New NFL team would likely have little economic impact

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There are a lot of things economists disagree about, but the economic impact of sports stadiums is not one of them.

“If you ever had a consensus in economics, this would be it," said Michael Leeds, a sports economist at Temple University. "There is no impact."

Leeds studied Chicago – as big a sports town as there is – with five major teams.

“If every sports team in Chicago were to suddenly disappear, the impact on the Chicago economy would be a fraction of 1 percent,” said Leeds.

We talk about sports a lot, and we pay a lot attention to them, but when it comes to the actual revenue teams generate, the impact is minuscule.

“A baseball team has about the same impact on a community as a midsize department store,” Leeds said.

That’s for a sport with 80 home games a year. NFL teams only play eight.

Inglewood commissioned an economic analysis of that city’s stadium plan that will be presented to the city council next month. Developers of the project – which they call City of Champions – have promised hundreds of millions of dollars in economic activity, but Victor Matheson, a sports economist at College of the Holy Cross, is dubious.

“A good rule of thumb that economists use is to take what stadium boosters are telling you and move that one decimal place to the left, and that’s usually a good estimate of what you’re going to get,” Matheson said.

Economists say the biggest reason sports teams don’t have much impact is that they don’t tend to spur new spending; most people have a limited entertainment budget, so the money they are spending when they go to a Dodgers game is money they would have spent elsewhere, maybe even at a restaurant or small businesses where more money would have stayed in the community. Plus, Matheson says, rather than draw people to a neighborhood, games can actually repel them.

“Sporting events can cause significant crowds and congestion that can cause people to stop going to other events in the area,” said Matheson.

That’s part of the reason why a 2003 analysis on Staples Center commissioned by the Los Angeles City Controller included a surprising finding.

“Economic activity in Inglewood actually increased when the Lakers left town,” said Matheson.

That is, sales tax revenue went up when the Lakers and Kings moved to Staples Center in 1999.

“A case can be made for the fact that a cause and effect relationship exists between the loss of professional sports and a spike upward in the rate of economic growth for the City of Inglewood,” the report said. “The losses of the Lakers and Kings apparently served as a call to action and may have prompted economic initiatives, which contributed to local economic development.”

Chris Meany, who’s leading development of the Inglewood stadium site, strongly disagrees that Inglewood benefited from the Kings and Lakers leaving.

“To argue that Inglewood is better off because downtown L.A. took the Lakers and Kings is to stretch credulity,” said Meany.

'This is much more than a stadium'

We met Meany in the middle of the 298-acre expanse of asphalt and what’s left of the Hollywood Park racetrack that he hopes to transform into a major sports and entertainment destination.

He’s not wasting any time getting started; construction has already begun on the 238 acres permitted in 2009.

This summer, Meany hopes Inglewood voters will approve a ballot initiative to add a stadium on 60 more acres, but he stresses that it — and any NFL team — is only the cherry on top.

“We’re going to create something that is active 365 days a year,” he said.

Meany said football is just a small part of the economic equation. 

“This is much more than a stadium,” he said. “This about developing a new node for this part of Inglewood, and that node includes some 800,000 square feet of retail, office, 25 acres of parks, 2,500 homes and a performance venue.”

Inglewood businesses hoping for spillover benefit

Derrick Brown is hoping to cash in on the ancillary spending Meany said the project will generate.

He owns Bourbon Street Fish & Grill – serving gumbo and crawfish specials — right across the street from where the 80,000-seat stadium would stand.

“That 80,000 – along with that new mall that is going there – will be a major impact on our business,” said Brown.

When we visited Bourbon Street Fish & Grill at the beginning of lunch time, there were more employees than customers. Brown says it gets busier when there’s a concert at The Forum, which re-opened last year after getting a $70 million facelift. 

“On the days of the actual events, our business is probably doubled,” he said.

There’s  no reason to doubt Brown would see an even greater boost from a stadium. Economists say businesses right next to stadiums do benefit, but go further than a few blocks, and you would hardly see a dent.

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