Free Agent Moneymakers

To intense sports fans, the offseason is so much more than just a break from one’s favorite sport.  The offseason is a flurry of action as free agents look to sign with a new team which is poised to make a run at the championship.  These free agents can sign for record numbers in the hundreds of millions of dollars, but more importantly they affect the economy of whatever city they decide to go to.  Whether these big money free agents decide to go to or leave a city, the economy of that city will feel the effects of their decision, for better or for worse.

In 2010, Lebron James' decision to join the Miami Heat  had ripple effects in the Cleveland community
In 2010, Lebron James’ decision to join the Miami Heat had ripple effects in the Cleveland community

The best and most talked about example in recent years has been Lebron James going to and from Cleveland and Miami.  James left the Cleveland Cavaliers in the summer of 2010 for Dwyane Wade, Chris Bosh, and the Miami Heat.  Instantly, reports started to come out that the local economy in Cleveland was about to go into a free fall.  James brought the Cavaliers to the NBA Finals once, several postseasons, and a couple MVP awards.  What did this do to the local economy? Lebron James turned the Cavaliers into a popular, winning NBA team.  This drives up ticket prices and fan interest, which leads to higher attendance at games, which leads to more business to the surrounding bars and restaurants on game days.

He then famously took his talents to South Beach and the Cavaliers floundered.  The Heat grabbed two championships but James felt like an emptiness.  He wanted to bring a championship to his hometown and give back to the fans who had given him so much when he was in Cleveland.  So he penned an essay to Sports Illustrated announcing his return to Cleveland last summer thus setting several things in motion.  It laid the landscape for the remainder of the offseason and other free agents such as Carmelo Anthony, but it also meant that the Cleveland area would get a much needed revival into it’s local economy with James returning.

There have been plenty of studies into the actual effect on what a major free agent like Lebron James can do to a cities economy, and there have been some interesting conclusions drawn.  In an article by CNBC, the average ticket price for a Cavaliers game jumped up 224% for James’ first season back in Cleveland to a whopping $338.  Also, the Cavaliers jerseys in general sales are up 700% according to the same article for this time period last year.  There have been several speculations as to how much of a change James himself could bring to Cleveland, but ranges anywhere from a $50M to $500M boost to the economy.

James' decision to return to Cleveland means a revitalized economy in northwestern Ohio
James’ decision to return to Cleveland means a revitalized economy in northwestern Ohio

Now, $500M is a lot of money to bring into a city, no matter how big or small.  It’s hard to believe James is that big of a walking economy, and if he brings in a positive $500M change to the conomy then that would mean that when he left Clevelanders justs topped spending money altogether.  It’s true that when James left there was a decline in game attendance and it was a bigger and bigger decline over his 4 year absence, but those fans that now weren’t going to Cavaliers games were most likely spending all that money in a different aspect of Cleveland’s economy.  Assuming these fans didn’t leave the city altogether because Lebron James left, the money that they would’ve spent on Cavaliers games and merchandise or local bars and restaurants stayed within the city, it just went to a different sector.

The Heat however are taking a much more positive approach to James’ departure.  Realizing that this will drive down ticket prices substantially, members of the organization hope to bring in new fans who will cheer on the fresh, new look Heat.  Local restaurants and bar owners also hope that there will be a surge as these new fans will cheer the “post-Lebron” Heat on vigorously.

A lot of people view sport as a simple way of entertainment but it’s quite clear that a single action like Lebron James returning home can have a huge effect on local economies.  Whether it’s $50M or $500M, big time free agents have massive impacts on the cities that they sign on to and it’s important to watch these events unfold to see how they might affect you.

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