Economics of pulling NBA All-Star Game from Charlotte overblown, but still power in shame

The NBA finally made it official last night that it was moving next year’s All-Star game out of Charlotte in protest against North Carolina’s law banning both LGBT antidiscrimination laws and people using bathrooms that don’t match their “birth gender,” and this is how the New York Times chose to lead its story:

The National Basketball Association on Thursday dealt a blow to the economy and prestige of North Carolina by pulling next February’s All-Star Game from Charlotte to protest a state law that eliminated anti-discrimination protections for lesbian, gay, bisexual and transgender people.

Prestige? Definitely. If anyone in the nation didn’t already think of North Carolina as “that state where they check your birth certificate before letting you pee,” they sure will now. Economy? Meh.

I’ve covered the myth that big sports events create a massive benefit for local economies at length both here and elsewhere — short version is, yes, having lots of people come to town for a few days generates some more economic activity, but not that much, since 1) a lot of the money goes straight to league pockets without landing in the local economy (leakage) and 2) everyone else steers clear of town those days who would otherwise be there, which cancels out the new visitors (substitution). How much is an All-Star Game actually worth? For the 2014 All-Star Game in Minneapolis, the estimate of new economic activity in the state was $21 million to $55 million; for the 2010 All-Star Game in Dallas, the estimate is zero. (And note that this is total economic activity; for actual tax revenue received, move the decimal point over at least one place.) The numbers might be a bit higher if you just looked at city economic activity rather than state, but “Now that Charlotte won’t have the NBA All-Star Game it won’t be able to cannibalize spending from Raleigh!” isn’t exactly the best rallying cry.

But that’s actually fine — the point of maneuvers like this is less to hit local politicians in the pocketbook than to not allow them to play in any reindeer games. I used to know a lot of people in the international anti-apartheid movement, and they always said that one often overlooked piece of the decades-long struggle to force South Africa to allow blacks basic human rights was the international sports boycott: White South Africans, it turned out, could put up with constant protests and world economic sanctions and even guerrilla attacks better than they could with having their soccer and rugby and cricket teams locked out of those sports’ World Cups. It wasn’t the only factor by a long shot, but it did play a key role in getting F.W. de Klerk and his generation to the negotiating table.

North Carolina isn’t being shut out of competing nationally, of course, it’s just losing an All-Star Game that, frankly, nobody really cares about. It’s still shame, though, and makes me wonder what would happen if, say, the NBA refused to let any of its teams play regular-season games in Charlotte on the same moral grounds. That would be fascinating to see, and while I don’t really believe it’s going to happen, it would certainly be putting the league’s money where its mouth is.

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33 comments on “Economics of pulling NBA All-Star Game from Charlotte overblown, but still power in shame

  1. In regards to Charlotte home games: you see Neil that will never happen because then money woukd be leaving the other 29 owners not just the one in Charlotte, and what we know about the professional sports owner is this: they never ever ever lose money.

  2. My idea was to make the Hornets play as a road team until the law is repealed.

  3. Any thoughts on the impact of the MLB All Star Game vs the NBA one? Baltimore Orioles fans believe that they lost the chance to host this year due to the ongoing dispute with the Nationals over broadcast rights.

    1. Well, Camden Yards holds about twice as many people, so the economic impact should be approximately bupkis times two.

  4. The NBA needs Charlotte more than Charlotte needs the NBA. Zero chance that the NBA tries any power moves with the Hornets.

    1. Why does the NBA need Charlotte? It’s done perfectly well without Charlotte–twice.

      1. Exactly. The league is looking at any excuse to put a team back in Seattle….assuming they ever get the arena thing figured out. But behind closed doors, the league probably secretly wishes that at least one of the deep south teams (New Orleans, Memphis or Charlotte) start having discussions with one Chris Hansen. And this is coming from someone who pushed hard for expansion to Charlotte after the original Hornets moved to New Orleans….

        1. @ Trueblood,

          I’m not sure if this is a sign of things but it seems to me anyway, that Seattle might not be getting an NBA team again after the news that the Supersonics longtime play by play voice Kevin Calabro joined the broadcast team for the Portland Trail Blazers.

