Economics

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Do NFL Franchises Bring Huge Economic Benefits to a City? Not Always

16 Dec, 2015

By: Tracey Schelmetic

The economic benefits of the presence of a professional football team in a city often seem hugely positive at first. Home-team fans are passionate and willing to spend big to see their teams play. But not all economists agree that these teams bring big bucks to their home cities, particularly after the enormous amounts of money it takes to lure (or keep) them in the city.

Former Cleveland State dean Ned Hill told Crain’s Cleveland Business last year that “spending on sports in a community is just a reallocation of the entertainment dollar.” In other words, while fans are attending a home game, they’re not spending their cash on some other city attraction, so the money is simply being moved from one amusement to another. In addition, the high costs of professional sporting event tickets and concessions are a serious splurge for most people, which probably means they’re cutting out spending elsewhere in order to attend.

And while certainly area bars and restaurants see a significant uptick in their business from home team fans (and visiting fans), it’s important to remember that NFL teams play only eight home games during a regular season. Eight really great nights a year is unlikely to make a huge difference for the average bar or restaurant. Local restaurant and bar owners report that the Cavaliers and the Indians are worth far more to their business, simply because they play more home games, and they also play on midweek days when business otherwise wouldn’t be so great.

Former Cleveland State professor and dean Mark Rosentraub and current chair of the department of sports management at the University of Michigan told Crain’s Cleveland Business’ Kevin Kleps that if a professional sports franchise is going to have a real economic impact on a city, there needs to be a “real estate development strategy that makes the venue part of a larger economic play.” This has not been the case for the Cleveland Browns, whose First Energy Stadium was rebuilt on the site of the old Cleveland Stadium, which was demolished in 1996.

Then, there’s the team’s track record. First Energy Stadium is often referred to locally as the "Factory of Sadness" due to the Brown’s lack of stellar performance in recent years. A game played against the Cincinnati Bengals in early December reportedly drew an initial crowd of nearly 65,000, but the stadium emptied out significantly during the second half of the game as it became clear that the Browns were losing badly.

“The identifiable economic benefit from football to a city is negligible,” Hunter Morrison, Cleveland’s planning director under former Mayor Michael White, told Kleps. “There are so few games. The sweet spot is baseball combined with basketball, because you get something on the order of 200 event nights (when concerts and other shows are factored in). You can sustain very little as a result of football. That being said, football draws people together and there’s a market there.”

Others say there are less tangible benefits to having an NFL franchise in the city. It brings a city a certain sports cache and pride to residents, some of whom may choose to live in a city because of a home team, adding to the available human resources pool. Former Browns president Carmen Policy compares the Browns to the Cleveland Orchestra. The latter group brings little economic benefit to the city – only a tiny slice of the population attends classical music concerts – but as one of the United States’ “Big Five” orchestras, it adds a great deal of prestige to the city.

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