LeBron's Limited Economic Impact

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You could be forgiven for thinking LeBron James will give unemployed autoworkers their jobs back, buoy a sunken real estate market, or generate mountains of tax receipts.

That's the impression one gets reading business stories speculating about his "economic impact" on his next destination. James has practically been called a one-man stimulus program, which one story said could generate as much as $2.7 billion in the case of Chicago.

But it's irresponsible to attach such sums to James's name, because these figures are based on hypothetical scenarios. In other words: James would have to turn a basketball team into a championship dynasty to have a massive economic impact on a city. After seven seasons in Cleveland, he failed to do that and only reached the finals once.

But what if the Miami Heat become this decade's Bulls and win several championships? That accomplishment will certainly raise attendance for the team, inflate the value of TV rights to broadcast games, sell merchandise, and bring more patrons to downtown Miami.

LeBron may have a deep economic impact, but not a broad one.

The owners of the team and its arena will pocket most of what is reaped by LeBron and company (and don't forget the NBA gets a cut). So some more service workers at the arena get hired and bars sell more beer for several months of the year -- that doesn't come close to millions or billions in economic help for an entire metropolis. (Let's see what LeBron contributed to the Cleveland area's economy in terms of jobs, tax revenue, income, and more - not just the bottom line of the Cavs' owner.)

Sports teams, stadiums, and players do not greatly help cities' economies--and in fact sometimes hurt them by allocating resources to activities that help few people and don't foster investment and innovation, such as a university.

At least two studies have shown that there's little to no net positive economic impact from sports teams on metropolitan areas. The main reason is simple: people who travel to the city to eat, drink, and be entertained would have spent much of that money on the same activities in the same region. What revenue a city gains (and again, most of it winds up in the team's pockets) is what revenue a suburb loses. Unless LeBron and the Heat attract tourists from far outside Miami or Florida, the net gain to the area's economy will probably be minimal.

It is unseemly that politicians and local leaders were literally pleading for this millionaire to come to their cities to do nothing more than play basketball and live in the lap of luxury -- not to hire workers, not to manufacture products, and not to educate people. A campaign to get investors to bring all of that to Cleveland, Miami, or elsewhere would be worth the effort from civic leaders.

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Justin Miller was an associate editor at The Atlantic from 2009 to 2011. He is now the homepage editor at New York magazine. More

Justin Miller was a associate editor at The Atlantic. Previously he was an assistant editor at RealClearPolitics, a political reporter in Ohio, and a freelance journalist.
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