When LeBron James announced that he was returning home to the Cleveland Cavaliers, he did more than give long-suffering fans reason to believe the city could soon win its first championship in any major sport since 1964. King James also boosted Cleveland’s economic system!
Via TIME Magazine reports:
The greatest player on the planet could be an economic catalyst for the Rust Belt city. More fans will flock to Quicken Loans Arena to see James play, more staff will be needed at the arena to handle those larger crowds, more money will be spent during games at local bars and restaurants, and all of that will get pumped back into the region. The result, says LeRoy Brooks, a professor of finance at the Boler School of Business at John Carroll University in suburban Cleveland, could be nearly $500 million added to the local economy. Call it the LeBron Effect.
Of course, that forecast is preliminary and depends on a number of variables. Here’s how Brooks found his way to $500 million (or so):
Cleveland’s home-ticket prices last year averaged $68.17, according to TiqIQ. In 2009–10, the last season James played in Cleveland prior to leaving for Miami, Cavs ticket prices averaged $195. Last season, Cavs fans paid $202.74, on average, to watch Miami beat Cleveland.
According to Brooks, Cleveland’s leisure economy — think hotels, bars, restaurants, shops — lost $48 million in annual revenue after James left, as fans and media lost interest in the team and spent less money. Brooks assumes that money is recovered, adjusts it for inflation, and adds a 10% premium for James’ increased popularity since 2009–10 — after all, he’s now a two-time NBA champ, and a player more on par with Michael Jordan than he was when he was last in Cleveland. That’s $57 million in local spending James brings in.
The city has come a long way since it was known as the “Mistake by the Lake.” A booming biomedical sector, fueled by the Cleveland Clinic, has helped recover some of the jobs lost in the decline in manufacturing. The arrival of another hyped star, rookie Browns quarterback Johnny Manziel, and the GOP’s announcement that it will hold the 2016 Republican National Convention in the city have also created some momentum. And the metro-area unemployment has fallen to 6.8%, down from a recession-era high of 10% in January 2010.
Still, that rate is higher than the 6.1% national average. And the Cleveland area ranked in the bottom fifth in the country in job growth from 2012 to 2014, according to USA Today. But James’ return is welcome news in Cleveland no matter the size of the economic benefit — something even an economist can recognize.