Rebuilding Place in the Urban Space

"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Monday, January 23, 2023

NBA All Star Game in Salt Lake, economic development hype | Pittsburgh Post-Gazette on the Pirates baseball team economics

I've been meaning to mention the upcoming NBA All Star Game in Salt Lake, not because I am particularly interested, but because I have seen advance marketing initiatives across the city--banners on the streets, signs on storefront windows, table tents in restaurants, some sort of hoops shooting thing at Trolley Square--which impressed me a bit.

But like all other such events which are overhyped:

-- "Musing on the economic impact of cultural and sports events," 2019
-- "Not enough time for a) 2024 DC-Baltimore Olympic Bid (to make sense)," 2014
-- "Big sporting events (World Cup/Olympics), economic development and trickle down economics," 2014
-- "Super Bowl," 2016
-- "More need for economic revitalization planning/linkage with sports stadiums: Las Vegas (+ Houston and the Super Bowl)," 2017
-- "Minneapolis Super Bowl: Urban Revitalization and Transformational Projects Action Planning," 2018

this event is overhyped by the Growth Machine, the City Economic Development Office etc.

Utah Business magazine claims that the economic development impact of the Game will be as much as $250 million ("The 2023 NBA All-Star Weekend could boost Utah’s economy by $250M+").  From the article:

Kunkel, director of Temple University’s Sport Industry Research Center, is referring to the economic impact enjoyed by hosts of what’s evolved into a three-day-long basketball bacchanal that briefly transforms the cities it touches, and which happens to be coming to Salt Lake City next month.

Kunkel earned his PhD in sport management and has published a multitude of academic treatises on the complex interactions of brands, professional sports, and fans. But what earns him the most press is the work he oversees estimating the economic impact of marquee sporting events on their host cities. Most recently, Kunkel and his team came to the conclusion that the 2022 NBA All-Star Weekend, held in Cleveland, produced a direct net economic benefit to the city of a stunning $141 million, part of $248.9 million in total economic impact. Based on this assessment, the total economic impact of Utah’s 2023 All-Star Weekend is projected to be at least $250 million, according to Caroline Klein, chief communications officer of the Utah Jazz.

To be fair, the UB article is pretty good, and the economist who did the study claims to have been highly focused on "leakage", that is the spending, like on airlines that ultimately ends up in a bank account somewhere else.

A table tent promoting the NBA All Star Game at Level Crossing Brewing Company.

The numbers still seem questionable.  For one, it would be gross revenue of over $13,000 per seat at the Vivint Arena, which has a capacity of 18,300.  (Net revenue would be $7,700 per seat, still quite high.)

Although in other recent All Star events, the total visitorship claimed is significantly higher than the number of people able to attend the actual game.  Again, it seems questionable that 121,000 people visited Cleveland for an All Star Game when the venue seats just under 20,000.

For another, as I've written, the primary spending categories are lodging, transportation, and food and drink (hospitality).  Most hotels are owned by non-local interest, same with transportation like airlines.  

Food and drink places tend to be more locally owned but even so, 18,300 divvied up over 100 establishments isn't as much as you think.  Especially when many might attend special event dinners by sponsors, etc.

One element I hadn't acknowledged in the past is income tax revenue on players ("State tax departments set their sights on pro athletes' earnings," CNBC).  But it's not huge when it comes down to it.

And sports betting, which is now legal in many states, and would experience a local bump maybe in association with an All Star Game, definitely with the Super Bowl.  Although not in Utah, where gambling is not legal.

Snowbird Resort, Little Cottonwood Canyon.

Skiing + the All Star Game.  Generally, when people go to these events, they aren't interested in consuming "local culture" independent of the event--so no local shopping or visiting the theater or museums.

But I could see, I don't know if the companies promoting it tried to link it up, in Greater Salt Lake specifically, people going skiing in Park City, or Big and Little Cottonwood Canyons, and staying longer than three days.  But it would have to be built into the experience.  That would add some money to the till.

