Why Losing One Basketball Game Is No Big Deal

If there’s a contest for the most bogus statistic the North Carolina Left has created this year, here’s an early favorite: the laughable claim that losing one basketball game – even the NBA All-Star Game – will cost Charlotte and the state $100 million in lost business.

This phony stat is repeated over and over in the kerfuffle over HB 2; the implication is that the fuss is hurting the state’s overall economy. But that’s just typical for the Left and their media minions: fabricating phony numbers, then parroting them over and over. First, let’s take a closer look at the hidden assumption that special sports events generate windfalls for local communities.

Well, if that were so, Detroit would be a fiscal Eden. As Civitas’ Brian Balfour points out, in the mid- to late-2000s Detroit hosted the Major League Baseball All-Star Game, the NCAA Final Four, and the Super Bowl. So its economy is in great shape, right?

Um, Detroit declared bankruptcy in 2013.

In fact, in recent years researchers have shown again and again that most big sporting events have a negligible effect on a community’s economic health. Economists Dennis Coates and Brad R. Humphreys in a revealing paper surveyed the research and found that most big sporting events had little or no impact on local economies – or even a negative effect. For example, when Houston hosted the MLB All-Star Game in July 2004, sales tax receipts were less than in a typical July.

We can turn back to North Carolina for another revealing example. The NBA once punished Charlotte much more harshly. The league cancelled not just one basketball game but all Hornets games for two whole years – when the league let the franchise move to New Orleans after the 2002 season.

So did the Charlotte economy collapse? Of course not. For those two years, its population and economy continued to grow at a rapid clip.

In fact, the entire effect of a big-league sports franchise does little for a regional economy.

“If you ever had a consensus in economics, this would be it,” Michael Leeds, a sports economist at Temple University who was quoted at marketplace.org about the impact of sports teams on cities. The bottom line, he said:  “There is no impact.”

Why? Let’s try a thought experiment. Suppose the NBA never picked Charlotte for the All-Star Game in the first place. Would every Mecklenburg County hotel and restaurant be empty that weekend? Would the streets be deserted and businesses shuttered in despair?

Of course not. Both residents and visitors would be shopping at stores, attending events, and seeing the sights.

To be sure, without the All-Star Game, there will be some in the hospitality industry who will lose out on some extra business that weekend, but most of that money will instead be spent elsewhere in Charlotte’s economy. Instead of going to the game, people will be patronizing local businesses, from restaurants to auto deals, and otherwise enjoying themselves or engaged in productive activities.

Modern economists now realize that a big sporting event just displaces other economic activity. Local residents, knowing downtown will be crowded, stay home. Other potential visitors who aren’t interested in basketball will travel to other cities or visit Charlotte at other times.

In other words, the whole idea that losing a basketball game will cost Charlotte a hundred million bucks is fraudulent. The reality is that any city’s or state’s economy is not based on one basketball game, but on helping businesses grow.

That in turn is based on more foundational factors, especially how little government hampers job creation, the quality of infrastructure, how friendly government is to business, and the quality of the workforce. That’s what will really drive an economy, not one weekend of basketball.

More important, we should extend that insight to the rest of the tales being tossed around about economic pressure applied over the state’s bathroom privacy law. The media has been peddling horror stories about how much the law will cost our state. But in fact those stories are basically the same as the All-Star Game spin.

Remember, North Carolina’s economy is larger than that of many nations, such as Sweden, Switzerland, Austria or Belgium. The loss of one basketball game has no impact.

Nor is there a sign that a threatened boycott is having any impact. Sure, a few out-of-state companies figured they could score some PR points by announcing how liberal they are. But there are few if any signs this is having a major impact. Some of these companies are finding their bottom lines are suffering, suggesting they are suffering their own backlash.

The vast majority of companies, however, will do what they’ve always done: go where they have the best chance to do business and make money. Many of them will do what companies have been doing for decades: looking at North Carolina and seeing it’s a good place for people to live and for companies to prosper.

And, of course, that what’s the legislature and governor have been doing in recent years. They have gotten state spending under control, cut taxes, reformed the unemployment system, and otherwise made North Carolina a better place to live and work. Unemployment has plummeted so that our jobless rate now equals the nation’s as a whole. That’s more important to businesses than anything else.

Remember that when wild figures are being tossed around about how the issue has affected the state. The Left can’t win on the core concern: providing privacy and safety in public bathrooms, locker rooms and showers. So it has to gin up phony figures and PR spin.

Finally, this whole hoopla is a good reminder for us to be skeptical of everything the media and their allies tell us. Use common sense and look at the economic realities, not incredible statistics.

As for any benefits from a basketball game, remember that the Hornets can bring at least two more high-profile NBA games to Charlotte in 2017 … just by making the playoffs. That’s another reason to root for the hometown team.