Economists question impact of NBA All-Star Weekend on city

July 28 2021 05:00 am

CHARLOTTE, N.C. (FOX 46 CHARLOTTE) — Will the NBA All-Star Weekend be a slam dunk for Charlotte’s economy?

Some economists are questioning the $100 million projected economic impact the weekend will bring to the Queen City.

“The number sounds ridiculous,” said UNC economics professor Norman Peter. “Suppose the All-Star game attracts 20,000 visitors. Then, Charlotte would have to ‘net’ $5000 per visitor to generate $100 million. So, whatever conclusions that were based on previous All-Star game figures seem to be based on some sort of voodoo economics.”

The $100 million impact, promoted by Mayor Vi Lyles, is based on spending studies from All-Star Weekends in Orlando in 2012 and New Orleans in 2014 – two major tourist destinations where spending is likely to be higher. 

If the Queen City is bringing in money, it is also spending it. Numbers provided by the city show the cost to host the All-Star Weekend is around $6 million. Much of that is paid for with your tax dollars. The city is shelling out $600,000 for services, including police and transportation, along with a combined $1.5 million to waive sales tax on tickets for sponsors and a “NBA All-Star Host Fee,” according to records. 

“We do get concerned as economists that cities are spending even more scarce resources on these events,” said UNC Charlotte economics professor Dr. Craig Depken, who has spent two decades studying money in sports.

Depken thinks the $100 million figure, representing total and indirect spending during the All-Star Weekend, could be accurate estimate. However, he says it doesn’t take into account that “50 percent” of all profits, according to studies, will “eventually leak out of the local economy.” Money almost immediately leaves town when it’s spent on ticket brokers, rental cars, hotel groups and restaurant chains with headquarters all over the world.

RELATED: Southpark Mall traffic patterns changing ahead of All-Star Weekend

“It’s not a zero [sum] of course,” said Depken. “There are people coming and spending money and they’re coming to Charlotte on a weekend when maybe they wouldn’t have come otherwise. So that’s a net plus.” 

Depken says the weekend will ultimately have a “positive impact” in terms of exposure for the city. It will also give a boost to hospitality employees.

“How much of that money is actually staying here and ending up in the pockets of hourly employees at a local hotel?,” he asked. “We don’t have any measures for that.”

Questioning how much of the profits will actually stay in our local economy versus how much will walk away is an important question to ask, Depken said. 

“That’s a good conversation to have because the debate is becoming more honest,” said Depken. “And we’re not just throwing numbers around…and asking people not to think.”

RELATED: Special rules for Epicentre during All-Star Weekend

The Charlotte Regional Visitors Authority acknowledges it will face a $256,000 deficit hosting the game. 

“This has always been the butdget since we won it the first time,” said CRVA spokeswoman Laura White. “And we always anticipated the loss associated in hosting.” 

Depken says that deficit is “common.” He says events of this size are a “break even” for city governments. Larger scale events, like the Super Bowl, are usually economic losses because expenses can be 10 times more, he said.  

RELATED: NCDOT, CATS announce changes for All-Star weekend

“These events are just on the verge of a ‘break even’ for the city government,” said Depken. 

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