LeBron Can Do A Lot of Things, But He Can't Save Your Economy

If any athlete would have a sizable economic impact on a local economy, it’s LeBron James in Cleveland, the ultimate combination of mega-huge global superstar with a small, but highly passionate, market. Yet, a recent Harvard Kennedy School study suggests even King James can’t rein in economic depression.

To measure this, the researchers looked at the number of restaurants and bars—and employment levels at those establishments—within a seven-mile radius of the Cavaliers’ home stadium, Quicken Loans Arena, and compared that with the establishments within a one-mile radius. It then does the same with James’s time in Miami as a kind of quasi-control group.

Before I get to the results, I’d like to point out some…ahem…flaws with this methodology. First, the researchers chose restaurants and bars because “they stand to gain the most from increased attendance and fan enthusiasm.” So keep in mind these are the very industries most likely to experience an economic boom from James. Second, downtown Cleveland, where Quicken Loans is located, is only 3.2 square miles. So the radius encompasses, well, most of downtown. Third, downtown Cleveland has been experiencing a rejuvenation thanks to multiple factors that have to do with real economic concepts like housing supply and demand, vacancy rates, employment, and new construction, not “basketball reasons.” In that vein, the study seems to do little to mitigate non-LeBron factors for downtown restaurant growth.

The Cavs have been to the NBA Finals in both seasons since James’ return. Photo by Bob Donnan-USA TODAY Sports

Now, all that said, the study found that James increased the number of restaurants and bars within one mile of Quicken Loans by 13 percent, and employment at those businesses rose by 23.5 percent. That sounds like a lot, but it’s not. At only 210 establishments, a 23.5 percent employment increase isn’t very many jobs. Also, the researchers found those effects became negligible outside the one-mile radius. Also, the researchers seemed to ignore that the number of restaurants near Quicken Loans declined during LeBron’s first four years with the Cavs (they do acknowledge he had no noticeable effect on Miami’s market).

One final point: the Cavs did not make the playoffs once between James’s stints, but have played in the NBA Finals both seasons since his return. This is important, because it means an additional 20 home games over the last two years. What a magical coincidence that 20 additional home games over two years equates to a 24 percent increase of home games, a nearly identical rate of increase to employment in Cleveland bars surrounding Quicken Loans! (No it really is probably a coincidence though.) So is this really about LeBron’s economic impact, or the economic impact of having a giant building in use more days per year?

And this is to say nothing of well-worn economic impact report buzzkills like the substitution effect.

The really stunning thing to me is that, given the mitigating factors and common sense this study ignored—and the fact this is LeBron Freaking James in Cleveland Freaking Ohio—the effect was still this small! If the best-case scenario, the absolute rosiest picture imaginable, is that LeBron opened 40 new restaurants and bars, then it is settled: let us never speak of the economic impact of pro sports ever again.

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