Jul 02, 2019 - 4:00pm

National Sports Championships Provide Big Wins for Local Economies, Businesses


Intern, Strategic Communications

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St. Louis Blues
The St. Louis Blues players pose with the Stanley Cup after their championship victory over the Boston Bruins. (Photo courtesy: St. Louis Blues)

There is no better feeling in the world than seeing your city’s beloved sports team take home a championship title. Fans in St. Louis and Toronto experienced this feeling recently as the St. Louis Blues and the Toronto Raptors took home the Stanley Cup and an NBA title, respectively.

Undoubtedly the joy of victory is felt throughout the communities of the winning teams, but joy isn’t the only thing a championship title brings to a city. A Stanley Cup and an NBA title have produced tangible economic benefits for the cities of St. Louis and Toronto, as well as increased tourism in those areas.

These economic benefits can impact a local economy so strongly that cities have attempted to defend public subsidies of professional sports as investments rather than just expenditures. Many cities view the possibility of new teams and stadiums as a path to economic stimulus in the future.

For example, in 2016 when the Cleveland Cavaliers won the NBA Title, LeBron James’s brand combined with the championship became a force of revenue for the local economy. 

In the 2018 NBA Finals, ESPN reported that 25% of all merchandise sales from Game 3 were LeBron James’ jerseys. James has been referred to as a one-man economy, but for Cleveland, that has had both positive and negative impacts. For example, when James left the Cavaliers in 2010 to join the Miami Heat, the franchise value of the Cavaliers fell from $476 million to $355 million in just one year, according to Forbes.

Harvard and Case Western University public policy professor Daniel Shoag investigated James’ economic impact on the cities he played for in 2017. He found that James’ presence, and the effect he had on game attendance, impacted the businesses around him. The total number of bars and restaurants within one mile of team stadiums grew by an aggregate of 13% and total employment saw an increase of roughly 23.5%.

But the economic growth James fostered with the 2016 NBA title in Cleveland is not a one-off example. The economic impact of sports championships can be seen across the U.S. and Canada.

Toronto

The Toronto Raptors are ranked 11th among the top NBA team valuations with a total team value of $1.7 billion, but after a championship title this year, the team may see that number rise. Adobe Analytics reported that a team just making an appearance in the postseason alone will boost merchandise sales by 24% and those who do not qualify for the postseason see negative returns of roughly 87%. In Game 1 of the Raptors finals against the $3.5 billion-valued Golden State Warriors, the Toronto merchandise sold at their Scotiabank Arena broke records by 27%, according to Fansided.

Toronto’s success has a strong correlation with rising consumer spending, which is benefiting Toronto’s economy. Credit and debit processing firm Moneris reported that transactions in the Greater Toronto Area had risen by 28% and reached a high of 76% as the game ended and fans went to bars to celebrate. The economic boom catapulted by the Toronto Raptors was not limited to just the city itself. The impact was seen in Vancouver, Calgary, and Edmonton as well.

Richard Powers, a sports marketing expert and associate professor at the University of Toronto’s Rotman School of Management, described the long playoff run to CBC news in Canada as “huge for Toronto” since the long term impact on entertainment and tourism could be up to $1 billion over a 10-year period 

Sunny Pathak, president of the Toronto marketing firm NewPath Sports & Entertainment, explained to CBC how jerseys and other merchandise sold out fast. Kawhi Leonard's New Balance shoes were out of stock in just six minutes. A spokesperson for Toronto Mayor John Tory told CBC: "With a growing number of fans gathering at Jurassic Park and across the city, restaurants, bars and other venues are likely to see an increase in revenue, which in turn will create strong economic activity. Beyond the financial impacts, the mayor recognizes that an event of this stature will shed a spotlight on our great city and our ability to come together to support this remarkable team."

Ticket sales are also showing the impact the championship is having on the city. Online ticket reseller StubHub reported that Game 1 of the Raptors-Warriors contest was the third-best-selling NBA Finals game ever for their company. StubHub's data stated that the 2019 NBA Finals were outselling the 2018 Finals by a margin of 57%, according to CBC. The amount of sales in just the first and second games of the Raptors-Warriors series alone were equivalent to 86% of the total 2018 NBA Finals sales on StubHub. The average prices of tickets for Games 1 and 2 were $1,371 and $1,444 with the highest ticket price being $23,896 and $10,000, respectively.

Overall, the Raptors have certainly put Toronto on the map with the team’s championship run, and the economic boom is likely to continue long after the confetti is cleared from the arena.

St. Louis 

The St. Louis Blues are ranked 17th out of all NHL teams in terms of valuation, which is reported at $465 million as they bring in roughly $148 million in revenue. The team’s value is bound to rise as the Blues just secured their first ever NHL Stanley Cup championship just last week against the Boston Bruins.

The Blues were a marginally profitable team before winning the Cup. The owner, Tom Stillman, bought the team for $180 million in 2012 and took on its debt. Stillman turned the franchise around, and the team has made it to the playoffs every year since, with the exception of last season, according to Forbes. The publication also reported that the Blues 2019 run to Game 7 of the Stanley Cup Final added roughly $9 million to the team’s operating income. Now with a championship win, the Blues are expected to close out a deal with Fox Sports Midwest, increase sponsors, and boost season ticket sales.

Not surprisingly, the Blues’ winning streak is generating growth for the local economy. The Federal Reserve Bank of St. Louis produced a report in May that found “area hospitality contacts report stronger than expected sales, citing strong interest in St. Louis Blues hockey.” The report further showed that employment and wages have risen and consumer spending is up.

“Many estimates of a run through the Stanley Cup finals start with lofty numbers of a $50 million dollar impact on the region. This number stems from projected revenue from tickets, merchandise, hotel, and restaurant and bar sales, among others, during the finals,” Douglas D. Mueller, a CPA at Anders CPAs and Advisors, noted.

The city of St. Louis estimated that the government receives $300,000 in direct revenue per Blues’ playoff home game from tickets, parking, and concessions alone, according to KSDK news station in St. Louis. Merchandise sales have been another critical asset for St. Louis. Sales of Blues championship apparel and memorabilia made an NHL record after just 12 hours after winning the title, Bloomberg reported. For comparison, the Blues sales beat out the sales of the Washington Capitals in 2018 by 10%.

Looking ahead

St. Louis isn’t done stimulating its local economy with national sports. The 2020 NHL All Star Game will be held in the city as well. The game alone could generate up to $20 million for the area, according to the St. Louis Business Journal.  

Beyond economics, a crucial part of the wins in Cleveland, Toronto, and St. Louis have been through the support of residents and growing civic pride - helping unify the communities these teams are from. And while these wins have launched new development for the cities of Toronto and St. Louis, these localities have also witnessed a new sense of consumer enthusiasm, spurring economic growth from not only visitors, but residents.

Congratulations to the fans, coaches, players, and staffs of the Toronto Raptors and the St. Louis Blues!

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About the Author

About the Author

Intern, Strategic Communications

Jared studies international affairs and history as an undergraduate at The George Washington University.