Sunday, May 3, 2020

Sunday reading - no sports will be a massive hit to the economy

My wife and mother in law used the good weather as a reason to make it over to Milwaukee yesterday to get some craft beer, and to get out and drive along the lakefront to take in the sights. We'd usually have been over to the Cream City a couple of times already this Spring, but the Brewers aren't playing games right now, like all other sports, and I wanted to talk a bit about the hit that the lack of sports has had on the country's economy.

Not coming here anytime soon.

There was an in-depth article on ESPN.com this week talking about the economic drop that has resulted from no games being played. One obvious effect is that a whole lot of people are out of work, especially the gameday personnel that don't make much money. And with the possibility of no fans attending, they may not come back any time soon.
How many of those people are out of work -- and when those jobs may return -- is not yet clear, but the effect on pro sports is already dramatic. It requires roughly 1,900 people to stage an NBA game, for example, according to league figures. Of the 52,450 workers the NBA supports, approximately 42,000 -- or 80% -- are ushers, security personnel, ticket takers and other service people working at arenas.

Although teams and, in some cases, star athletes have pledged money to help those workers, the assistance will fall short of what's needed, especially if leagues such as the NBA and MLB return without fans. "My worst fear is the startup -- coming back if the people are not attending games," said Tawanda Murray, 45, who works concessions at Chicago's United Center.

On March 11, Murray was working a Blackhawks game when she and her colleagues heard the NBA was shutting down. One day later, the NHL postponed its season. Murray immediately filed for unemployment.
Another big loss that the ESPN article notes is in youth sports tournaments and the traveling teams that go around the country in the Summer. It gives a major hit to tourism-related industries that count on those youth players and families staying in hotels and eating in local restaurants.
In Westfield, Indiana, officials were forced to shut down the 400-acre Grand Park Sports Campus at the height of the spring season. The facility, about 30 miles north of Indianapolis, has 31 multi-purposes fields and hosts events year-round. Grand Park hopes to reopen June 1. Officials calculate that the central Indiana economy is losing more than $20 million per month while the facility is closed. Nearly a quarter of all hotel room reservations in Hamilton County are tied to the complex.

"I wouldn't hesitate to say this is devastating," said Brenda Myers, president of the Hamilton County Tourism Board, which is financed almost entirely by a lodging tax. Myers has cut her 24-member staff in half through layoffs and furloughs.

In Blaine, Minnesota, the $170 million, 660-acre National Sports Center lies dormant. Billed as "The World's Largest Amateur Sports Facility," the complex includes 50 multi-use athletic fields, an ice arena with eight rinks, a stadium that seats 5,500 people and a 58,000-square-foot indoor facility. The NSC has calculated its annual economic impact to the community at $89.1 million.
Cities with professional and college sports are also likely to miss out from having people travel to their communities to games if fans aren't able to attend. And few places would feel that more than Green Bay, Wisconsin, population 105,000, but a whole lot more on a Packers weekend.
Historically, the stable Green Bay-area economy, supported by the papermaking, transportation and food-processing industries, provided a sound base for the Packers. The team's contribution to the economy was less, in part because many of the fans were local and because it played half its games in Milwaukee.

That changed in 1990s, when the Packers moved all their games to Lambeau Field and Green Bay resumed its place as one of the NFL's most successful franchises, increasing fan interest. The renovation of Lambeau Field in 2003 and the addition of about 7,000 seats in 2013 further altered the equation. An economic impact study conducted during the 2009 season concluded that more than 80% of fans attending Packers games traveled 50 miles or more, which meant a lot of money is imported into the community.

As a result, more hotels were built, and more bars and restaurants opened while existing ones expanded, driven in large part by the Packers' training camp and those 10 home games a year. Add to that the development of the Lambeau Field Atrium as a year-round tourism and meeting place and the development of Titletown District, which are all currently closed to the public...

Using the 80% estimate, Packers games draw in the neighborhood of 600,000 people to Green Bay on game days.

"The influx of traffic during the NFL season for the home games does generate a lot of business for many people," said Tony Weid, CEO of Dino Stop gas and convenience stores in Green Bay. "We do see a huge increase on weekends and particularly on game days (at the Dino Stop) on Ashland Avenue. We also see big increases at our locations on interstates. It’s a statewide event."
GB can't afford to have Lambeau look like this.
The ESPN article says the losses from a lack of sports will be massive in 2020, and COVID-19 sports shutdowns are going to ripple through many other industries.
The numbers include everything from the price of a ticket and a hot dog to the money you spend taking your daughter to an out-of-state soccer tournament. For example, the crisis stands to wipe out more than $3.25 billion that fans would have spent on pro sports. It would erase nearly $371 million in wages -- approximately 20 million hours -- for ticket takers, beer vendors and other stadium and arena employees. At least $2.2 billion of national TV revenue would be lost, as well as up to $2.4 billion in tourism related to youth sports.

The analysis is conservative in a number of ways. It does not include projected losses from NASCAR, golf, tennis and several minor sports and gambling. The numbers also don't account for losses in the outdoor recreation industry, including hunting, skiing, recreational golf and tennis and fishing. Outdoor recreation generated $427 billion in 2017, according to the Bureau of Economic Analysis. With sporting goods stores, golf courses and fishing tournaments shut down in parts of the country, those revenues and jobs have disappeared, too.
And those ripples will continue to work their way through in the coming months, especially if fans aren't allowed to be packed into stadiums like they were in 2019 (which seems likely through at least the late Summer).

1 comment:

  1. And while I don't generally like subsidizing pro sports unless it is part of a bigger project, this situation of not having sports will uniquely hit the economy. Unlike a normal scenario, a lot of other entertainment options like dining and concerts also aren't available, so it seems likely that nothing gets spent at all.

    The highest savings rate since 1981 for March would also indicate money is not being spent elsewhere, or at all. And that's a longer-term issue that likely will hit sports after the games resume.

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