November 17, 2011
Indianapolis businesses say sales fine during NBA lockout
Finally, somebody who reads Slate! From last night's WRTV in Indianapolis:
Although the National Basketball Association's players and owners have failed to hammer out a contract, downtown businesses that normally depend on traffic from Indiana Pacers games said there's a silver lining to the lockout's dark economic cloud...
Chris Ratay, general manager at St. Elmo's Steak House, said the lockout hasn't really put a dent in his pockets, RTV6's Rick Hightower reported.
"All I can say is I'm so happy we're up even without the Pacers. I do look forward to them getting back to playing so we can start a promotion again with the pregame dinners, and maybe even increase our sales a little more," Ratay said.
Also reporting strong attendance during the NBA lockout: The Indianapolis Children's Museum and the Indianapolis Symphony Orchestra.
Now, this is just as limited anecdotal evidence as some of the news stories claiming that local businesses would be devastated by the lockout — though at least this is based on actual businesses reporting their actual sales, not projections based on a team consultant's report. More concerted studies would be great, but in the meantime, it's nice to see the media at least acknowledging the possibility that, as the WRTV report puts it, "the lockout won't likely affect downtown business revenues because consumers with disposable income will redirect their entertainment dollars to other venues."
October 20, 2011
NBA lockout: When it hurts, when it doesn't
Hey, look! It's yet another news story about how the NBA lockout is hurting local economies!
The NBA lockout means lost income for workers at Oracle Arena, reduced takings for some Oakland bars, restaurants and hotels, and a drop in revenue for the city of Oakland, which operates the arena and also gets sales-tax revenues from many affected businesses.
Those who read my recent Slate article, or my FoS posts since then, know that this is what economists refer to as "a load of crap." To their credit, the above-cited article in the San Francisco Chronicle quotes economist Roger Noll as saying that there's no indication that lost sporting events have any significant effect on the local economy — less to their credit, they then counter Noll with figures lifted from the Boston Globe and "an NBC affiliate report in Indianapolis" that claim otherwise.
The Chronicle didn't bother to include links, but I dug up the Globe article, which, it turns out, cited the Boston Redevelopment Authority, which just added up all spending in and around Celtics games and came up with a figure of $1.8 million — with no adjustment for money that's being spent elsewhere now that the NBA is on the shelf. The Indianapolis report's source was a consultant behnd the Pacers' latest subsidy deal; the station didn't give details about how the numbers were derived. In either case, though, it's not exactly a peer-reviewed study, like some I could mention. It's just another example of how bad journalism can take on a life of its own, long after it's been debunked.
I would make the same complaint about this report out of Memphis, except that there's a twist here:
The city of Memphis is considering getting involved in the NBA owners' lockout of the players. Memphis taxpayers stand to lose a lot of money if game revenue doesn't come in to pay off the bonds used to build the FedExForum.
Research is still being done, but early estimates indicate taxpayers could have to pay $18 million in bond payments if the entire season is cancelled...
At the suggestion of Chairman Myron Lowery, the council approved a resolution that would ask City Council Attorney Allan Wade to explore all options, including a lawsuit against the NBA.
So if the claims of economic losses from an NBA lockout are nonsense, then a lawsuit to regain those losses would be even bigger nonsense, right? Not quite: In Memphis' case, the Grizzlies actually cough up a share of arena revenues to help pay off the city's construction costs on FedExForum, as part of the team's complicated lease deal. In that case, the city actually is losing real money — rent money, effectively — to the lockout, and has a right to try to sue to get it back, though it seems a longshot whether they'll be successful.
In Indianapolis, by contrast, not only aren't the Pacers paying rent, they're actually now being paid by the city just to play there — or not to play there, as the case is so far this year. So the only money being "lost" is sales taxes and other taxes in the arena district, which according to economic studies should be recouped from increased sales in other parts of the city — something that every sports economist is aware of, but not so much, for example, the Indianapolis Business Journal.
It's taking longer than we thought, indeed...
