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NBA team looks to cater to big business

A fan of the Sacramento Kings hold up a sign against the Los Angeles Lakers on April 13, 2011 at Power Balence Pavilion in Sacramento, Calif.

Jeremy Hobson: Sacramento is trying to hold onto its pro-basketball team And the city will get one more "desperation shot" in the next couple of days. The owners of the NBA Kings are in talks to move their franchise from Sacremento to Anaheim. But first, league officials are taking a close look at what the mayor of California's capital city says he's got lined up -- millions of dollars in new business commitments to keep the team in Sacramento.

Here's our senior business correspondent Bob Moon.


Bob Moon: To find out what the fuss is about, I spoke to a Stanford University economist who's studied the financial impact of sports teams. And professor Roger Noll told me: Follow the money.

Roger Noll: Arenas, and stadiums for football and baseball as well, have grown bigger and bigger without adding seats.

He says the new venues have become "shopping malls" for team concessions, and they cater to business bigwigs with lucrative "skyboxes." For one thing, Sacramento doesn't play host to any Fortune 500 headquarters, and Anaheim has 50 more luxury suites than Sacramento's aging arena.

He says the skybox money flows to the owners. But no matter which California city gets the team next year, Noll says the average fan won't add much to the local economy.

Noll: If they spend more on basketball, it's because they'll be spending less on doing other things, in entertainment and recreation, other kinds of discretionary expenditures. So as a result, the net effect on the economy is zero.

Still, I asked the Stanford professor: Try putting a value on the civic pride of being a big-league city.

Noll: $4.24.

It's an interesting question, Noll explains -- but not really one for an economist.

I'm Bob Moon for Marketplace.

About the author

Bob Moon is Marketplace’s senior business correspondent, based in Los Angeles.
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Roger Noll couldn't be more wrong. How about the effect of having 12-15 multi-million dollar salaried employees living in your community (much less your neighborhood? A single player could purchase a nice home and elevate the value of the other homes in his neighborhood by millions of dollars just by his presence. Is he saying none of a team's player payroll of $50M doesn't flow into the community, not even $4M/year. How about the high salaried jobs of coaches along with team and arena management in the community? How about having 12-15 millionaire players flying into your city 41 times a year and spending the night, along with coaches and management, each having their own room in the best hotels in the city? Tell the hotels and restaurants close to the arena the net effect is zero. What about the percentage of fans from out of town who wouldn't come into the community otherwise? Mr. Noll doesn't have a clue what he's talking about.

I love this. It's the first time that I have heard someone in the media explain that sports teams are gnerally a $0 impact to the local economy. The usual (and false) line is that they are great money makers, but that is only if you look in a small enough circle.

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