“Hosting something like the NBA All-Star Weekend is an absolute slam dunk,” says Thilo Kunkel flatly, completely unaware he just provided a guaranteed opening quote. “The host community cannot lose—particularly when working with a reputable organization like the NBA, which has a lot to lose if they don’t organize an outstanding event.
Kunkel, director of Temple University’s Sport Industry Research Center, is referring to the economic impact enjoyed by hosts of what’s evolved into a three-day-long basketball bacchanal that briefly transforms the cities it touches, and which happens to be coming to Salt Lake City next month.
Kunkel earned his PhD in sport management and has published a multitude of academic treatises on the complex interactions of brands, professional sports and fans. But what earns him the most press is the work he oversees estimating the economic impact of marquee sporting events on their host cities. Most recently, Kunkel and his team came to the conclusion that the 2022 NBA All-Star Weekend, held in Cleveland, produced a direct net economic benefit to the city of a stunning $141 million.
This is not Salt Lake’s first time hosting the event. In 1993, then-rookie Shaquille O’Neal played his first All-Star game here. It’s understood that the NBA’s All-Star Weekend selection process strongly favors shiny, modern arenas, and the two-year-old Delta Center—as the Vivint Arena was called at the time—clinched it.
The reverberations of the 1993 All-Star game were profound, as its unambiguous success demonstrated the community’s capacity to host high-profile, high-consequence, multi-venue events. This, in turn, provided a launchpad for Salt Lake City’s successful 2002 Winter Olympics bid, submitted three years later.
To give a sense of the long-term economic impact of the 2002 games, it’s useful to look at skier-days, which is a measure of paid visits to Utah’s ski areas over a season. It took the 20 years between 1981 and 2001 for Utah skier-days to increase from 2 million to 3 million, but only three years to leap from 3 million to 4 million—the obvious infection point being 2002. And the impact continues, as the Ski Utah Association holds out the possibility of a record-breaking 6 million skier-days this season.
A look at the past 30 years of All-Star Weekends reveals a venue selection process that is hardly evenly distributed. Indeed, over those three decades, Los Angeles and New Orleans hosted 20 percent of the time. Being awarded a second All-Star Weekend puts Salt Lake in an elite club, which includes such cities as Atlanta, New York City and Philadelphia.
Recognizing the venue selection process is not one in which every city eventually gets its turn, what factors, apart from arenas that sparkle, is the league looking for?
“It’s a significant amount of resources that are needed. You have to decide if the return on investment is there, and where are you going to raise the money to fulfill the community obligations,” says David Gilbert, who oversaw the 2022 All-Star Weekend as CEO of the Greater Cleveland Sports Commission. “[The NBA is] very specific in their RFPs, that here are the things that your community is going to provide if awarded the event, and a lot of them cost money. It’s free facilities, safety and security, traffic control, marketing, programming, and things like that.”
PHOTOGRAPHED BY MELISSA MAJCHRZAK FOR THE UTAH JAZZ
Not all cities are geared up to do it, Gilbert continues. “Not necessarily the municipality, per se, but it’s the community. Who’s going to rally the corporate community, public sector, and civic sector? There are teams in the league that don’t see that as their purview.”
This is something Jazz President Jim Olson is well aware of.
“It’s a pretty extensive process,” Olson says. “The NBA wants to make sure a team and community are serious about hosting the event. It’s a huge undertaking with a huge impact economically.”
Olson, in 2017, was president of the Vivint Arena—a position under the same corporate umbrella as, but separate from, the Jazz. He oversaw the arena’s extensive $125 million renovation, which infused the facility with new vitality and, he realized, was completed just in time for consideration as the site for the All-Star Weekend that would mark 30 years since Salt Lake City last hosted.
“After the renovation of the arena, there started to be behind-the-scenes conversations about whether it was time to consider an All-Star bid again. And we made the decision to make a run at it,” Olson says.
Typically, the hosting organization is a publicly-funded entity, such as a city or state’s sporting commission, and while the up-front price tag may be a hefty one, it’s generally an easy sell to taxpayers.
Not so, in 2023.
Instead, the Jazz decided to take the unusual step of putting on this show independently, with no ability to recoup the substantial costs. “The motivation really was the great impact it would have on the community and the state of Utah,” Olson says, recognizing an opportunity to reap the long-term benefits of the event’s contribution to the state’s cultural tapestry and outside perception.
Prior to being awarded the game, the Jazz formed the All-Star Alliance: a collection of 11 prominent businesses (the Utah Sports Commission would eventually join to make it 12), each chipping in to share the financial burden associated with putting on auxiliary events and making the All-Star experience much more broadly accessible to the 99.2 percent of Wasatch Front residents who will not attend any of the weekend’s tentpole events.
“When you get one of these All-Star games, the people most able to consume it are the people who go to the game,” says the chief commercial officer for the Utah Jazz, Chris Barney. “That’s a pretty limited ecosystem in the grand scheme of being in a metropolitan area. We’ve been focused on expanding access. Some of the resources that have been provided by these 12 All-Star Alliance partners will let the whole community participate.”
The majority of alliance members are those with tight existing connections to the Jazz, such as perennial sponsors Zions Bank and America First Credit Union, team healthcare provider University of Utah Health, former owner Larry H. Miller’s namesake car dealerships, current owner Ryan Smith’s Qualtrics, and arena naming rights holder Vivint.
Other alliance members include NuSkin, Workers Compensation Fund, Coca-Cola, Ford and Toyota.
While the benefit of sponsorship of an event that is expected to bring in many thousands from around the country and beyond is obvious for ubiquitous brands like Coke, Toyota or NuSkin, it makes less obvious sense for regional financial institutions and even less for a local healthcare provider. Though if you ask them, they too are looking at the bigger picture.
