A Deep Sports Impact

Everyone talks about sports being a big business, but the conversation rarely specifies how big. Now that’s been quantified: Sports generated $6.2 billion in economic activity and $327 million in state and local taxes in Los Angeles and Orange counties in 2018.

The finding was the centerpiece of a report dubbed 2019 Sports in Los Angeles and Orange Counties: An Economic Impact Analysis.Commissioned by the City West-based Los Angeles Sports Council and the Southern California Committee for the Olympic Games, it was released on Monday, June 24, at the inaugural Los Angeles Sports Summit.

The report, the first of its kind since 2013, was conducted by the Los Angeles Economic Development Corporation’s Institute for Applied Economics.

The study analyzed the total economic impact of professional and college sports in the region (along with special events such as the L.A. Marathon). It found that nearly 40,000 people work in the industry either full- or part-time. The majority of the positions are game-day jobs, including parking lot attendants, food service and ticket staff.

Although the report did not parse out statistics by geographic region, Downtown’s impact is dominant, according to Dr. Somjita Mitra, director of the LAEDC Institute of Applied Economics. That’s because of the 11 professional sports teams that call Los Angeles and Orange counties home, seven — the Dodgers, Kings, Sparks, Rams, Lakers, Clippers and the Los Angeles Football Club — played home games at venues in and around Downtown Los Angeles last year. The report also takes into account college athletics, and the University of Southern California plays in the area.

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“Four of our major teams, including the L.A. Sparks, play in Downtown and there is a reason they are all here,” Mitra said. “They could have been anywhere, so I think that the impact of Downtown is pretty significant.”

That wasn’t always the case. Prior to the opening of Staples Center in 1999, only the Dodgers and USC teams played in the Downtown environs. Now the arena is home to three basketball teams and one hockey franchise.

The situation might not always be this robust for Downtown. Although the Rams currently play home games in the Los Angeles Memorial Coliseum, they will move out when a new $5 billion stadium opens in Inglewood in 2020. They’ll share the stadium with the Chargers, who currently play in the Dignity Health Sports Park in Carson.

Additionally, the Clippers could leave in 2024 for a new arena that owner Steve Ballmer hopes to build in Inglewood.

Still, the community should remain a sports center, as the other squads don’t appear to be in any danger of departure, and the scene expanded last year when Banc of California Stadium, the home of the Los Angeles Football Club, opened in Exposition Park. 

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The Staples Effect

Bill Allen, executive director of the LAEDC, is among those who view the opening of Staples Center 20 years ago as a catalyst in the overall development of Downtown. The once sleepy South Park neighborhood is now home to numerous glass-and-steel skyscrapers, along with copious restaurants and bars.

“People come to Downtown much more frequently than they did 20 years ago,” Allen said. “Downtown I think has been revitalized mostly by the sports and entertainment community rallying around these particular venues.”

That includes L.A. Live. Anschutz Entertainment Group, which developed and owns Staples Center, complemented the arena with the entertainment and restaurant complex in 2008. Chuck Steedman, chief operating and development officer of AEG Facilities, said that the evolution of AEG and Downtown go hand-in-hand.

“I think the growth of Downtown is pretty well tied to the growth of L.A. Live and the presence of L.A. Live,” Steedman said. “When people live in a place, they want to do stuff. There is a great entertainment destination in Downtown. You can eat, you can go to concerts and you can go to block parties. It’s part of a quality of life generator.”

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The topic of a stadium or arena’s impact on a city is frequently discussed, in part because many team owners pit cities against one another to seek hefty public contributions for the construction of new facilities. According to the Greater Sacramento Business Council, in the wake of the Sacramento Kings beginning construction on the Golden 1 Center in the heart of the city in 2014, nearly $2 billion has been invested in new projects in the area. Similar figures were reported in Minneapolis following the construction of the Vikings’ U.S. Bank Stadium. Almost half of the nearly $1 billion venue was funded by local government entities.

Allen said one thing that makes Los Angeles unique in the sports industry is that local governments may pay for things like infrastructure improvements, but generally don’t chip in for construction of a stadium or arena.

The report didn’t analyze the ancillary benefits from sports venues, such as revenue generated by concerts and festivals that utilize the stadiums and arenas when athletic teams are not playing.

Sports Council President David Seigel, who took over for longtime President David Simon in January, positioned the report as the first of many to come. He also mentioned that the economic impact of sports should continue to grow, in part because of major events coming to the region. That includes the 2020 Major League Baseball All-Star Game at Dodger Stadium, the 2022 Super Bowl, the 2023 College Football National Championship Playoff Games, and the 2028 Summer Olympics.

“I think it will be really neat to see the longitudinal play on how the report evolves and develops over time,” Seigel said. “With all these events, supplemented by all these amazing sports teams, and all of these buildings coming online in the next decade or so, it will be really interesting to see how things evolve.”

Allen said that LAEDC is in talks with the Sports Council to discuss ways to analyze additional benefits from local sports venues, including spending at area restaurants prior to games, and the impact from tourists coming into the region for sporting events, and where they spend their money.

“We anticipate adding those components to future studies in partnership with the L.A. Sports Council and I know it will reveal an even greater economic contribution,” Allen said.

In other words, sports will continue to be a really big business, for a really long time.

sean@downtownnews.com

©Los Angeles Downtown News 2019