Economic Development hype versus building the local economy.  This comes down to what I call the difference between "building a local economy" and "economic development."  ED tends to focus on that top line number: "X millions" while "building a local economy" is more focused on the local multiplier effect, where money is actually spent and where it ends up.

Yes, labor in restaurants, hotels, and the airport, taxis/ride hailing, etc., will benefit some, not as much as is hyped.  But the real money likely ends up elsewhere.  For example, Delta is the biggest airline serving Salt Lake.  They're based in Atlanta.

Sports Events Tourism, Costs and Return on Investment. But events tourism is still an important element of community identity building and marketing.  So I am not against it.  It's just we need to be realistic about what it can really do and the return on investment and we should limit how much we are willing to subsidize it, especially as the sponsoring organizations have plenty of money of their own.

-- "Sadly, DC won't show so well during the Baseball All-Star Game," 2018

Also see:

-- "Should small city economic development over minor league baseball and other sports be treated differently from big city cases?," 2018
-- "More need for economic revitalization planning/linkage with sports stadiums: Las Vegas (+ Houston and the Super Bowl)," 2017

For example, with the 2026 World Cup, the City of Toronto is on the hook for at least $90 million.  Because the province, not the city, collects income and sales taxes, the City is likely to net less than $4 million in additional revenues ("The proposal to host World Cup games in Toronto is a sucker’s deal. The city should demand better," Toronto Star).  No way would I say that's an adequate return on investment!

The Salt Lake NBA game doesn't come at great cost to government and related organizations.  According to the UB article, it's $4.5 million--$3 million from the state, $1 million from the city, $500,000 from the county.  But that's because the Utah Jazz team organized a group of 11 other businesses to cover the bulk of the costs and requirements.

Photo: Andrew Rush, Pittsburgh Post-Gazette.

2.  The economics of Pittsburgh Pirates baseball.  I just came across some articles in the Pittsburgh Post-Gazette from last year, that are quite amazing on this topic.  

The PPG did a public records request to the Sports & Exhibition Authority, which owns and funds the PNC Bank Stadium.  It took three years of back and forth, threat of lawsuits, and redactions for the paper to get the records.  Which they then analyzed, in two main parts and a follow up 4 months later.

-- "Records show the Pirates’ payroll is often covered by ticket and food sales. Whether they should spend more has tormented fans"
-- "The Pirates’ PNC Park lease was set up to benefit the public, too. It has rarely paid off"
-- "Moneyball: A losing Pirates season can impact city revenues, vendors and even PNC Park itself"

1.  People criticize the team for its low payroll.  The analysis finds that the team doesn't spend much more on payroll than it makes from ticket and concession sales.  Leaving other revenues from television and other sources untouched--although the team points out its minor league and Latin American operations are paid for out of those sources too.

2.  Revenues decline significantly across the board when the team does poorly.  With restaurants and bars netting 30% less or worse.

Think about this when teams deliberately tank.  Interest tanks.  Patronage tanks.  And so does revenue associated with the team.  Even though in most cases, the stadiums and arenas the teams play in are primarily funded by the public. 

The PPG series is a great model for other newspapers, especially on this element.

3.  The lease agreement has many elements that favor the team.  Although it's pointed out this happened because at the time in the early 2000s, the team was under the threat of being moved, and they needed inducements.

This isn't a surprise, and is comparable to deals for the Anaheim Angels and Cincinnati Bengals, which are mentioned in the comments on this entry, "Framework of characteristics that support successful community development in association with the development of professional sports facilities."

Also see:

-- "Revisiting "Framework of characteristics that support successful community development in association with the development of professional sports facilities" and the Tampa Bay Rays baseball team + Phoenix Coyotes hockey" (2022) 
-- "Camden Yards baseball stadium is 30 years old" (2022)
-- "Does professional soccer have the same economic impact as minor league baseball in smaller cities?" (2022)
-- "Pittsburgh developer backs down on opposition to ticket fee for concerts, to be used for area improvements" (2023)

4.  City/government revenues from the lease are minimal.  $350,000 maximum annual lease payment.  And revenue sharing agreements when revenues are higher rarely kick in, because the base was set not on average attendance, but on the teams highest attendance years. Most of the amusement tax (fee on tickets) go to the Pirates baseball team, not the city. Etc.