October 11, 2011
AP: La la la, we can't hear you, economists!
Last Wednesday, I published an article in Slate on why the NBA lockout isn't likely to harm local economies, providing evidence from multiple economic studies of previous work stoppages. The explanation is the same as for why new sports stadiums don't help local economies much: Most sports spending is just reshuffled from elsewhere in your local region, so what's good (or bad) for sports is bad (or good) for movie theaters, restaurants, bowling alleys, etc.
Twenty-four hours later, the Associated Press ran this:
Harry Buffalo is one of the downtown restaurants in Cleveland that counts heavily on the beer-drinking, burger-devouring NBA crowd to keep its doors open. Operations manager John Adams has taped an internet report outside the kitchen for his waitresses, bartenders and cooks to read.
With yellow highlighter, he's shaded the grim news of the NBA labor impasse for his employees, some of whom may soon lose their jobs if there's no deal.
This is where the lockout hits home, and hits hardest.
"It's rough," Adams said, glancing toward The Q. "I've got three single moms on my wait staff and two single dads in the kitchen. I've got their 11 children to think about. It's painful when it's out of my control, when I have to put the business first and say I can't have 15 servers on staff because we don't have the business."
Now, all of this is true — but in both economic and journalistic terms, utterly beside the point. If a restaurant across from the Cavs arena is facing layoffs if the NBA season is cancelled, there's almost certain to be a restaurant across town that will end up hiring as a result — people in Cleveland have still gotta eat. (Some people, anyway.) But that doesn't fit the desired narrative as well, so instead we get stories of how "ushers, security personnel, parking lot attendants, concession workers, restaurant employees and others all stand to have their hours cut or join the country's 14 million unemployed." Number of actual economists consulted by the six AP writers who contributed to this 1200-word article: zero.
On Friday, incidentally, I wrote another article for the Village Voice on how claims (this time by the New York Daily News) of a lost economic windfall from the Yankees not making the next playoff round were hogwash, for the same reasons as the mythical lockout disaster. So far as I can tell, the AP hasn't written an article yet directly contradicting this one with no evidence, but maybe they were all off for the holiday weekend.
October 25, 2010
Stern: We'll contract teams! Just you watch us!
Of more significance was Stern confirming a report by CBSSports.com that the option of contraction will indeed be on the negotiating table. Small market teams such as the Thunder are typically the first on the contraction chopping block. Stern, however, said at this point he's "not spending a lot of time" on a contraction strategy and added that fans of small-market teams shouldn't be worried.
I should hope he's not spending a lot of time on it, because as I covered for the Village Voice way back in 2001 when MLB tried it, the contraction gambit is almost certainly a bluff. It's not as simple as calling up a few teams and disinviting them to the upcoming season — the NBA would have to collect money to buy back the franchises, and then would almost certainly face antitrust lawsuits from the cities that were left suddenly bereft of franchises. And that's without even getting into the problem that the players union would come after Stern with an elephant gun.
The players union, of course, is the intended target of this threat, as the league prepares for a 2011 contract renegotiation that's almost certain to turn into a lockout. So is Stern's concurrent threat to cut player salaries by one-third. ("There's a swing of somewhere in the neighborhood of $750 [million] to $800 million that we would like to change," declared Stern, adding: "That's our story and we're sticking with it.") Unlike certain other people, Stern understands that at the negotiating table, you start by asking for the moon and let the other side bargain you down to a few major asteroids.
June 04, 2010
NBA All-Star Game shows zero impact on Texas economy
The first solid numbers are in for the economic impact of February's NBA All-Star Game, and they're a bit less impressive than expected:
Based on the economic score, the dollars spent, let's look at the economic impact of this year's NBA All-Star Game:
It's not $152 million as predicted.
Tax receipts from the State of Texas show the game brought in zero.
The numbers are reflected in tax receipts from five North Texas cities which were predicted to post large hotel, restaurant and alcohol revenue increases as a result of the game.