          Also (someone can correct me if I am wrong), is there any chance that the Timberwolves might move out of Minnesota within the next five years? That might be Seattle’s best bet for landing an NBA team. More so than prying away the Hornets, Grizzlies or Pelicans.

          1. So long as Chris Hansen is involved, Seattle will not be getting a team.

            Funding the anti-arena vote in Sacramento was dumb and vindictive. Getting caught at doing it was straight-up stupid.

            Going from past experience, the NBA is pretty much okay with dumb and vindictive, but it usually tries not to sell its teams to stupid people.

          2. Matt, the answer is no. T-Wolves owner refused to sell to anyone who might move the team, and reportedly will also sell a chunk to Kevin Garnett to make sure the person who does own the majority after he dies keeps their word.

  5. All-Star Weekend, on the other hand, brings $100+ million of additional economic activity to a city. That’s the one regularly scheduled NBA event where the League has leverage over a city.

    1. Ben, did you not read the numbers directly above that show the economic activity as $0-55m?

      Or are you saying that it’s $100m for a city, not a state? If so, that’s possible, but the NBA doesn’t need leverage against Charlotte — Charlotte already passed an LGBT anti-discrimination law, which the state then overruled with its own law.

      1. I SWEAR I actually heard the $100M number on NPR this AM. No idea where they got the number and I can’t find it online so maybe I was still in a dream state. But as son as i heard whatever number it was, i chuckled and thought of FoS and the bupkis numbers that are thrown around.

        1. Maybe it wasn’t NPR. Possibly CNN citing the “visitors authority”:

          “The NBA’s decision to pull its All-Star Game out of Charlotte means an estimated loss of $100 million to the city’s economy.

          The city’s visitors authority said tourists were expected to spend as much as $60 million and rent hotel rooms for a total of 27,000 nights during the All-Star weekend.

          The influx of cash would have also triggered a $40 million spending spree by Charlotte businesses and the employees of its hotels and restaurants, the authority figured. ”

          1. Thanks for the link.

            But “expected to spend” is not the same as actual data.

            And the fact that the apparently vast number of people who were coming to Charlotte to spend that $60m (which is $3,000 per attendee, assuming all 20k are coming from somewhere else and will spend that much – which I think is dubious at best) will trigger an additional $40m in ‘spending’ is also a little vague.

            On what will this spending be made? Overtime? Hiring new staff? Since the restaurants don’t just sell service, but product as well, it seems likely that at least half the expected restaurant “boom” will in turn be funnelled out of the local economy to the suppliers of same (which are often non-resident businesses). So that $40m in “expected” local business spending, if it even exists, will be funded not by goodwill, but by the $60m in expected tourist spending. The two figures are not cumulative benefits, in other words.

            It’s true that hotels are likely to be either full or more full than usual, but I’m not clear on how that is a benefit for anyone but the hotel owners?

            Some parasitic tax revenue will be generated for the local governments (which may or may not already be spent), but a windfall for hotel and restaurant owners is not necessarily a windfall for all local businesses. Nor is there any guarantee that the majority of the ‘actual’ economic benefit generated will stay in the community. The newly prosperous hotelier may decide to visit Disneyland (or EuroDisney) with his windfall, or buy a nice Italian made car, not raise wages for his workers or hire additional staff. Or s/he may simple keep the newfound revenue in their bank account, which benefits no-one else at all.

            If 20,000 people turn up for this event and book three nights in a hotel at $300/night; and the ‘local’ hotel tax is 12%, the local economy sees a shade over $2m as a result. You can add in restaurant and rental car taxes and anything else you’d care to think of, and then double the calculated impact from same, and you still don’t get to $25m, much less $100m.

            How many of the hotel nights booked or restaurant meals eaten will happen within the NBA controlled economic zone? It’s possible (if not likely) that those benefits will accrue entirely to the NBA, leaving nothing but added police/service costs for the local economy.

            People coming in from outside the area will absolutely leave some money behind… it’s not at all clear who benefits from this or how much, however.

    2. I think we ALL know these sources & sites lie considerably about economic benefits; especially since there’s never any real specifics.
      They also leave out the specifics of typical spending of that given day/time, probably because the real boost is so mediocre it’s pointless/embarrassing.

