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Does having a NBA team improve the economic growth
Introduction The sport industry is one of the key drivers of the
country’s economy. The mere presence of, or lack thereof, an
NBA franchise does not mean that a city’s or a country’s
financial health will be better or worse. It is an investment liken
any other hence poor decision making may lead to predominant
misuse of public funds.Taxpayers and tourists must have a
more recognizable outlet to devote their expendable income to.
Cities often use public funding to help construct and renovate
the facilities of large, private sports franchises. As the major
sports leagues grow in popularity and revenue, cities have had
to offer increasingly competitive incentive packages to owners
in order to keep their team from relocating to more profitable
markets or cities willing to issue public funding for new
facilities. Much literature has been conducted on the economic
impact of sports teams with a general consensus that there is
usually no guarantee for positive economic effect for cities that
serve as homes for these teams from the largest league.
Source of Employment Having a National Basketball
Association (NBA) team creates employment to the
players.Owners of NBA teams report earnings around $12-30

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million per season year (Berri, 2015).After counting player
salaries, arena costs and maintenance, and other required
expenses, the owners take home a decent payday.
There are a number of variables and they cannot always be
discerned from the Team's financials. For example, an owner
may take a large salary and out family on the payroll, making
him look less profitable but reducing his personal expenses. Or,
the same owner may also own the stadium and shift revenues
and expenses between the two and report them separately. It is
safe to say that owners make a great deal of money. During the
pre-Chris Paul days, Donald Sterling would pay his players at
the NBA minimum for a team, and bank his TV and revenue
sharing money and probably made in excess of $10 million per
year. Once he invested in payroll and talent, the team sold for
$2 billion. A team like the Milwaukee Bucks, without much
recent success, sold for $550 million. That would suggest the
pre-tax profits were in the millions of dollars to Herb Kohl
when he owned it. All in all, the owners, either through
enormous compensation or profits, make a great deal of money.
Establishment of other businessesOwning a team could help
other business’s interests which obviously is a big money
maker.An example of business establishments that come with an
NBA team are advertisement agencies. An NBA team is also
major client for the suppliers of games kits such as Nike among
others (Josza, 2011).
Owners could help advertise other companies or business’s in
many ways since they are well know and successful so therefore
people want to have them advertise their business. For people to
have the owners advertise for them they pay them good amounts

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of money so they can get their company/business heard.This is
another way how owners make their money.
Brand loyaltyA well-performing NBA team is recognized
internationally. Any product associated with the team also gains
increased attention and popularity. The owners of these
products hence making striking profits out of this deal that
further contribute to the national income (Kern, 2016).
For one thing, Team owners have an advantage that many few
other company owners can – a loyal fan base. Brand loyalty is
where owners make their biggest profit. Millions of fans follow
NBA teams and with that comes TV deals, ticket packs,
endorsements, media attention and much more through which
revenue is generated.
An NBA team encourages foreign investment
Sport leagues cater to ever-expanding global markets.Wealthy
individuals and powerful conglomerates buy and sell teams for
hundreds of millions of dollars.Sport teams play a major role in
the development of complex urban economies
The significant investment by local governments suggests that
the economic returns of sport must be quite large. Indeed
economic benefits are often proffered as the justification for
sport subsidies. Teams, stadiums, and events are commonly
promoted as economic catalysts. For example, in 1997 a group
campaigning for a new publicly funded football stadium for the
San Francisco 49ers used the slogan “Build the Stadium—
Create the Jobs!” (Epstein, 1997). The Oregon Stadium

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Campaign, a group working to bring major-league baseball to
Portland, ran an ad in the local newspaper that read, “$150
million company seeks move to Oregon. Will bring jobs,
development, snappy new uniforms.”
Development of city economyIf a country hosts the events such
as, professional basketball season sees may fans travel from
different parts of the world to where the league is hosted
(Lineberry, 2014). With them come immense dollars which
increase the revenue base for the country.For instance,
accommodation, food, travelling among other expenses
increases the revenue base for the country.
The professional basketball season, in its entirety, will span 82
regular season games with an additional amount reflected
through a city hosting one or several rounds of the playoffs.
Those additional games can range anywhere from 7 to 28;
prolonging the season to an impressive 110 games. Wherever
the number of games played in a season falls, it does not change
the fact that the NBA is a multi-billion dollar industry that
spans across the globe. With the current NBA schedule, each
NBA city can host 41 regular season games and somewhere
between 2 and 16 extra home playoff games. It should be noted
that the focus is on the games played at home. Although the
season can range between 82 and 110 games, each NBA city
will only play host to between 41 to 57 games. Furthermore, the
numbers found for this study will be representing a market in
which there is a successful playoff-caliber team with one of the
league’s most popular superstars in Kevin Durant.
NBA Teams nurture talents Talents are key drivers of a