“It really was a pretty easy decision for us to say we want to be in,” says Rob Brough, EVP of marketing and communications at Zions Bank. “We recognize that the All-Star Game coming to Salt Lake City is about a lot more than just the game itself. It really is about showcasing our state. It’s about highlighting who we are as a community. It’s about creating additional economic benefit to the people and businesses here.”
The NBA makes a strong effort to positively portray the host city’s team, lifestyle and culture and how these all positively reinforce one another. Getting those messages to skilled workers both in and outside the area is central to what Kunkel says is among the less quantifiable but more powerful economic benefits of sponsoring an All-Star Weekend.
“For a growing business, it’s about attracting new people or keeping people from leaving. It’s part talent attraction and part talent retention,” he continues. “There are a lot of reasons why local companies that might not have a national reach would still benefit from association with an event like that.”
In addition to making a financial contribution, University of Utah Health will provide services to any player who gets injured—a rare occurrence in what is typically a nearly defense-free contest. For Blake Johnson, an executive director at University of Utah Health Sports Medicine, the allure of joining the All-Star Alliance was the opportunity to get positive health messages into places where an organization like the NBA is uniquely able to go.
“The All-Star game brings with it a lot of different initiatives that get into schools and get kids moving,” Johnson says. “When we saw the opportunity to partner with the Jazz on this, we wanted to support those initiatives centered around promoting healthy lifestyles in the community. To be a part of that really elevates our brand but also helps put healthy living in a different light.”
Of all the alliance members, the one with economic interests most directly aligned with this particular event is the Utah Sports Commission. Its mission is to attract major sporting events to the state.
“There’s both summer and winter Olympics, right? A lot of these major events that are getting exposure are not in the winter. They roll up to the same key people, sponsors and partners,” says Jeff Robbins, president and CEO of the Utah Sports Commission. “The global positioning of these major sporting events is significant to the state and certainly significant to our bid.”
The bid Robbins is referring to is Salt Lake’s anticipated future Winter Olympics bid, and this does weigh significantly. “[The All-Star Game] is another step toward hosting the Winter Olympics in the near future,” adds Salt Lake Chamber President and CEO Derek Miller.
Hosting the All-Star Weekend is a slam dunk, indeed, which brings us back to where we started: the net economic impact that Salt Lake can expect.
PHOTOGRAPHED BY MELISSA MAJCHRZAK FOR THE UTAH JAZZ
For its part, the NBA has a standardized answer to the question, which it has used for the better part of the past decade: the All-Star Weekend adds on the order of $100 million in cash directly to the local economy, though that number would seem to need updating. In 2012, 2014 and 2022, the cities of Orlando, New Orleans and Cleveland brought in $95 million, $106 million and $141 million, respectively. While the jump to $141 seems abrupt, when the three points are plotted on a graph, the resulting line is disconcertingly straight.
These increases seem tied to the numbers of visitors recorded at each event: 37,000, 55,000 and 121,000, respectively—figures that also form an impeccably linear relationship powered by growth in sanctioned and unsanctioned parallel events able to entertain many more than just competition attendees. Gilbert attributes his city’s high visitor count, despite lingering Covid restrictions, to extensive promotion of those parallel events in cities located drivable distances from Cleveland.
And these are not back-of-the-napkin calculations. Economist Kunkel says that only dollars not subject to “leakage,” meaning dollars that will remain in the city, are considered. Thus, for every hotel room reserved at a chain with headquarters elsewhere, only that portion paying for local taxes, utilities, and payroll, for example, is counted.
“We’re also looking at attendee spending versus corporate spending. A lot of corporate sponsors are spending money in the local community: hiring local companies to print their marketing materials or to build their sponsorship booth,” Kunkel explains. “We only consider new money into the economy. Locals who participate are counted as sources of economic activity but not economic impact. Similarly, anything that the NBA spends that is not in the market is not considered.”
As for the cost of hosting the event, both the Jazz and All-Star Alliance members are keeping their financial commitments to themselves. This may be in part because the total number is as yet unknown.
“The total cost is growing every day,” Olson told the Salt Lake County Council in September when speaking in support of a reallocation of $500,000 to support the development of All-Star Weekend activities. “We don’t have a total cost today. I will tell you it’s more than the funds we’ve so far had committed, and that’s why we’re working on raising more money for it.”
In the absence of firm numbers, one data point provides an idea.
The 2019 All-Star Game was hosted by the City of Charlotte, North Carolina at taxpayer expense, and thus, the associated $6 million expenditure was disclosed.
Taxpayer support for Salt Lake’s All-Star Weekend comes to $4.5 million: $3 million from the state via the Utah Sports Commission, $1 million from Salt Lake City, and the balance kicked in by Salt Lake County. This alone is an appreciable proportion of what it cost Charlotte, and doesn’t include any of the expenses born by the Jazz nor the other 11 Alliance members.
“That’s because we are so committed to creating an event that is going to blow everybody’s socks off,” Olsen says.
All this would hint at the cost of hosting the 2023 NBA All-Star Weekend likely being on the order of $10 million.
Whatever the amount, Jazz leadership affirm that the expense of hosting is justified by all involved as a labor of love: love for basketball and love for the people of Utah.
“This is a basketball community,” Barney says. “We have basketball courts inside almost every church here. Junior Jazz is the largest youth basketball program in the country. The community loves basketball. To me, the All-Star Game represents a celebration of that love.”
PHOTOGRAPHED BY MELISSA MAJCHRZAK FOR THE UTAH JAZZ
The post The 2023 NBA All-Star Weekend could boost Utah’s economy by $250M+ appeared first on Utah Business.
* This article was originally published here