Hockey Lockout's Penalty: Will It Bench City Economies?
With the NHL mired in a lockout, many have reported on the economic impact of a lost season. The overall cost includes millions of dollars in ticket sales and additional millions in food and beverage purchases. It even includes the loss of "that guy" who would have purchased that $200 customized jersey after a big win. He won’t be doing that anytime soon. And the person that would have sold him that jersey? He or she won’t be working until a resolution is reached.
An economist with North Carolina State University has pegged an approximate loss of 800 jobs and $46 million to the Raleigh, North Carolina economy due the loss of the Carolina Hurricanes season. That is more than $1 million lost per game in just one city
The latest loss to the NHL lockout is the Winter Classic, which was to be hosted at the University of Michigan’s Big House. Some are saying this is nearly as bad as losing a Super Bowl game in terms of the percentage loss to the total economy of the City of Ann Arbor. The city is losing as much as $30 million and the region will have to do without approximately $70 million.
What really happens though when a sports team or a major sporting event, like the Super Bowl or the World Series, comes to a city? It all depends on whom you ask.
Super Bowl XLII, hosted by Arizona State University in Glendale, Arizona was projecting an economic impact between $400 and $500 million. The reality: they surpassed all expectations and actually generated more than $500 million as a result of hosting the Super Bowl. NCF’s Rich Cooper blogged earlier this year about the real Super Bowl Winners in the New York Giants versus New England Patriots game in Indianapolis.
However, there are some economists who say that a sports team doesn’t actually improve the local economy; it simply displaces money from one sector to another. These economists argue that the money you spent on your Detroit Tigers-San Francisco Giants World Series would have been spent on another activity rather than put away in a savings account.
“As an extensive 2008 review of the peer-reviewed economic studies published over the past 20 years concludes: "No matter what cities or geographical areas are examined, no matter what estimators are used, no matter what model specifications are used, and no matter what variables areused, articles published in peer reviewed economic journals contain almost no evidence that professional sports franchises and facilities have a measurable economic impact on the economy."
What about a city hosting a losing team or a team trying to head for a new city?
When the Seattle SuperSonics were trying to depart for Oklahoma City, the team's ownership brought in an economist that testified that the departure of the team would have "no detectable economic impact" on the greater Seattle area.
Closer to home, watching the area around the Washington Nationals Baseball Park has been very interesting. I’m definitely on the side of those who believe that a sports team brings a boom to a city or, in our case, a neighborhood.
When I moved to Washington, DC in 2006, the area now occupied by the park was a series of warehouses and storage facilities. Now, the area around the park is in full development mode. Apartments and condos have been built and major companies have opened buildings full of staff. It’s truly a beautiful thing to watch the area transform into a hub of activity.