LeBron James is set to make $8 million over two years with his move to the Philadelphia 76ers. But how much money will the city’s economy get out of the deal?
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“It’s hard to precisely quantify, sitting here today, what that exact number is going to be,” said Ethan Conner-Ross of Econsult Solutions Inc., a Philadelphia-based economics policy consulting firm.
Of course there’s James’ own money as a high-earning professional coming into the region — including any local taxes he’d pay, and the money he would spend to rent or buy a place in the Philly region, though rumors suggest he might commute from New York.
The greater economic impact depends on how many consumer dollars come into the city that wouldn’t have without James joining the Sixers.
“The level of interest in the team, and then ultimately the success of the team, could definitely play out in more economic activity in a few different ways,” including short- and long-term outcomes, Conner-Ross said.
History provides some idea of how this athlete could financially benefit the city.
A 2017 Harvard study found that James’ presence in Cleveland and Miami was tied to an increase in the number of food and beverage businesses within a mile of the arenas in those cities and a boost in employment at those establishments.
Moody’s Analytics economist Matt Colyar says James’ presence won’t increase housing prices in the area or lower the unemployment rate, but if the team performs well and ends up playing more playoff games, that could fill up restaurants, bars, and hotels with Sixers fans on additional days.
“All that is serious dollars,” Colyar said, “but not the kind of thing that makes us revisit our forecast for Philadelphia’s long-term trajectory.”
Where will money be spent?
In the short-term, James’ move could mean more ticket sales and jerseys bought, Conner-Ross said. It likely means more media and more fans coming to town for games.
Early signs suggest this is already happening. Fanatics, the sports apparel company, sold out of some LeBron James Sixers jerseys within hours of the announcement Friday that he would join the team. Preseason ticket prices have risen as well, 6abc Action News reported.
How much money stays in Philadelphia will be a “tourism story,” Conner-Ross said. Hotels, restaurants, and bars near the arena or downtown could benefit.
Some of the money spent by locals on James-related experiences and merch may have been spent locally anyway, Conner-Ross said. That could still be positive for the city, he said.
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“Philadelphia entertainment activities are not the only things competing for those dollars,” he said. “These folks have the ability to spend their entertainment dollars at the Shore or going to New York, or what have you.”
If “they’re excited about the Sixers and spend more in town, it’s probably a net positive,” Conner-Ross said.
Boosting Philly’s reputation
Some of the James effect — like more media exposure and nationally televised games for the Sixers — will make money for non-Philly beneficiaries.
“Those aren’t dollars that are going to support public parks in Philadelphia,” Colyar said.
But there could be a reputational gain, Conner-Ross said. Hosting the World Cup, the All-Star Game, and other events have helped Philadelphia be seen in a positive light, he noted, and James could similarly contribute to the city’s image.
“Philadelphia is … competing with other East Coast cities, other places in the country, in the world for residents, for visitors, for businesses, and that reputation really does matter,” Conner-Ross said.
That kind of influence can have financial consequences, even if it’s hard to measure in exact dollars.
International soccer star Lionel Messi, for example, helped raise Miami’s profile in the soccer world as well as attract tourism, and the Wall Street Journal says some have estimated that his presence on Inter Miami has generated billions of dollars for the city.
To be sure, Messi’s and James’ situations are like apples and oranges — or soccer balls and basketballs — in part because they’re playing out in different cities.
In any case, the influence of a star like James could have a trickle-down effect.
People aren’t “going to necessarily point to LeBron James and say, ‘Now I have to live there,’” Conner-Ross said. But “it affects their perception of Philadelphia as a place that people choose.”
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