Guest Post by fellow Jackal, Dr. Victor Matheson PhD, sports economist at Holy Cross
The Job Creators Network, a conservative U.S. advocacy group founded by Trump mega-donor and Home Depot co-founder Bernie Marcus, is suing Major League Baseball for $1.1 billion for moving the All-Star Game out of Atlanta in protest of voting restrictions passed by Republicans in the Georgia Legislature. The $1.1 billion damage claim is based on a $100 million economic loss from moving the All-Star Game out of the state and another $1 billion in punitive damages.
Put aside the fact that it is sheer lunacy to sue a private company for not creating positive spillovers for other firms. I mean by this criteria, every time Home Depot decided not to open a store in one town and opened one instead in another town, small business owners could sue Home Depot for the customer traffic that is no longer coming to the jilted city. No, let’s focus on the entirely fictional $100 million economic impact figure.
Academic economists like myself have been studying the economic impact of sports for over two decades concluding that mega-events like the All-Star Game create economic benefits that are a fraction of that claimed by sports boosters. Sometimes the numbers are simply fabricated and impossible to believe. Truist Park in the northern Atlanta suburbs has a capacity of roughly 50,000 fans. In order to get a $100 million figure, we would need each fan to be generating a rather unbelievable $2,000 in economic impact just for attending a baseball game. But even when estimates are not so obviously fraudulent, economic impact studies suffer from 3 major problems.
The first is the substitution effect. The vast majority of attendees at most sporting events, and even at the MLB All-Star Game, are locals who are spending their spending at the ballpark rather than elsewhere in the local economy. The event shifts around where people are spending their money but doesn’t significantly increase the total amount of consumer spending in a region.
The second is the crowding out effect. While not likely to be a major problem with a relatively minor event like the All-Star Game, when events like the Super Bowl or Olympics attract large numbers of fans from outside the city, they displace other visitors. Pre-COVID, a typical hotel averaged 70% capacity year-round. Fill a hotel with baseball fans and you are crowding the 70% of rooms that would have been filled with other travelers anyways.
The third is the leakage effect. This is when money gets spent in a city but doesn’t stick in the city. Even for those fans who would have traveled to Atlanta for the game and spent money there, most of their spending wouldn’t end up in the pockets of the citizens of greater Atlanta. Their big expenditures would be for tickets (which goes back to MLB), airfare (which goes to nationally owned airlines), and hotels (the most expensive of which are national chains). Thus, even if you find a bunch of out-of-town baseball fans actually spending $2,000 for an All-Star weekend, very little of that $2,000 is going to benefit small, minority-owned businesses in Atlanta.
My own rule of thumb, which others have somewhat flatteringly dubbed “the Matheson Rule” is to take whatever the boosters tell you and move the decimal point one place to the left to get the real economic impact of a sporting event on the local economy. Of course, the Job Creators Network is making me rethink this. Perhaps the “Job Creators Network Corollary” is that we need to move the decimal point two places to the left if RWNJs are making the claim!
TeezySkeezy
So will MLB argue in court that no, actually, we *don’t* provide the economic benefits we and our boosters claim. Hm. Well that would be amusing in itself.
mrmoshpotato
That’s a LOT of peanuts and Cracker Jack!
TaMara (HFG)
Well, as a Coloradoan, I’m still happy to welcome the MLB All-Star game to the land of mail-in ballots, same-day registration and generally protecting voter rights.
And besides, this Red Sox loving, Rockies supporter, who loves Coors Field and LoDo, is glad for it to get its close-up.
Bill K
@TeezySkeezy:
No need. They should be able to just point at their contract where it says they can cancel or move it. They can further state that any economic lost incurred on Atlanta was the fault of the boneheads in State government passing the voter restriction law. Any further lawsuits should be directed there.
raven
They have taken the Braves off of almost every platform except cable with this “Bally’s Sports” deal. Fuck em.
matt
Smells like fascist control over private business to me.
Cervantes
“I mean by this criteria, every time Home Depot decided not to open a store in one town and opened one instead in another town, small business owners could sue Home Depot for the customer traffic that is no longer coming to the jilted city.” Err no, the exact opposite actually. Home Depot destroys local small businesses. That’s its reason to exist. There goes the hardware store, the garden center, the appliance store, the lumber yard, the home furnishings store . . . .
The people who should sue are the people in the town where it does locate, not the town where it doesn’t.
Anonymous At Work
People talk with their mouths and vote with their feet. Economic impact statements backed by numbers are always more modest than quote-happy CoCs, much less reactionary nutjobs.
Kinda surprised that they launched this lawsuit, since the next step (assuming MLB doesn’t get it tossed) will be discovery. For a place clearly founded as a sock-puppet for misleading “research” and wingnut-welfare addicts, I’d fear MLB doing discovery.
Ken
Not at ball park prices.
Ken
“Your organization is claiming damages to your income, so let’s see where your income is coming from?” Yes, that might be interesting.
Though if they claim it’s damage to their member’s businesses, that will just become funny. “Is it your claim that people going to the All-Star game would have dropped by an Atlanta Home Depot for a framing hammer and a couple of sheets of drywall?”
