By: Justin Krause
On Thursday, November 1st the NBA announced that 2022 All-Star Game would be hosted in Cleveland, Ohio by the Cleveland Cavaliers. This struck as a major surprise to the public since the Cavaliers lost their major star (LeBron James) and are left without much talent in the upcoming years. The city of Cleveland lost a lot of hope with LeBron leaving and really affected the economy. But hosting the All-Star game in 2022 could greatly impact Cleveland’s economy in a positive manner.The NBA just thought that’d it would be fitting for Cleveland to host another All-Star game to not only show off Cleveland to the world but also boost Cleveland’s economy. Even with the announcement just occurring three days ago they came out with a prediction that the all-star game “will make an economic impact of $100 million in Northeast Ohio” (Dammarell).
This $100 million isn’t exclusively for the Cavaliers, it’ll be spread out throughout Northeast Ohio. Since so many people will be coming to Cleveland to watch their favorite All-Stars to dual it out the demand for hotels will increase, for the week and weekend the demand for food and drinks will also increase because it’s a necessity for people to live. With this, it’ll increase the restaurant’s total revenue, and most likely increase the profit of the restaurants too.
Now it’s not only restaurants and hotels that’ll feed into the $100 million impacts to Cleveland. The ticket prices, merchandise, and concessions sales. Again the concession stands part is fairly explanatory the food is a need and at NBA games they can charge a hefty price tag on that food because people will get hungry over a four-hour time span.
Ticket prices will most likely increase last year according to Forbes “the average price at Staples was $2,638 for tickets” (Badenhausen). Which would be a huge increase from the Cavaliers price tickets this year “According to TMZ, Cavaliers tickets were reselling on third-party sites for Wednesday’s game against the Brooklyn Nets for $2” (Delgado). Even if the Cavaliers 2022 All-Star game isn’t around $2,600 anything will be an increase from ticket revenue. The demand will increase for tickets, supply won’t change but demand increases significantly. Which then will obviously increase the price for tickets, and will increase the Cavaliers revenue.
Cleveland has had a little worse of an economy than what they’ve had over the past four years. However, when the NBA announced that Cleveland will be hosting 2022 All-Star Game, that definitely brought hope to not only the Cavaliers but all of Northeast Ohio. An estimated $100 million economic impact will help out Northeast Ohio through tickets, food, hotels, etc.
Works Cited
Ap. “AP Source: Cleveland to Host 2022 NBA All-Star Game.” FOX Sports, Fox Sports Interactive Media, LLC, 30 Oct. 2018, www.foxsports.com/nba/story/ap-source-cleveland-to-host-2022-nba-all-star-game-103018.Badenhausen, Kurt. “Ticket Prices For The 2018 NBA All-Star Game Are Up 220%, To Record $1,900 Average.” Forbes, Forbes Media LLC, 15 Feb. 2018, www.forbes.com/sites/kurtbadenhausen/2018/02/15/ticket-prices-for-the-nbas-2018-all-star-game-are-up-220-to-record-1900/#5e439e111657.
Dammarell, Evan. “Cleveland Cavaliers and NBA Bring Hope To City With 2022 NBA All-Star Game.” Forbes, Forbes Media LLC, 2 Nov. 2018, www.forbes.com/sites/evandammarell/2018/11/02/cleveland-cavaliers-and-nba-bring-hope-with-2022-nba-all-star-bid/#51b24a0d4d6a.
Delgado, Dane. “Tickets to Cavaliers Games Are Selling for $2 on Third Party Sites.” ProBasketballTalk, NBC Universal, 26 Oct. 2018, nba.nbcsports.com/2018/10/25/tickets-to-cavaliers-games-are-selling-for-2-on-third-party-sites/.
One would have thought that LeBron James leaving the Cavaliers would have driven their demand for ticket sales and merchandise way down, thus causing a decrease in price in order to entice consumers to buy. However, when the NBA stepped in, they gave cause for demand to increase all over Cleveland. Yes, tickets and merchandise will increase in demand and supply, but also local businesses can expect to gain more activity when the time of the game comes. Thus, they could raise their prices as demand would become relatively inelastic as consumers would most likely be willing to buy products at a higher price if they are temporary visiting Cleveland for the game. However, post the All Star Game, Cleveland could most likely expect a major decrease in demand, and should be able to lower their supply accordingly in order to stop a surplus. The NBA/government could step in and put in a price floor so that producers can't sell their prices to low, but this would create deadweight loss, which is not efficient for the industry. The NBA is a big enough corporation where they could and would be prepared for this market activity and would be able to absorb any losses.
ReplyDeleteAs mentioned, hosting the All-Stars game in Cleveland will economically boost Cleveland due to the demand for tickets, food, hotels, merch, etc. This boost will only be short term and Cleveland’s economy will likely settle back down to what it intrinsically is. The game may bring people into Cleveland, increase demand, and price in conjunction, for various products and services that the city has, but the game won’t last forever, and the tourists won’t stay forever. Once the game is over, tourists will return to where they came from, and demand and price will settle once again. At the same time, it is very possible that hosting the game in Cleveland will shine a light on the city, bringing in more tourists for attractions outside of the All-Star game. In this case the long term revenue that the city will bring in will increase due to the increased attraction it is receiving post- All Star game.
ReplyDeleteHopefully this will boost Cleveland's ego for their team, as they are not one of the favored teams in the NBA due to LeBron James leaving them behind for the LA Lakers. Knowing the allstar game is so popular, this might boost the economics of the Cavaliers by mass majority of demand for watching the game in their city. This will also bring a lot more tourist and hopefully bring a new crowd to them, as they are still facing troubles as a team.
ReplyDeleteHosting the All-Star game in Cleveland like you said would really boost Cleveland economically due to the demand for the tickets, food, hotels, etc. But with this one game it will be a short boost in the economy and it will mostly settle back down to what it was like originally. The game will bring in people from all over the place and it should help boost the economy because of all the stuff that people will buy while they are in Cleveland. After the game is over people will leave and go back home and the demand and price will settle back once again. With having the game here it will mostly like the city bring in new people to what it is really like to be in Cleveland.
ReplyDeleteThis event is a bigger event to the NBA than the finals. It brings in lots of celebrities for other events and the NBA has done a good job at finding the people that would spend a large amount of money on just a few day weekend. They may have troubles with Cleveland this time of year with snow or cold weather which might scare some people away from going.
ReplyDelete