Field of Schemes
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April 05, 2008

Rose-colored glasses day at Comerica Park

Crain's Detroit Business has a story this week about the impact of the Detroit Tigers on the local economy, and if you were hoping for a hard-hitting analysis of economic benefit claims, you 1) don't realize how ga-ga news writers go when sports is involved, 2) haven't been following how economic impact claims seldom get close examination from the news media, even those specializing in economics, and 3) didn't notice that the story ran in a Crain's section titled "The Bright Side," helpfully described as "a collection of stories and videos that address the positive side of business in [Southeast Michigan]."

The Crain's story looks at two new reports projecting the Tigers' impact on the local economy, one from the Detroit Regional Chamber of Commerce (which counts Tigers heir Christopher Ilitch on its board of directors), and one from the Anderson Economic Group (which Crain's billed as an "exclusive," but which you can find on Anderson's website here.) [UPDATE: Crain's writer Bill Shea informs me that the report was initially a Crain's exclusive, but was subsequently posted to the Anderson site.] The Tigers' increased attendance in recent years, writes Crain's, are "good for business ... to the tune of about $117 million to $277 million," according to the Anderson and Chamber reports, respectively.

Well, no. Those figures actually represent the estimated economic activity generated by Tigers games: in other words, all the money spent on tickets, food, or other related items (hotel rooms, effigies of Dontrelle Willis, etc.). That's "good for business" if you're the team's owner, certainly, but isn't going to do much for you if you run an auto repair store on the other side of town. (Unless Dontrelle Willis stops by to have a slashed tire repaired.)

Moreover, as economists are always pointing out, sports teams can actually be bad for other businesses if they siphon off spending that would otherwise be going elsewhere - as video rental stores found out during the last baseball strike, when their business suddenly soared. The name economists give this is the "substitution effect," and the Anderson study, at least, attempts to account for it, by assuming that 50% of all spending at Tigers games would take place anyway if the team didn't exist. (Crain's doesn't reveal whether the Chamber report included any substitution adjustment.) That's still a remarkably high figure, though, given that the reports were looking at economic activity in all three counties of the Detroit metro area - unless you assume that half of Tigers ticket buyers are Canadians swarming across the river to take advantage of the exchange rate, or that most Detroiters would be sitting at home reading the mayor's steamy text messages instead of spending money if not for baseball.

So what this story boils down to is: If a lot of people go to Detroit Tigers games, they'll spend a lot of money there, and Mike Ilitch will make a lot of money. And he's a Detroit businessman, so that's good news! See how much easier journalism is when you look on the bright side?

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