Oklahoma City's return on its Thunder investments is approaching “priceless,” economist Mark Snead says.
While economists have long debated the benefits of public spending to attract and retain major league sports franchises, Oklahoma City clearly got its money's worth in the tax dollars it spent to bring the Thunder, Snead said.
“We don't have mountains. We don't have a coastline. We don't have a ski resort,” he said. “Amenities include pro sports franchises. It's one of those components that now make Oklahoma City completely in a different category.”
The city also has garnered abundant media exposure during the NBA finals, Snead said. Recent examples included Friday's front-page Wall Street Journal story on Russell Westbrook's eyewear that repeatedly mentioned Oklahoma City, and the featuring of town vistas on national broadcasts of games attended by its famously fervent fans, Snead said.
“You literally can't buy that kind of exposure,” he said. Snead, most recently an economist with the Federal Reserve in Denver, is moving back to Oklahoma to launch a regional economic forecast firm called RegionTrack.
Oklahoma City officials have continued to use estimates generated during the temporary tenure of the Hornets that each sold-out game brings in about $1.2 million in economic impact. Tom Anderson, a specialist with the city manager's office, notes that economic impact for the season to date, with every game sold out, totals more than $53 million.
Robert Dauffenbach, a University of Oklahoma economist, said it's difficult to quantify the economic benefits of a professional sports franchise.
“I think there's been a lot of criticism of these kinds of studies, that they exaggerate the benefits a lot,” said Dauffenbach, director of the Center for Economic and Management Research at OU's Price Business College.
But he agrees with Snead that the coverage of the NBA Finals in Oklahoma City has provided a huge boost to the city's image, which for many outsiders continues to be focused on the Dust Bowl or 1995 Murrah Building bombing.
“A lot of it would relate to changed attitudes,” Dauffenbach said. “The chief benefit is it puts you up there with the world-class kinds of cities. Frankly, we belong there with San Antonio and Seattle.”
Economic studies vary
Before moving to Oklahoma City, the Seattle SuperSonics claimed that the team pumped $234 million into that area's economy each year — a huge difference from the Thunder estimates.
But a 2011 study by economists Rob Baade and Victor Matheson pointed to three potential flaws in any calculation of economic benefits of major sporting events or teams. Those include failing to note that spending associated with a sports team simply replaces other entertainment spending, that the crowds associated with games push out normal economic activity in the area, and the propensity of highly paid coaches and athletes to live elsewhere.
Independent studies performed after big sports events or after a city has built a sports facility have “almost invariably found little or no economic benefits from spectator sports,” Baade and Matheson wrote.
So it shouldn't be surprising that many economists are critical of the public spending to attract and retain professional sports team. In one survey, 85 percent of economists said local and state governments should eliminate subsidies to sports franchises. Oklahoma City's Chesapeake Energy Arena, funded entirely with public money from a dedicated sales tax, was at $89 million among the least expensive NBA arenas built in the past 30 years.
Snead said he disagrees with the view of many of his peers that public spending on professional sports franchises is wasted.
“Like most public expenditures, some are much better than others,” Snead said. “The Thunder is much better.” He notes, for instance, that Thunder ticket holders likely are spending money in Oklahoma City that they might otherwise take to a Dallas Cowboys or Kansas City Royals game.
Baade and Matheson give some credence to the intangible benefits touted by Snead and Dauffenbach.
“Although the professional sports industry in the United States is only roughly the same size as the cardboard box industry, cardboard boxes don't warrant multiple channels on cable television, have a dedicated section in most newspapers, and are not the focus of frequent discussions around the office water cooler,” Baade and Matheson wrote. “Sports serve as a municipal amenity that can create social capital and improve the quality of life.”
“Sports may make a city happy, but they are unlikely to make a city rich,” the economists wrote.
For Oklahoma City Mayor Mick Cornett, the presence of the Thunder helps “create a city where a lot of cool stuff is happening,” which in turns attracts young, educated, mobile people who will help expand the local economy.
“When you combine it (the Thunder) with the arts and parks and the other stuff we have, then it's a complete package,” Cornett said. “If you want to be relevant to the pop culture of America, a city has to have a major league franchise.”
The current attention focused on Oklahoma City because of the Thunder is in stark contrast to when Cornett was elected in 2004.
“It's not that we were discredited — we were ignored,” he recalled. “This is as loud as we're ever going to scream to the rest of the world that we matter.”