Ceci n est pas mon nym
Are we including the money spent on sex workers and drug dealers, who then put it back in the local economy?
Patricia Kayden
Even if it did cost small businesses millions of dollars, so what? The voting suppression law hurts millions of Georgians as it restricts their right to vote. Every business should be concerned about that.
The Dark Avenger
@mrmoshpotato: Or snacks at the Oakland Colosseum.
hueyplong
The mendacity rate is approximately 100% for any sentence uttered/written by any GOPer that includes the term “small business.” It starts with the definition of the term and spreads out to whatever “facts” they’re spewing about it.
Ken
@Ceci n est pas mon nym: You’re thinking of political conventions. This is baseball, a wholesome national pastime. Absolutely no sex, drugs, or rock-and-roll.
gene108
@Anonymous At Work:
Discovery in a civil lawsuit only relates to the subject of the lawsuit. It’s going to be a “show your work” sort of thing. Given tobacco companies successfully fought lawsuits for decades, I think this RWNJ place can drag this out awhile.
I wouldn’t be surprised, if RWNJ won a smaller monetary award than they are asking for. Judge pulls up some contracts are sacred logic, and rules in their favor.
mrmoshpotato
@TaMara (HFG): Home run derby in the thin air! Oh yes!
dmsilev
Wouldn’t the All Star game be a contractual matter between MLB and whoever owns the stadium? Was there ever a contract between MLB and “the small business owners of the Atlanta area”?
dr. bloor
@TeezySkeezy: The proverbial knife fight where contestants are strapped together at the wrist. With a little luck, the argument would run over into whether the municipal scam that is Truist Park has paid promised benefits, a melee would take place involving MLB, Marcus, and Cobb County government officials, and everyone would end up bleeding out on the ground.
And then a small meteor would hit, just to make sure.
mrmoshpotato
@The Dark Avenger: Mountains of tortilla chips and sliced jalapenos with a vat (or a cat, autoincorrect) of nacho “cheese.”
SteveinPHX
Isn’t this the old “Walmart” effect? They move into a small town, build a big box store and in two years all the little mom and pop businesses have disappeared.
Victor Matheson
@TeezySkeezy: Funny, but my fellow economists and I have gotten in bed with the leagues, who we usually fight against regarding stadium subsidies, to argue this exact thing in court on numerous occasions.
Victor Matheson
@Cervantes:
“Err no, the exact opposite actually. Home Depot destroys local small businesses. That’s its reason to exist. ”
Yeah, I am really talking about the Subway across the street from the Home Depot that no longer gets foot traffic not the local hardware store that gets driven out of business. That’s the right comparison here.
Ruckus
@SteveinPHX:
Which is the point entirely. They Do Not Like Little People messing up their income stream. And they are pissed that they are having to pay for their hate. Their hate/racism/theft is their birthright and nothing else matters.
Victor Matheson
@Ceci n est pas mon nym: “Are we including the money spent on sex workers and drug dealers, who then put it back in the local economy?”
Turns out this is actually a great example of leakages. During mega-events like the Super Bowl and World Cup, host cities import strippers to cater to the surge of sports fans who do significantly increase spending at local strip clubs. (This is true, btw, not just a fun example.) But since these strippers are not locals, this spending doesn’t benefit local workers and there is no ripple effect (or multiplier effect) as these workers respend their earnings in the local economy (since they leave town and go back home with all of that cash in their g-strings.)
Steve in the ATL
@Victor Matheson: yes, but don’t the strippers buy their coke locally?
Victor Matheson
@dmsilev: Wouldn’t the All Star game be a contractual matter between MLB and whoever owns the stadium? Was there ever a contract between MLB and “the small business owners of the Atlanta area”?
Yeah, that’s part of the whole absurdity of the lawsuit in the first place. No standing and no contract, so no lawsuit even if these fictitious losses actually existed.
Steve in the ATL
I’d like to move everything a couple of steps to the left!
Victor Matheson
@Steve in the ATL: “don’t they buy their coke locally?”
I don’t know! Looks like an on-site research trip for data collection is in my future!
Steve in the ATL
@Victor Matheson: Atlanta and Denver Juicers will all buy coke the week before the All-Star game, the weekend of, and the following week, then you will have enough data to write a white paper on economic impact that will surely get published right away!
hueyplong
@Victor Matheson: Likely depends on the strippers’ mode of transportation to the event. Definitely something that calls for actual research and not assumptions.
Enhanced Voting Techniques
So basically the suit is arguing that people come in town for a ballgame, get drunk and decide to do some dry walling. Ok…
Victor Matheson
@Enhanced Voting Techniques: “So basically the suit is arguing that people come in town for a ballgame, get drunk and decide to do some dry walling.”
I am totally stealing this line.
mrmoshpotato
Ummmm…..sober drywalling? You alright there? You sound drunk.
azlib
I wonder if the lawsuit is just another grift to raise money from the rubes?
mrmoshpotato
Anyone else got a VidCrunch auto-playing video showing B-J posts?
