NBA team looks to cater to big business

Bob Moon Apr 21, 2011

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.

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