Economic impact study of Pittsburgh professional sports teams.  Interestingly, in 2018, feeling inadequately appreciated, the Penguins (hockey), Pirates (baseball), and Steelers (football) commissioned an economic impact not unlike the one performed for Salt Lake's NBA All Star Game.  It claimed $6 billion per year in total economic impact.

The full study was never released, only a summary ("Just how much do sports teams contribute to Pittsburgh's economy?").  From the article:

Tired of taking it on the chin in debates over whether taxpayers should help pay for improvements to Heinz Field, PNC Park, and PPG Paints Arena, the Steelers, Pirates and Penguins are making their case for the value they bring to the region.

They even have come up with their own stat line — $6 billion, $50 million, and $41 million.

The figures respectively represent direct and indirect spending the teams have produced over the last five years; the amount of city, county and state taxes they generate annually; and the value of the advertising the city receives each year thanks to their presence.

Economics is just one part of their argument. ...

The teams, they argue, are as ingrained in the city’s fabric as Primanti sandwiches and Pittsburghese.

And they help make Pittsburgh big league, with a higher profile than cities like Austin, Texas; Tucson, Ariz.; Omaha, Neb.; and Tulsa, Okla., all of which have larger populations — but no pro sports teams.

“Steel is the foundation. Technology, energy and eds and meds are the future, but the heart and soul of this city has been sports,” said David Morehouse, the Penguins CEO.

Although the Allegheny Institute of Public Policy argues that the numbers aren't credible ("Pittsburgh teams fight back: ineffectively"), making the point that the UPMC Medical System, Carnegie-Mellon University and other organizations have significantly greater impact.

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9 Comments:

At 10:09 AM, Blogger Richard Layman said...

https://www.reddit.com/r/SaltLakeCity/comments/10l00kf/nba_allstar_weekend_events_around_slc/

 
At 12:54 PM, Blogger Richard Layman said...

https://www.fox13now.com/news/local-news/a-pop-up-liquor-store-will-be-created-inside-the-salt-palace-for-the-nba-all-star-game

 
At 1:42 PM, Blogger Richard Layman said...

https://kslsports.com/498164/jazz-look-to-bring-all-star-experience-around-salt-lake-city-with-events-concerts/

 
At 2:35 PM, Blogger Richard Layman said...

https://www.bloomberglinea.com/english/super-bowl-2022-whats-the-score-with-the-games-economic-impact/

 
At 8:06 PM, Blogger Richard Layman said...

https://kslnewsradio.com/1987878/slc-hotel-rates-before-and-during-nba-all-star-weekend/

 
At 9:22 PM, Blogger Richard Layman said...

https://www.sltrib.com/sports/jazz/2023/02/15/gordon-monson-if-you-love-nba-all/

"Love it or loathe it, the NBA All-Star Weekend circus has arrived"

This shindig is a show. It’s not designed to be taken too seriously. You’re not going to see any version of Pete Carril’s old offense out on the floor. You’re going to see athleticism and acrobat-ism, not five passes for the ideal shot before the clock runs down to nothing.

And defense? Ha. We’re here to have a good time.

And beyond that, there’s all the other stuff associated with Sunday’s centerpiece — the outreach to the community, the extension of good will, the good feel to the weekend in its totality. The list of All-Star events is vast.

Pay no attention to the fact that tickets to the actual game will cost you a fistful of paychecks and maybe part of your kids’ college funds. Pppfffww. You’re building memories here.