  6. I self-indentify as a cat. I asked them to put a litter box in the bathroom at Pepsi Center, but so far it’s a no-go.

    1. Directly or indirectly….you hit on one of the major cylinders in the debate.

      Humor aside….some need to really do some digging as to who the NBA is going to bat for, even with this gesture. If only because, they are doing the right thing…but maybe not for the best of reasons. Not wanting to start a range war with anyone on this site…but Mike, you brought something to light which the NBA missed, by proxy.

  7. Neil,
    Respectfully, I expect sensationalist phrases from other sites, not yours. The restroom issue is a smaller part of the legislation (but often more publicized part). The more serious concern is the removal and prohibition of employment protection and anti-discrimination measures for the LGBT community. The Times got that right in the quote (but obviously not the economic part).

  8. This just in:

    “The law has also forced the cancellation of men’s basketball and field hockey matchups between Duke and Albany, a New York public university that’s travel to Durham was put on ice by a state order that halts all travel to North Carolina that is funded by the public.”

    1. Neil,

      While that boycott is understood, why is the NCAA not taking strong action against their member schools which have become [as reports on NPR, CBS, et al have confirmed] places where some male athletes have turned their personal hunting grounds towards females [be they athletes or otherwise]? And we are not just talking about just cutting scholarships or appeasing settlements..but real action.

      There are other issues that are associated with the above…and will not use this space to vent those out on you, Neil. But the above needs to be put forward, in that if the NCAA and members are fighting on this front…..why not the others as well.

  9. Consider the rag that the quote was pulled from, they have their agenda and being able to beat down those who aren’t in Nazi-like lock step will be beaten down until they comply is part of the Sulzberger ego trip.

  10. I’ve met people who actually do travel to the NBA all-star game. Most were rappers and ghetto strippers. Don’t know if they actually went to the game but they all ways make it to the local strip club.

    1. I’m not sure who that’s supposed to be stereotyping (or what a “ghetto stripper” is — do poor people strip differently, with a pole made out of old wrapping paper tubes or something?), but if it were true, it would actually be good news for All-Star Game impact. I’d bet a way higher share of strip club dollars are recirculated within the local economy than NBA ticket sales.

  11. Has nothing to do with color or economic level. More to do with life style. They also followed Floyd May weather fights.

    1. “Ghetto” has nothing to do with color or economic level? Clearly I don’t get this new lingo you kids today use.

  12. I think it’s more about money-greedy NBA hearing their league in the same sentence as “Charlotte,NC” & worrying about losing a dollar from people boycotting NC & the ASG, than “doing the right thing”. It would be nothing but negative daily 24/7 press.

  13. Sadly, sports are still segregated in South Africa:

    – Rugby is played by whites.

    – Soccer is played by whites.

    – Cricket is played by those who are beaten up by soccer and rugby players.

    Seriously, though; one of the few places South African soccer players (mostly blacks) were allowed to play was the old NASL in the US and Canada.

    To this day, South African soccer is still underachieving. South Africa was the first country not to make it out of the first round as the host.

  14. Example : When rims on car worth more than car. If you drive a new car and live rent free with mom. If you spend more money on getting high than rent. If drama follows you everywhere. If your a guest on Jerry Springer. You might be ghetto.

  15. To put the unimportance of the economic impact of the NBA all-star game into perspective, let’s assume that the $55 million impact stated by Neil early in this thread is real. Let’s further assume that all $55 million goes directly into the pockets of the 2.38 million folks living in the metro Charlottte area – a totally bogus assumption. That works out to $23 per metro Charlotte area resident or $92 for a family of four. Wow, will that drastically change the economic status of the residents! And in another 30 years or so, this event will be repeated. Now that is a sustainable and repeatable source of income! Whoopity doo! When you factor in the substitution effect and that most of the money goes to already very rich people, the ultimate net effect will not even be noticed. This same train of thought applies for the Olympics, the Super Bowl, the NHL all-star game, the MLB all-star game, etc.

    North Carolina passed a stupid law, but whether or not the NBA all-star game is played there matters not.

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