It's lazy reporting, but it's going on around the country in NBA cities. Local TV news stations are spreading doom and gloom about the negative economic impact if the lockout cancels regular-season games. It's easy to hook in viewers, but what if it's just not true?
Slate has a brilliant piece written by Neil deMause that exposes the myths about the devastating impact of a work stoppage on local economies across the United States.
"There is no way the NBA lockout will have any significant economic consequences," the University of Alberta's Brad Humphreys, an economist who has studied the effects of sports work stoppages, told deMause for Slate.
Humphreys and Dennis Coates of the University of Maryland-Baltimore County studied the effects of sports work stoppages in the NFL and Major League Baseball back in 2001 and found that even in those instances when ticket sales stopped, the average income in a city had no change. The pair also looked at NBA cities that had lost their teams and came up with the same result.
A group of researchers from Holy Cross focused only on the state of Florida, looking at how sales tax receipts changed during every NFL, MLB, NBA and NHL labor standoff going back to 1982. That study, released in 2006, came up with the same results.
Yes, certain businesses near arenas will suffer greatly. But losing professional sporting events to a work
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stoppage could actually be a blessing in disguise for other local companies. The University of Maryland-Baltimore County study found per-capita income actually went up slightly (a fraction of a percentage point) during sports labor disputes.
Experts call this the substitution effect. When consumers decide to spend money on a particular entertainment event, they also decide not to spend that cash on something else. If you've purchased Lakers tickets, you're not going to Disneyland or the movies. If regular season NBA games are canceled, fans will spend that entertainment money on nice meals, movies or other sporting events.
While fans spend ridiculous amounts of money on tickets to watch the Knicks, Celtics and Bulls play, they are taking those entertainment dollars away from the local mom-and-pop amusement options in town. Should the work stoppage last for awhile, people will spend still spend their money -- just not on LeBron James.
The real negative impact of the lockout will be on tax revenue from cities attempting to pay off arenas.
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