You can buy entrance to all sorts of happenings — to the All-Star Celebrity game at the Huntsman Center, to the NBA Rising Stars event at the Viv, to an All-Stars practice at the Huntsman, to the HBCU Classic at the Huntsman, to NBA All-Star Saturday Night, to the Skills Challenge, to the 3-Point Shootout, to the Dunk Contest, all at Vivint, to the NBA G League Next-Up game at the Viv, to NBA Crossover at the Salt Palace, to the NBA EXP Lounge, to NBA Legend Meet and Greets, to a Pitbull concert, to the Exclusive Playmaker Afterparty, to a PB&J Brunch with famous chefs, to the NBA Mascot Buffet Breakfast with photo ops. ...

And there’s some genuine good-cause elements mixed in.

Five days of what the league calls “social impact and youth basketball events that will unify communities through service, philanthropy and teaching the values of the game of basketball.” It is said that the NBA and the NBA Players Association will combine to contribute “more than $3 million to the Utah and HBCU communities.”

Further, Team LeBron and Team Giannis will collectively donate up to a million dollars to local youth and family-serving organizations. A release says Team LeBron will play for Big Brothers Big Sisters of Utah, Team Giannis will play for Raise the Future, an outfit that benefits kids in foster care.

The NBPA Foundation will also contribute funds to reducing mental-health stigma and increasing access to mental-health services.

In addition, substantial amounts of contributions will be raised during many of the aforementioned events, including donations for a learn and play center and other upgrades at a South Salt Lake elementary school. Also, there’s an All-Star day of service, including hundreds of volunteers, that is scheduled to aid in all manner of service projects in Utah.

 
At 9:25 PM, Blogger Richard Layman said...

https://www.sltrib.com/sports/jazz/2023/02/09/when-nba-comes-town-next-week/

"How the NBA says it will give back to Utah during All-Star Weekend in Salt Lake"

New and updated rooms at Lincoln Elementary — Feb. 16

State Farm and the NBA has provided funding or remodeled two sections of Lincoln Elementary School in South Salt Lake. First, a STEM education room, will include new tech and library resources for the school. Second, the school’s gymnasium has been remade, with new equipment, lighting, flooring, and basketball hoops. The dedication of the new spaces takes place on Feb. 16.

NBA All-Star day of service — Feb. 18

Every year, NBA employees gather at the site of NBA All-Star Weekend on the days before the game to take part in a community service project, and Salt Lake City is no exception. This year, over 500 employees “including current players, legends, guests, community partners” will work with the Utah Food Bank, Bishop’s Central Storehouse, and Volunteers of America Utah to package and distribute food donations.

Multiple Jr. NBA events — Feb. 18-19

The Jazz and the NBA will host several events geared toward youth basketball participation throughout the weekend. This includes hosting a clinic for girls to play alongside WNBA players for a day, called Her Time to Play. Additionally, 200 special olympic athletes will be put through a skills clinic hosted by the Jazz.

All-Star Game donations — Feb. 19

During the All-Star Game itself, $750,000 will be split between two charities’ Utah chapters. Team Giannis’ charity will be Raise the Future and Team LeBron’s charity will be Big Brothers Big Sisters of Utah. Raise the Future seeks to “reduce the amount of time youth in foster care live without a permanent family;” Big Brothers Big Sisters “creates and supports one-to-one mentoring relationships” with youth in Utah. Kids and families from both organizations will be part of All-Star Game practice, the pregame draft, and will get tickets to the game itself.

Sustainability efforts

The NBA, in partnership with Clever Carbon, will be handing out quizzes to test people on their own carbon footprint. In a city with well-documented air quality issues, the goal is to make people generally more aware of their own contribution. Throughout the weekend, the league will donate to initiatives to help educate students on environmental issues.

 
At 9:31 PM, Blogger Richard Layman said...

https://www.sltrib.com/sports/jazz/2023/01/30/how-take-part-salt-lake-citys/

"How to take part in Salt Lake City’s NBA All-Star Weekend on any budget"

Map graphic showing location of events
https://www.flickr.com/photos/rllayman/52693513816

Free activities and events

Grit Rail Jam at the Olympic Legacy Plaza in The Gateway: Two snowboarding competitions will take place at Gateway’s Olympic Plaza, as athletes show off their rail tricks to an open audience.