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country’s economy. Prominent basketball players are recognized
worldwide. This increases the country’s visibility to investors
(Schiavone, 2016). Other entities may purchase players or hire
them on contractual basis. Huge amounts of revenue are
deposited with the mother country.
One of the biggest benefits in owning a team is selling the team
for a much higher price. Especially since there is high inflation,
millions of money will be made. For example, Bill Davidson
bought Detroit Pistons for eight million in 1974 and possibly
sell the team for over 37 million in today’s money. Another
example is that the Philadelphia Sixers were bought for 125
million in 1996 and now 180 million after inflation and soon
could be sold for roughly 300 million. Obviously by doing this,
you make millions of money and a good profit.
Tax revenue benefitsFans’ spending before, during, and after
games is likely to be subject to local and state sales taxes.The
income accruing to any net increase in jobs is often subject to
local and state income taxes. Such spending “imports” tax
revenue that would otherwise not be possible if the league was
not held in the country.
The main way in which increased sales tax revenue benefits a
host metro area is if it is paid by nonlocal residents. Nonlocal
sports fans visiting to attend games pay sales taxes on all local
purchases before, during, and after games. Such spending
“imports” tax revenue, which in the absence of a professional
sports team would have accrued to governments outside the host
metro area. Imported sales tax revenue benefits the host metro
area by reducing the amount of taxes that need to be raised from
local residents

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Quality of life benefitsThe presence of a major league sports
franchise can help make a metro area an attractive place to
live.Nearly all analyses of the benefits from hosting
professional sports teams recognize this contribution to a metro
area’s quality of life.Quality of life captures the satisfaction, or
happiness, residents derive from shared metro area attributes
such as recreation facilities which are major drivers of the
country’s economy.
Professional sports teams contribute to a metro area’s quality of
life primarily by increasing the happiness of sports fans. The
most visible source of fan happiness comes from attending
home games. However, only part of this happiness actually
counts as a quality-of-life benefit attributable to hosting a team.
This is because fans must pay to attend games. In the absence of
a professional sports team, fans could instead use what they
paid for game admissions on other sources of happiness, such as
watching a movie or traveling to a different metro area to attend
a game. Formally, the quality-of-life benefit to a particular fan
who attends a sports game is the amount above the admission
price they would have been willing to spend to attend the game.
For instance, if someone is willing to spend $30 to attend a
game that only costs $20, they receive a $10 quality-of-life
benefit. Adding up the individual quality-of-life benefits of all
residents who attend games yields the total metro area’s quality-
of-life benefit from game attendance.
Cont…It is important to understand that have an NBA does not
guarantee economic benefits. The real public cost of sports
facilities is tremendous. Policymakers should be extremely

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wary of devoting a significant portions of their capital budgets
to sports facilities. Unless there are mechanisms to guarantee
team’s revenues within the city and the entire country (Kern,
2016).
The real public cost of sports facilities should be a key
consideration in determining the economic significance of an
NBA team. She claims that the publicly reported costs
associated with a new stadium is often grossly underreported
because they only account for the amount of direct support in
the form of issued bonds and do not incorporate other financial
support such as the cost of foregone property taxes, the cost of
municipal services to the facility, and even the ongoing cost of
operations in some cases
Cont…The economic benefits of an NBA team will largely
depend on the management of the team and how active it is. No
investor would be associated with a non-performing team. Fans
want assurance that they will be given the value of their money.
Well performing teams will attract people from all parts of the
world whereas underperforming teams will discourage investors
(Kern, 2016).
The public benefits from professional sports teams will always
leave open the possibility of public funding, even if there were
many more franchises and less owner leverage. It is is not
necessarily a bad decision for smaller cities to offer subsidies as
a way to entice owners to remain within the municipality
because there is intangible public benefit present. Policymakers
just have to decide whether the public funding they are offering
to a profitable, private venture for the economic benefits of
having a professional sports team in the community

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ConclusionA sports team would also employ either directly or
indirectly, lead to establishment of businesses and contribute
significantly to the host city’s economy. However, the ec0nomic
benefits of an NBA team are not guaranteed. Before the team is
established, the costs should be examined in relation to the
prospected benefits. It should hence be considered if the
expected benefits surpass the public and private costs of
establishing it.
References Berri, D. J. (2015). The wages of wins: taking
measure of the many myths in modern sport. Stanford, CA:
Stanford University Press.Jozsa, F. P. (2011). The National
Basketball Association: business, organization and strategy.
Singapore: World Scientific.Kern, W. S. (2016). The economics
of sports. Kalamazoo, MI.: W.E. Upjohn Institute for
Employment Research.Lineberry, W. P. (2014). The business of
sports. New York: H. W. Wilson Co.Schiavone, M.
(2016). Sports and labor in the United States. Place of
publication not identified: State Univ Of New York Pr.