Wednesday, August 6, 2014

Will LBJ land in Sacramento?

Publication date: 2010

Tomorrow everyone will know LBJ's new address. Will he move to a title contender, or take another shot at helping Cleveland win a title?

Lebron James is receiving more attention than the oil spill in the Gulf of Mexico. Should sports work in such a way as to consume the attention of the media and viewers? The hoopla surrounding the NBA is that Lebron James will decide his future tomorrow. Will LBJ remain a Cavalier? Or, will he relocate to a contender? Every sports fan and business is paying close attention to the LBJ economic effect.

As a Sacramento Kings fan, I would welcome Lebron James to the Kings. The moment Kevin Martin left, the number 23 is available again. What better way than to hand Lebron James a new Kings jersey with the number 23 on it. Businesses have dreamed about this moment, especially restaurants, bars and sports-related stores. The media has attempted to convince the mass that the coming of Lebron James would generate huge revenue.

Everyone has to remember that the same amount of money will be spent. The LBJ economic effect is that his signing will generate more interest. On nights that his team plays, fans will flock to the arena, local bars and the restaurants to watch the team. It is determined that LBJ will increase the value of a franchise and increase a city's revenue.

However, other businesses may lose money due to the the redistribution of revenue. People that normally go out to dinner and watch movies will instead choose to invest their time and money into basketball. No matter what, people will always spend their money. Whether they go shopping, dine out and travel, a basketball player or a team will not change the amount of money that is spent. It is evident that more money will be spent in a particular area, but there will be other areas that stand to lose revenue.

The best strategy to determine if a player such as LBJ can change the economic dynamics of a city is to compare the amount of revenue he brings in to past years. Also, it is also wise to assess the change in revenue in other areas. Evaluating the overall amount of money spent in an entire city versus that in the recent years can determine whether LBJ can generate more revenue in relation to its past economic performance.

There is a perception that city council members must approve tax increases to build new arenas. The sports owners convey that investing into an area will bring notoriety to a city, and generate additional revenue. New York City doesn't need Lebron James to be successful. They already have Broadway, the Statue of Liberty, Manhattan, Times Square, Yellow Cab taxis, and museums to generate revenue. Cities that approve multi-million dollar sports arena may benefit from using the arena to hold conventions and other events, but for sports alone it's not a good investment. The money is better spent somewhere else.

Furthermore, LBJ alone cannot improve the economic landscape, except maybe for Sacramento, California. A player of LBJ's stature will likley transform Sacramento into a premiere hot spot. California surely needs an economic boost. LBJ has the influence to bring the media along with him. The Maloofs will then be able to build their new arena. Sports fans would travel long distances to watch the Kings.

So those fans that are coming from outside cities will adversely impact revenue in places such as Reno, San Francisco and other surrounding cities, but for the most part, the LBJ economic effect can benefit a smaller market like Sacramento, who really needs a catalyst to generate revenue in their struggling economy.

  Written by Jason Allen Goodlin

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