Ceci n est pas mon nym
@Victor Matheson: That’s similar to the lie sold when people want to build casinos. Harrah’s built a large casino near here, in the desperately poor city of Chester, PA. A big selling point was all the jobs that the casino was going to create.
The casino did indeed hire lots of people to work there. Just none of them locals.
hueyplong
@Ceci n est pas mon nym: Hey now, Harrah’s is my former employer (40 years ago).
Hoodie
@azlib: you win the door prize. There is no contract with the small business owners in Atlanta and no tort corresponding to deciding not to hold an event someplace. I’m sure the contracts that MLB signs have all sorts of escape clauses and, since MLB has the leverage, they will all be in MLB’s favor. Even with a breach claim, the likelihood of getting punitive damages in a breach of contract case is zilch. In sum, this is just nonsense to stir up the rubes.
Ken
Yes, definitely need to determine whether it’s economically more beneficial to fill a single party bus with strippers, or use a fleet of hot-tub equipped stretch limos.
Villago Delenda Est
The “Jobs Creators Network” should be nuked from orbit.
Only way to be sure.
Ken
By the way, why am I suddenly seeing a video showing Balloon Juice recent posts? It’s not dismissable, and covers part of the text.
mrmoshpotato
@Ken:
Who talks economics when it comes to hot tubs?
Hot tub? Yes!
(Note: this is strictly endorsing only hot tubs)
mrmoshpotato
@Ken: Welcome to the club, pal.
worn
Oh good lord, what fresh hell is this? An unclosable, auto-generated video with a slightly techno soundtrack that has no content other video fades between the same photo of Tunch? Fucking thing takes up a 1/3 of my screen (iPhone 7).
Watergirl please help us – you are our only hope!
The Lodger
@mrmoshpotato: Yep, on a Samsung J7 Star. Takes up most of the bottom third of my screen.
Ken
@worn: There’s a service listed near the end, but for me it’s working as an anti-advertisement.
Feathers
@Ken: also on my iPad.
Tenar Arha
@worn: I had the same problem on the main page. Firefox version 33 for iOS & iPhone 11 Pro iOS 14.4.2. I can’t even see the link to email Watergirl direct from that page. Going to check if I can reproduce it now. But posting this ftr just I case I can’t.
ETA Yeah, I can’t reproduce it. (Never happened at all in Safari or Chrome).
Tenar Arha
@Tenar Arha: Yeah, I can’t reproduce it. (Never happened at all in Safari or Chrome).
Anonymous At Work
@Ken: …more…”What emails and communications were exchanged with ALEC, Trump Organization, HOME DEPOT, etc.? Did any specify that your analysis would come to predetermined conclusions?” and a lot of other such things about “How independent are your analyses?”
Anonymous At Work
@gene108: Yup. Show us the work on this analysis and any communications about such work, like from a CEO demanding that the analysis “prove” things in advance. Show us how independent your institute really is and how well your experts hold up to outside scrutiny.
RWNJ institutes don’t want that.
Just One More Canuck
We’ve gone through this any number of times here in Toronto- when we we bidding for the Olympics (the ones that went to Atlanta), when we bid for the Pan American games (we were promised that Union Station would be renovated in time for the games – not done 6 years later), and multiple times when people try to sell the benefits of new arenas. A former colleague of mine wrote a series of articling pointing out the holes in all of the pie in the sky projections of all the benefits of the Olympics – he took a lot of heat from it
J R in WV
@Cervantes:
Very much so, we had great locally owned lumber yards here in town, with products and services far better than Home Depot or the other guys. All gone now, retired and sold out. I very rarely shop at Home Depot since they’re out of Atlanta, founded by a Nazi.
Most of our house material was delivered by a local firm, they would have brought us a roll of duct tape while that was on-going. Not that we would have asked for that, but that’s the level of service they provided.
Cervantes
@Victor Matheson: Well, if there is any such effect — and there probably isn’t since Home Depots not normally located near Subway shops — it’s trivial compared to the small businesses it destroys. You really need to rethink this.
Martin
There’s a new dynamic for these things. If tickets were $200 at the box, they’ll be $1000 after the scalpers bought them all.
WaterGirl
@mrmoshpotato: @Ken: @worn: @The Lodger: @Feathers: @Tenar Arha:
That was a temporary location so we could see what the ad itself would look like. It was gone from there within minutes.
The best description of it on phones when it was pasted into the corner of the screen was “that blows on mobile”.
I am writing up a post to explain where we are with the ads.
Just Chuck
@Steve in the ATL: It’s just a jump to the left…
Just One More Canuck
@Victor Matheson: On a side note, I went to your Holy Cross page – I downloaded your paper on the Olympics and will read it later. (I loved economics but never had the math chops to go past a BA) then went to the Journal of Sports Economics page and was both happy and sad to see the name of one of my former professors – Colin Jones on your editorial board. Happy because he was a very good professor and man who was always able to make his classes interesting and relevant, but sad to let you know that he passed away a couple of years ago
Bokonon
The basis of the lawsuit is complete BS – but this “Job Creators Network” didn’t file it to win. They filed this lawsuit to intimidate. And to exact political vengeance.
Cross the right wing, and they will make you pay.