Economist: NFL Lockout Would Make for $20 Million in Lost Economic Activity per Game on Average

Dr. Jesse David:Thanks George. Well I’ll get right into it. We were asked by the NFL PA to come up with an independent analysis of the economic impact of a potential lockout in 2011.

Our approach to doing that is based on publicly available information that all of you would be able to find pretty easily, and I can point you to some of it. What we did was look for other studies that would be relevant and do a survey of those studies, and pull the appropriate data and aggregate it into a number that we could use.

In particular I’m sure you’re all aware of the kind of analysis that cities, development agencies, the teams and the league itself often provide to the public when they are seeking public assistance with building stadiums.

That happens in almost every case when there’s a new stadium built or a major renovation. We actually calculated that the public’s provided an average of about $250 million per facility since 1990 per NFL facility.

Well when the teams and the developers are seeking that money, they often commission studies of the economic impact that a stadium and the NFL operations in it will have on the local economy.

Those numbers are clearly relevant to the question of what will happen if NFL activity stops. So we looked for publicly available studies of that nature, and found about ten of them in the last decade that were relevant to this question.

They are studies that have been commissioned by for example the San Francisco 49ers, by the Metropolitan Sports Facility Commission up in Minnesota, by the new Meadowlands Stadium Company who is working to build the new Giants and Jets stadium.

Each of them published a study using proprietary data from the teams to estimate the impact that those facilities and the games in them would have on the local economy.

We took those studies, we did a few things to them to make them comparable and to make them useful for the question that we have here. For example we extracted the information regarding ongoing operations and separated that from economic information related to construction.

We don’t want to count any of the initial economic impact associated with constructing a facility, because if a football game takes place or doesn’t take place the relevant question is, is what’s happening to the operations of the facility and the team in the facility?

We took information where possible from each of these studies relevant for the county in which the stadium is located, as opposed to a broader measure like the state or even a narrow measure like the city.

So we’re making comparable – we’re taking comparable results from each of the counties in which the economic activity is occurring. And then finally since some of these studies were ten years – as much as ten years old, the ones that we looked at, we brought them all forward to current dollars to make each of them comparable.

And our results are that each NFL game, the actual operations of a game, generates an average of about $20 to $21 million in economic activity. There’s a range, something like $10 to $40 million, in these studies that averages about $20.

Over the course of eight home games, and that obviously doesn’t count playoffs and the Super Bowl, that’s about $160 million per year in economic activity.

That is activity that would be lost if there’s a full year of a lockout. Over one game you could lose as much as $20 million in activity, economic activity. We’re talking about wages, we’re talking about salaries paid to anybody who is associated with the game including players and the folks who work at the stadium, the folks in the front office and all of the associated businesses that earn money when a game goes on, for example local hotels, restaurants and the like.

So that’s $20 million per game, and I think something that’s very important to consider is that that $20 million is associated with a certain number of jobs. According to these studies it’s approximately 3000 per site.

Those jobs would be lost if there’s a lockout and certainly a significant portion of them immediately, and then almost all of them as time goes on, for example the teams could retain some of their front office people if the lockout only lasted a week or two.

But if it lasted a full season we’d expect to see layoffs increase. And the last point I’ll make is that given the economic conditions that we see today and projected over the next year or two with unemployment at 9% or higher, I think it is very unlikely to expect that there would be any kind of mitigation in the economy and that these lost jobs would be replaced.

Certainly under current conditions that’s even less likely than usual. So I think that’s the summary of the work we did. Again all of the source data is publicly available and I’d be happy to point anyone toward some of the particulars if there are questions about that. George, I think that’s all I have.

George Atallah:Excellent. (Luke), I can – we can receive questions now. Thank you.

Operator:Thank you. Ladies and gentlemen, if you would like to register a question, please press the 1 followed by the 4 on your telephone. You will hear a three tone prompt to acknowledge your request.

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One moment please for the first question. Our first question comes from the line of Eric Edholm with Pro Football Weekly. Please go ahead.

Eric Edholm:My question is of that $20 million per game number that you cited, what percentage would be players’ salary? Was there – were you able to determine that?