homeboy

What LeBron James is worth to the city of Cleveland

July 11, 2014
July 11, 2014

When LeBron James left his hometown post with the Cleveland Cavaliers in 2010 to join the Miami Heat, he made a bold exit.  His boastful appearance on an ESPN special devoted to James called “The Decision”—during which he announced that he was taking his basketball “talents to South Beach”—made him the ultimate villain in the eyes of Cleveland loyalists (they burned his jersey in protest).

A flurry of analysis ensued about what his departure would cost Northeastern Ohio. Now, according to a first-person account in Sports Illustrated, James is reversing course and heading home. Why? It’s not about grandstanding and winning NBA championships anymore, according to James; it’s partly about helping to revive Cleveland’s wilted economy. “I’m not having a press conference or a party,” he writes. “After this, it’s time to get to work.”

So just what can his return do for Cleveland’s economic standing? Quite a lot, judging by calculations of what Cleveland lost when he left (many of those calculations by the city’s own Plain Dealer Reporter). Here are some highlights of the potential civic windfall in store:

The home games: $48 million

James boosted Cleveland’s stadium crowds by 6,500 fans a game, a 46% increase from before he arrived. The rise in ticket sales, paid parking, restaurant and bar celebrations and hotel rooms added up to an additional $1.2 million per game, or $180 per fan. Multiply that by 41 home games and you arrive at a $48-million boost, according to calculations by the city’s convention and visitors bureau.

The playoffs: $150 million

If the Cavaliers make it to the playoffs, and you assume sellout crowds at the Quicken Loans Arena, that might add up to an average of $100 per person on all the merrymaking (in food, drinks, car rentals, paraphernalia, etc.) according to 2010 calculations by the University of Illinois at Chicago economist John Skorburg.

The team’s value: $121 million

The Cavaliers lost 26% of their franchise value, down from $476 million, in the year after James left for the Miami Heat, according to Forbes. At the time, it was the biggest one-year drop by any team since the publication started valuing NBA franchises in 1998. The franchise’s value has since recovered to $515 million. Would James’s return have an even bigger reverse effect?

The taxes: $1 million

One of the wee perks, for James, of living in Florida: no state income tax. Not so in Ohio. Before James scurried off to a tax-free zone, he was paying upwards of $1 million to local governments in taxes on income, property and endorsements. In local income taxes alone, he paid about $353,250 to Cleveland, Independence and Akron combined.

The fringe benefits: priceless

If James gets his messaging right this time around, his return to Cleveland could inspire feel-good municipal chest-thumping that generates economic development: more young people to stick around, more business owners to set up shop there, and so on.

James himself is an intrepid entrepreneur; he reportedly made $30 million when Apple bought his Beats Electronics business in June, based on a stake he took in the company for promoting its headphones. Just look at what Magic Johnson has done for the shopping malls and theaters of Los Angeles in recent years. No doubt James wants those boasting rights, too.

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