But instead of that boost, year-to-year revenue comparisons with 2009 — during the depth of the economic downturn — show only small increases or decreases during February, the month of the game. The All-Star contest was early in the month, allowing businesses ample time to report their revenues.
What the heck happened? Well, presumably there was some of the "crowding out" effect observed by economist Phil Porter, where Super Bowls and other mega-sporting events end up driving away as many visitors as they attract, because of booked hotel rooms and traffic fears. Dallas TV station WFAA, which unearthed the tax receipt figures (and is, incidentally, one of the few TV stations in the country that still does investigative reporting), also notes that the initial projection of $152 million in impact cited "a 'literature search on the Internet' as a secondary source, using numbers — presumably from news stories — about earlier All-Star games in Washington, Philadelphia and Atlanta. But news stories frequently quote economic impact estimates from the consultants themselves."
Consultant Michael Casinelli, who prepared the initial economic impact report, defended his methodology, sort of, saying "There is never enough data" to get reliable figures, and blaming "alarmist" university academics for pooh-poohing the benefits of sporting events. Which he's sure must be there, even if you can't see them.
October 07, 2009
Sports bubble watch: NBA, Yankees cut prices
More signs that the crazy inflation in sports ticket prices has found a ceiling:
- The New York Yankees provided more details on their previously announced ticket price cuts for 2010: They'll lower prices for their most expensive seats, the Legends Suite tickets behind home plate, from $2500 a game to a mere $1500, while some tickets in the $500-$1000 range (the ones that the Yanks had trouble selling this season) also will see price drops.
- NBA commissioner David Stern says he expects NBA revenues to drop in the coming season, and says a large part of the reason is price cuts that teams have instituted to keep fannies in the seats. "I would love to get it closer to 2-1/2 percent, but I don't think we're going to because our teams have cut their ticket prices or frozen them, so as a result, even if we have good attendance, we'll be taking in less revenue at the gate, and that's an important component. And that's OK. We're responding to our fans."
August 03, 2009
In case you were wondering what ever happened to that Las Vegas basketball arena that got preliminary approval two years ago, well, it's dead, a victim of the collapsing economy and, quite likely, what was a nebulous financing plan from the start. Just listen to the Las Vegas Sun's report:
At a June 2007 council meeting, an REI Neon official promised the developers would be able to tap the deep financial pockets of "multiple billionaires." At one point, Goodman asked REI Neon official Greg Borgel to confirm that four billionaires "who have contacts with the business community" were lined up to be principal investors.
"I'm not asking for their names," Goodman said, according to a transcript of the meeting.
"Oh good, 'cause I can't tell you," Borgel replied.
They call them "mayors," but another M-word might be more appropriate.
April 05, 2009
Legislators weigh Indy stadium bailout
WRTV News reports, somewhat dramatically, that Lucas Oil Stadium could close if a state bailout deal is not reached for the Indianapolis Capital Improvement Board. The CIB, which operates the Indianapolis Colts' one-season-old stadium along with Conseco Fieldhouse, home to the Indiana Pacers, is facing a $47.4 million operating deficit, after failing to budget properly for $26 million in annual operating costs for Lucas Oil Stadium.
The consequences of financial failure for the CIB remain unclear. CIB President Bob Grand sounded pessimistic, if vague, saying, "If you want me to give you worst-cases, I mean the worst-case scenario is we could be out of money and the facilities would be, arguably, closed."
The bailout plan includes annual $5 million payments from both the Colts and Pacers, which neither team has agreed to as yet (UPDATE: Since the Pacers would be absolved of about $15 million a year in operating costs, this would actually save the team $10 million a year. -ND), as well as tax increases on alcohol, restaurant meals, hotel stays, and sports tickets.
Politicians are not yet on board with the plan, either. NWI reports that Thomas McDermott Jr., Mayor of Hammond in northwest Indiana, is incensed that a similar finance plan for flood protection levees in his district was blocked in December. "It seems to me that it's more important to build football stadiums than it is flood walls," he said on Thursday.