Several weeks ago, when we proposed to finally bring an NBA team to Louisville as a key driver of equitable economic growth, we were surprised by the press coverage and the response of citizens on social media and on the streets.
In retrospect, we shouldn’t have been surprised.
Sports may represent the most powerful platform for equity in economic growth of all the drivers. The voices of athletes in 2020 and 2021 amplified cries for social, environmental and economic justice for marginalized communities across the county and around the world. And the NBA further amplified those voices and partnered on projects in their cities.
The nation is watching Louisville, and there is reason to believe the NBA and other athletes will be interested in helping Louisville.
In the coverage and the response, we were asked: How is this different from prior, unsuccessful efforts; and how are you going to get this done?
In response, here is this growth strategy for change further unpacked.
Background on Bringing the NBA to Louisville Effort
An NBA team is worth $2.12 billion on average (2018-2019 season) and the value of each franchise is at least $1 billion. These high values imply a high level of annual revenue, where most of the revenues come from broadcasting rights, merchandising, and licensing. Basketball related income (BRI) from ticket sales and event revenue is a smaller but important revenue source as well.[i]
Sounds amazing, right?
Why hasn’t this happened in Louisville yet?
1. Studies show high franchise value does not automatically mean high economic impact to the local economy
Economic studies, including a feasibility study in the Louisville market done in 2012,[ii] found that the economic impact of the NBA franchise to the local economy is relatively small. In Louisville, the projected impact is $2.4 million per year.
If you read the coverage around this analysis and since carefully, no one uses the economic impact argument for Louisville. After the analysis, the city turned its back, saying the private sector would need to make a deal happen.
2. Private sector has been unable to achieve the goal on its own
The private sector did make some attempts by forming an investment partnership targeting to raise $5 million and spend $995,000 on exploratory costs for attracting an NBA franchise in 2016.[iii] One of the two initial principals resigned early on[iv] and it was not until 2018 that new leadership for the partnership was secured.[v] Nondisclosure agreements were signed with three potential majority owners shortly thereafter[vi] and people involved say that conversations have been ongoing.
The city, GLI and the Sports Commission were reported as “supportive” of these efforts in 2018 but are not leading them.”[vii] A grassroots social media campaign has stayed active in the meantime.[viii]
3. New franchise opportunities depend on two key external factors
Opportunities for an NBA team in Louisville come either from a franchise moving to Louisville, or from a decision by the League to expand beyond the current 30 teams. The market environment ebbs and flows with respect to these opportunities.[ix]
There are rumors of a new openness by the NBA to expansion in light of financial strains produced by the pandemic.[x] Factors driving the potential relocation of an NBA teams can come from new potential owners seeking to have franchises in their hometown or a team experiencing weak financial returns in a particular city.[xi]
4. There is and will continue to be stiff competition when an opportunity does arise
In either expansion scenario, there will be stiff competition from five to ten cities.[xii] Louisville is generally considered “a long shot” in the top five[xiii], but has some intriguing advantages, like an arena already built and a deep basketball fan base.[xiv]
How This Initiative Drives Economic Growth
We don’t look at bringing the NBA to Louisville as an economic on-off that must drive growth and produce a positive return on investment (ROI) on its own. Compare how Indianapolis took a strategic approach to sports, including professional sports, as driver of economic growth:
“Having made a conscious decision to achieve prosperity through sports, Indianapolis quadrupled its tourism trade and doubled its hotel space during the period 1984–1991, largely by hosting amateur sporting events. Since that period, Indianapolis' role in the sports arena has magnified. Each major sporting event pumps tens of millions of dollars into the economy and leads to expanded business opportunities, more jobs, and increasing tax payments to the city. Tourism and conventions, including the hotel industry, are major economic factors.”[xv]
So, the NBA Initiative in Louisville becomes the tip of the spear for equitable economic growth.
Indianapolis is roughly the same size as Louisville and has three professional sports team. So, this is as much about culture than anything else. A culture of planning and investment. A belief that sports are perhaps the very best driver of the kind of growth a city would want. And quite a bit of swagger.[xvi]
And as for the power of the sports experience on fans and the impact on cities, we only have to look as far as Indianapolis for solid evidence of sports driving growth. When our Sports Commission’s leadership states that “major league sports strengthen a city's brand and make it more attractive,” we don’t have to look much farther than Indianapolis’ corporate roster for evidence.
Top-performing companies based in Indianapolis include Anthem Inc., Conseco Inc., Eli Lilly and Company, Guidant Corp., Duke Realty Corp., Hunt Construction Group, National Wine & Spirits, and Simon Property Group. Major employers include Clarian Health, Dow AgroSciences, Roche Diagnostics, and more than 20 others.[xvii]
How it Would Work
As with all growth strategies for change, this starts with a new table, rather than trying to “include” the right people at the prior table. We recommend convening a dynamic, inclusive group to catalyze this campaign:
Create a vision for how our NBA Initiative will drive equity, engagement and economic growth
Bring the full support of the City and Metro Council, our major businesses and institutions, community leaders, influencers and fans to the Initiative
Sell, sell, sell Louisville as the next market for a team.
Beyond that we should seek to send a new message to the nation about who Louisville is in composing the new voices that speak for it in this Initiative. It would look something like:
2 male pro athletes/representatives/families
2 female pro athletes/representatives/families
2 major public corporation representatives
2 NBA to Louisville experts and grassroots representatives
People are crazy about their sports team, and most also get pretty excited when they realize that, with new approaches and thinking, sports can change their city for good.
Epilogue: Why not the WNBA, too?
[ii] Feasibility study by Cambridge Economic Research in 2012, https://docshare.tips/impact-of-nba-franchise-in-louisville_5770d57fb6d87fef528b5827.html
[xv] Read more: https://www.city-data.com/us-cities/The-Midwest/Indianapolis-Economy.html
[xvii] Ibid, city-data.com