Will the LeBron James Stimulus Be Good for Cleveland?
When LeBron James announced his return to the Cleveland Cavaliers in July, fans celebrated by hanging banners, getting drunk and digging old jerseys out of purgatory. They ran into the streets, honked horns and hugged strangers. And some of them started trying to figure out just how much money was about to rain down on Cleveland. According to one estimate, the return of the “king,” as James is known, will add $500 million a year to the city’s economy. “When people say this is just about an athlete making money, there’s more to it than that,” said Edward FitzGerald, the Cuyahoga County executive, at a news conference devoted to the anticipated windfall. “Other people will make a living.”
James is certainly a good investment for the Cavaliers, who will probably cover his $20.6 million salary just from increased ticket sales. The last season James played in Cleveland, after all, the Cavs sold every available regular-season seat at an average price of $55.95, earning about $47 million. Last season, the Cavaliers sold just 84 percent at an average price of just $43.31, for a decline of $16 million. This year, season tickets sold out the day James announced his return, and demand is so overwhelming that the team is raffling the remaining single-game tickets so that everyone in Cleveland has a fair chance. Everything else is gravy: playoff games, sponsorships, jersey sales and the team’s local broadcast rights, serendipitously scheduled for renegotiation at the end of next season.
What FitzGerald and some other Cleveland boosters envision, though, is a LeBron stimulus that enriches the city as a whole. Start, for example, with the restaurants along East Fourth Street, near the arena, whose business dropped significantly after James bolted for Miami. Scalpers are happy, too, and owners of nearby stores that sell T-shirts and jewelry also expect sales to pick up. To get that $500 million estimate, LeRoy Brooks, an emeritus professor of finance at John Carroll University, just outside Cleveland, assumed that all these people making more money will spend it in Cleveland, multiplying the James effect. Brooks told me he now thinks James will add between $163 million and $426 million to the regional economy. He said that he made the first estimate in haste, “on the day after my first grandson was born.” FitzGerald’s staff estimated a more modest bounce. The LeBron stimulus, they concluded, could reach $285 million, including the creation of about 550 new jobs.
Certain individuals have changed a city’s fortunes. John D. Rockefeller helped to drive Cleveland’s rise as an industrial power. Bill Gates sparked Seattle’s high-tech transformation. Dan Gilbert, the founder of Quicken Loans and owner of the Cavs, has purchased a large chunk of downtown Detroit, which he is slowly renovating and repopulating.