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July 14, 2014Andrew Wiggins splits a double-team and goes baseline for a jam
July 14, 2014Update: Apparently Cuyahoga County never meant to indicate $500 million per year at all. We used a Bloomberg report for our info that indicated $500 million per year in both the headline and the text. Cuyahoga County officials meant $500 million in total and think the annual number is closer to $50 million or so. I’m still wary of “economic impact statements, but some faith has been restored.
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The simple and obvious answer to the headline above is a resounding “NO!” Look, I don’t want to inject some negativity into the positive story of LeBron James coming back to Cleveland because there’s pretty much no downside. Still, I think it might be important to temper expectations of what the actual upside might be, especially if we start talking about half a billion dollars per year. County Executive Ed FitzGerald said today that LeBron James’ financial impact on the local economy will be $500 million per year.
The return of the star forward to his hometown Cleveland Cavaliers will have a $500 million a year impact on the local economy, with a boost from additional ticket sales and other spending, County Executive Ed FitzGerald said today.
Obviously when politicians make proclamations like this, there’s no real way to figure out exact figures. Still, I’d like to put some math to it just for fun.
From a ticket standpoint, the Cleveland Cavaliers had attendance in 2013-14 of 710,522 fans. Back in 2009-10 when LeBron was still here that number was 843,042 fans. Let’s assume LeBron brings all those fans back, that’s an additional 132,520 attendees. That’s really good, but that means each additional fan would have to generate $3,773.02 per ticket sold to reach FitzGerald’s $500 million mark. That’s an awful lot of LeBomb James’.
LeBron brings economic contribution based on other factors like nationally televised games, but you’d have to do some funky, unsubstantiated economic calculations to arrive at $500 million.
Anyway, LeBron is back and it’s great. Government should be happy. Maybe not that happy. Still, this is a vast improvement over FitzGerald’s last sports initiative, the “Win Tax.”
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And so, Mike Polk’s once astute observation is true once again: Our economy’s based on LeBron James.
I believe estimates were that he added $50-80M/year when he was here previously, which actually adds up decently. Even if that went up significantly, $100M/year seems a bit crazy but OK, great.
$500M/year is absurd.
watching him play for the Cavs makes me smile like a million bucks. Guessing there’s another 500 out there like me.
#justrounditoff
Granted, this number probably came from an intern who woke up with a hangover Saturday morning, they probably tried to run some calculations then just said “screw it, I will give my boss a number he will want to hear and then throw another $100M on there for good measure.” But I don’t think $500M is absurd. This was an estimate for the whole local economy, not just the Cavs organization. Adding yearly playoff runs, our thriving tshirt economy, everyone replacing burned jerseys and the inevitable crazy night on the town from Jay-z, Drake, or (insert famous person here) seems like you could get reasonably to their estimate. I have not done math in almost a decade so I am probably no better than a hungover intern, but this doesn’t sound insane to me.
http://sd.keepcalm-o-matic.co.uk/i/yes-yes-yes-yes-yes-8.png
Yeah, this is insane.
Let’s break down their own math:
“James’s return will increase the benefit from Cavs games alone to about $268 million”
What is this benefit exactly? Is it how much more the city will rake in a sold out arena 41 times a year?
“Anticipated benefits include a $34 million increase in annual spending by fans at games”
Hmm, guess not. That’s only $34M
“to $170 million a year”
From where? For what? To who?
“plus 500 additional jobs supported by the Cavaliers, the county said”
These jobs numbers are always overinflated. Even if there were 500 more positions necessary for the Cavs to fill now that James is in town, the vast majority are part-time, no benefits, and at or near minimum wage, i.e. extremely minimal revenue generators for the city.
“The county expects a $3.5 million increase in admissions tax to put toward debt service”
After all the sin tax debate, where we’re still waiting on Eddie’s “discussion” to happen, we have some idea on the details here. The admission tax is 8%. For 8% of 132,520 tickets to add up to $3.5M, tickets will need to average $330. That’s one seat for one game. Now, I wouldn’t put it past Gilbert to want to raise tickets prices by 175%, hey, that’s just a hair more than it cost to see a 37 win team play in NYC. But I think he’s going to have a hard time justifying those prices in Cleveland.
This article mentioned the average attendance before LeBron arrived the FIRST time, in the 02-03 season. That was closer to an average of 12,000/game, which may be what they’re basing these numbers off of.
To be fair, there’s a piece on Cleveland.com today in which he says it’s $50M/year with calculations that make sense.
So they’re using a terrible starting point and still unable to defend their numbers? No surprise that it came out of Fitzgerald’s mouth.
“FitzGerald pivoted his speech from talking about James’s return, to comparing the condition of downtown Cleveland in 2010, when James left, to 2014, when he will return.
Incidentally, that time frame roughly coincides with FitzGerald’s four-year term in office.”
And we’ve gotten to the root of it. Fitzgerald is looking to drum up some good numbers for his next candidacy.