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Overstating King James’ Impact on the Cleveland Economy

2010 July 6
by Phil Miller

Meghan Barr, an AP correspondent from Cleveland, needs a lesson in economics in this article about LeBron James.

“James has been with Cleveland since he was drafted in 2003 but now is at the center of a high-profile pursuit by several NBA teams. The Cavs can offer him a longer and more lucrative contract under league rules, but other teams are trying to convince him that they are his ticket to the championships that have so far eluded him.

James has helped inject untold millions into Cleveland’s economy. His team, which had an average home attendance of about 11,500 the year before he joined, sold out every game in its 20,000-seat arena last season. Having arguably the NBA’s biggest star also has meant more television revenue and more jersey sales for the Cavs, and a higher profile for their often-maligned city.”

As you might expect after reading numerous stories like this one, Barr doesn’t consider the fact that the thousands of people in attendance at Cav’s games come largely from the city of Cleveland.  Had they not attended a Cav’s game, they would have spent their money elsewhere in the city.

What about the out-of-towners who go to Cav’s games?  They also probably came to Cleveland for some other reason – business, the Rock and Roll Hall of Fame (which still, IMHO, needs to induct Rush – a shameless plug, I know), to visit relatives, etc.  Had they not gone to a Cav’s game, they would have done something else in the city.

No doubt that some of the restaurant and bar owners around the arena have cause for concern, but I doubt the whole economy of the city of Cleveland is going to go belly up if Lebron takes his show elsewhere.

Via John Palmer

9 Responses
  1. Greg Pinelli permalink
    July 6, 2010

    LaBron..the Olympics..the World Cup…etc…these “events” are not moneymakers..any more than Billion dollar mega sports complexes. When a careful analysis is done it ALWAYS turns out that the benefits are exaggerated and the drawbacks and costs ignored or dismissed outright. The events leading up to the “final” decision are precisely like political campaigns…they involve heavy media attention and huge doses of spin control.

    My first real “aha” moment on this topic involved the San Francisco Giants paying unbelievable amounts of money to have Barry Bonds break the home run record. In the process of engaging in this fiscal disaster the Giants ability to compete as a team/franchise for the playoffs deteriorated every year. The farm system produced NO field players and real hard core baseball fans were replaced by picture taking, spectacle mongering non baseball people at AT&T Park.

    This is what I believe is the bottom line on James’ influence on the next team he takes money from..great regular season shows…large crowds..and feature television games where his next set of accomplices
    make him look good by letting him do whatever he wants! A lot like Cleveland with a different jersey.

  2. Yann permalink
    July 6, 2010

    In the first paragraph after your quotation, the important word is “largely” (assumption #1; only nonlocal spectators), and, in the second paragraph, the important word is “probably” (assumption #2; no “casuals”). In spite of them, the number of out-of-towners who exclusively go to Cav’s Games may be strictly positive, and so, ignoring other possibilities, the impact in question, no?

  3. Nick W. permalink
    July 7, 2010

    I also wonder if the arena was sold out because so many people thought this would be the last time they would see LeBron in Cleveland, and figured we should go watch the show while it lasts. Could having LeBron for many more years really keep the stadium sold out for all those years?

    On another note, Phil, I totally agree about the part with Rush (not to mention Deep Purple, and many other great bands). I go to Cleveland every year for a sport tournament I participate in, and I refuse to go to the Rock and Roll Hall of Fame until they induct Rush.

  4. beenlostonce permalink
    July 7, 2010

    Rush rules.

    They are like Bill Murray’s assessment of Tito Puente in “Stripes.” Once they are gone, EVERYONE is going to be saying they were down with them from the beginning.

    Signed,

    The Priests of the Temples of Syrinx

  5. July 8, 2010

    Why do you assume most of the people in attendance actually live within the city of Cleveland? Why not the suburbs and surrounding smaller cities neighboring Cleveland, where they might choose to spend their money instead on local businesses? I am not very familiar with Cleveland, but in my experience in Chicago a great many of the fans at Soldier Field were from Chicagoland not Chicago itself and made a special trip to Chicago just to go to a game rather than to visit their family.

  6. Phil permalink
    July 8, 2010

    Yann,

    I don’t deny that there are some people who travel to Cleveland and stay overnight etc. for the sole reason of watching the Cav’s/LBJ. But I’m skeptical that there are more than a mere handful.

  7. Nick Evans permalink
    July 9, 2010

    Are away supporters not a significant element of the crowds attending US major sports? Presumably this is an effect of the distances involved?

  8. Phil Miller permalink
    July 10, 2010

    @CM: I base my comment on the common finding in the econ literature that finds little if any impact on jobs and income in cities with major sports teams.

    @Nick: do you mean mega events or events like, say, regular season MLB games? Tourism is a bigger factor for mega events.

  9. Yann permalink
    July 11, 2010

    @Phil : Thanks.

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