The Sonics are Leaving Seattle and I Steal from the Sports Economist

Posted on February 17, 2008 by

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According to an Associated Press article, the Sonics are leaving Seattle.

Here is how the story begins:

Sorry Seattle, there is no saving your Sonics.

That’s the feeling of NBA commissioner David Stern, who said Saturday he expects the Seattle SuperSonics to leave the city, either this year or when their lease expires in 2010.

“It’s apparent to all who are watching that the Sonics are heading out of Seattle,” Stern said during his annual All-Star Weekend news conference. “I accept that inevitability at this point. There is no miracle here.”

We learned last month why Seattle is willing to let the Sonics leave.  Apparently, the Sonics don’t provide any economic impact to the Emerald City.  For evidence of this, here is a post offered by Skip Sauer at the Sports Economist last month.

Sonics to Seattle: “we have no impact” 

From today’s Seattle Times:

If the Sonics leave Seattle, the city’s economy won’t suffer and most people won’t care.

That’s not the tirade of some anti-arena activist; it’s the Sonics’ latest legal argument to try to get out of its KeyArena lease.

And it’s exactly the opposite of what the Sonics have claimed when asking for taxpayer help to build a new arena.

The team made the argument in papers filed in U.S. District Court this week, seeking mediation or a speedy trial to allow the team to abandon city-owned KeyArena before 2010. In the documents, Sonics’ attorneys dispute the city’s contention that the team’s departure would have a broad and hard-to-quantify impact.

“The financial issue is simple, and the city’s analysts agree, there will be no net economic loss if the Sonics leave Seattle. Entertainment dollars not spent on the Sonics will be spent on Seattle’s many other sports and entertainment options. Seattleites will not reduce their entertainment budget simply because the Sonics leave,” the Sonics said in the court brief.

…Rodney Fort, a professor of sports management at the University of Michigan, who has criticized the economic-impact claims made by pro-sports teams, called the Sonics’ latest argument “the best chuckle” he’s had in a long time.

Cue major grins :) from coast to coast among the community of sports economists! H/T to Matthew McCoy in the Emerald City.

It’s surprising to learn that sports do not provide a significant amount of economic impact. Brad Humphreys – again at the Sports Economist – offered this tongue-in-cheek review of recent advances in the economic impact studies provided by paid consultants.

Exciting News from the Sports Subsidy Crowd 

As a researcher working in the area of the economic impact of sport, I try my best to keep up with the “state of the art” in forecasting economic impact. Like many other fields, work in this exciting area moves forward at breakneck speed. It seems that every week brings fantastic new breakthroughs in sports subsidy technology. Consultants at the cutting edge of forecasting the expected economic impact of sporting events are continually “pushing the envelope” of economic impact estimates. In my professional opinion, it is only a matter of time before advances in multiplier technology and cutting edge assumptions about impact areas and daily tourist spending break through the legendary “billion dollar barrier” and usher in a new era in economic impact analysis.

The latest breakthrough comes to us from Washington state, where the 2015 US Open was recently awarded to a public golf course in Tacoma. According to this article, the local government “invested” $21 million in a new golf course, Chambers Bay, that opened a few months ago. This $21 million “investment” is a pittance compared to the estimated $100 million in economic impact that the community will receive from hosting the 2015 US Open golf tournament. Yes, that’s correct, $100 million in economic impact from a week long event that will attract about 60,000 spectators. As astute County Executive John Ladenburg points out, that forecast makes those chumps in Seattle who only got a forecast of $50 million in economic impact for the 2001 MLB All Star game look like pikers.

Consultants are often on the “cutting edge” and “pushing the envelope” (all you have to do is ask them).  And to prove the amazing power of paid consultants, we again turn to the economic impact of the Sonics.  But this time, it’s the impact on Oklahoma City.  This issue was explored by Dennis Coates (again at the Sports Economist).

Supersonics-Hornets-OKC 

Earlier on this blog the question was raised about what sort of economic impact was being projected for the Oklahoma City area if the Supersonics moved there. A partial answer to that question is found at bigleaguecity.com. Don’t you just love the web site name?!

I wonder how the consultants explain the job creation figures. Note that in 2006-07 there were 37 games and direct and indirect jobs created of 289, but in 2005-06 there were 38 games but 229 direct and indirect jobs created. In other words, according to this report, playing one fewer game in OKC in 2006-07 than in 2005-06 brought the city 60 jobs.

It is also interesting that per game attendance fell by 3650 from 2005-06 to 2006-07. Seems like the novelty of having a team wore off pretty quickly.

So let’s see if we can follow the story.  The Sonics have no economic impact on Seattle.  Hence, the Emerald City should just let the team walk away from its lease.  But the Sonics do have an economic impact on Oklahoma City.  Consequently, Oklahoma City should use public funds to attract this team. 

All in all, you have to love the work of “cutting edge” consultants. 

By the way, for those not familiar with the story told by researchers in sports economics, part of the Sonics tale is true.  The Sonics don’t have much economic impact on Seattle. So Seattle taxpayers may be correct to withhold funds for a new arena. 

And the Sonics will also not have much impact on the economy of Oklahoma City. Consequently Oklahoma City residents who don’t like basketball might want to pay attention.  Yes, I can understand why basketball fans want a team.  But to ask non-basketball fans to pay for this form of entertainment seems a bit unfair.  At least, I can imagine many forms of entertainment basketball fans might not want to subsidize (even if a consultant told them it was “good” for their economy). 

– DJ