inject money into the local economy, it would be better to drop it from a helicopter than invest it in a new ballpark."
Studies demonstrating pro sports stadiums' slight economic impact go back to 1984, the year Lake Forest College economist Robert Baade examined thirty cities that had recently constructed new facilities. His finding: in twenty-seven of them, there had been no measurable economic impact; in the other three, economic activity appeared to have decreased. Dozens of economists have replicated Baade's findings, and revealed similar results for what the sports industry calls "mega-events": Olympics, Super Bowls, NCAA tournaments and the like. (In one study of six Super Bowls, University of South Florida economist Phil Porter found "no measurable impact on spending," which he attributed to the "crowding out" effect of nonfootball tourists steering clear of town during game week.)
Meanwhile, numerous cities are littered with "downtown catalysts" that have failed to catalyze, from the St. Louis "Ballpark Village," which was left a muddy vacant lot for years after the neighboring ballpark opened, to the Newark hockey arena sited in the midst of a wasteland of half-shuttered stores.
And why do teams ask for subsidies? Because they can.
Jim Nagourney, who spent three decades negotiating stadium deals on behalf of government agencies and team owners, describes how he helped snooker city officials as a consultant to the Los Angeles Rams, who were then negotiating a move to a new stadium in St. Louis. "We had a whiteboard, and we're putting stuff down" to demand in a stadium lease, he recalls. "I said, 'Guys, some of this is crazy.' And John Shaw, who was president of the Rams at the time — brilliant, brilliant guy — said, 'They can always say no. Let's ask for it.'" The result, which Nagourney calls "probably the most scandalous deal in the country," included a clause requiring the new stadium to remain "state-of-the-art," or else the team could break its lease and leave. "The city was poorly represented — the city is always poorly represented.... We put in all of these ridiculous things, and the city didn't have the sense to say no to any of them."
Here's what I wrote about this ST Rams situation several years ago.
There is no mention of job creation or wage improvement in the article. Instead the article sums up the decision to subsidize construction of the Edward Jones Dome ($280 million from 1993-1995) in St. Louis thusly: 1. Professional sports brings prestige to a community; 2. The people in the community felt like losers when other professional sports teams left the area; 3. It's government's job to do things to make life a complete and fulfilling experience; 4. We were jealous some other community was going to get a team and their officials were going to gloat.
Economists are still studying the value-of-civic-pride-angle regarding sports teams, and there's still some economic analysis being done on the jobs/income angle. But even though there is still some research being done on the economic development angle, there's a strong consensus amongst sports economists that throwing money at sports teams is a terrible economic growth policy. As Allen Sanderson of the University of Chicago once said (paraphrased) "The biggest wastes of land are graveyards and sports stadiums." At least the St. Louis pols noted in that post didn't mention the jobs and income angle as a motivator for public funding.
*Earlier this summer, my wife and I took our kids to a Milwaukee Brewers game (and, later, to Chicago) for a trip to celebrate Eldest's birthday. After splurging on nice tickets, I was given an option to print my tickets at home and another to pick them up at will call. I don't remember the exact amount, but the Brewers charged me around $2 - $2.50 for the print-at-home option and $4 or so to use the will call window. I can understand why will call would cost more than print-at-home, but why would print-at-home cost more than X→$0?