Entertainment on TRAX: The Downtown Alliance, Salt Lake City, and UTA have contracted with nearly 50 singers, comedians, musicians, and magicians who will perform inside train cars during All-Star Weekend. Performances will take place from the Gateway to the Gallivan stops downtown. Hosts who work with each performer will act as guides, answering visitor questions and providing directions.

UTA will have free fare days for all of Feb. 12-21. For the entirety of February, any person with a day-of-travel airline ticket can ride free on UTA’s system.

The Shop Salt Lake City at The Gateway: The subject of a recent Tribune profile, fashion expert Calyann Barnett is curating two pop-up retail stores at The Gateway. Brands with collections inside include Cactus Jack, MRKT, StockX, The Webster Miami, CounterPoint, and Mitchell & Ness featuring Slam & Thrifthood. The stores are open from 10 a.m. to 8 p.m. from Feb. 16-18, and open from 11 a.m. to 4 p.m. on Feb. 19.

CENTRAL at Gallivan Plaza: An art and music demonstration just off Main Street. A total of 25 musicians will perform above upcycled shipping containers; inside those containers will display artwork from local artists. A generative A.I. film will be projected onto the Gallivan stage. Various sculptures, including one created for the event, will be displayed on the city block’s grounds. CENTRAL will be free and open to all ages from 1 p.m. to 10 p.m., Feb. 17-19.

NBA Ice Buckets at Trolley Square: A free-to-play basketball shooting game. Like a huge, tricked-out version of Pop-a-Shot, players can compete by themselves or against others as they shoot on five different baskets at different heights. Winners can get prizes such as tickets to All-Star 2023 events, merchandise and more. Open Fridays, Saturdays, and Sundays, from now until the end of All-Star Weekend.

 
At 1:45 PM, Blogger Richard Layman said...

Probably need a separate master article on "economic impact of sports stadiums, arenas, and special events" separate from the framework characteristics piece.

https://urbanplacesandspaces.blogspot.com/2021/03/framework-of-characteristics-that.html

Lots of hype. And not a lot of nuance in the studies.

https://www.kmbc.com/article/2023-nfl-draft-economic-impact-in-kansas-city-missouri/44914726

Visit KC: 2023 NFL Draft held in Kansas City resulted in $164M impact for the city

8/25/2023

According to data compiled by Visit KC, the 2023 NFL Draft resulted in a total economic impact of $164.3 million for Kansas City.

The amount includes $108.8 million in direct spending and $55.5 million in indirect impact.

The breakdown of direct spending revealed 60% came from accommodations, 18% from food and beverage, 8% from business services, 6% from transportation, and around 4% from retail and recreation.

While the city celebrates those numbers, in the aftermath of the draft, KMBC spoke to small business owners who said their draft expectations fell short.

https://www.kmbc.com/article/this-isnt-a-cry-fest-for-us-small-businesses-see-dip-in-sales-during-nfl-draft-weekend-kansas-city-missouri/43751303

Café Cà Phê posted to Instagram saying draft weekend led to “the biggest dip in sales history.” The post has more than 100 comments with local businesses sharing similar stories.

"We just had like a lot of help working overtime, trying to prepare for the draft, thinking it was going to be like a lot of business, a lot of sales, stuff like that,” Samantha Hutsell with Shop Local KC said. “Unfortunately, I think we all kind of took a little bit of a slope down."

Shop Local KC has multiple locations – one of them inside Crown Center. They said they expected a big spike in business with the Draft right around the corner at Union Station. Instead, their numbers were down.

In the Crossroads, Mean Mule Distilling Co. shared a similar draft experience.

"I think that we had some bigger expectations for how it was going to go for us,” Mean Mule Distilling Co. CEO Jeff Evans said. “In anticipation for the draft, we turned down all private events this weekend. And so, that hurts, right? Because, you know, we're small business. We're not necessarily made of money. So, every little bit matters to us."

 

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