Price Tag of Losing the Browns is Hard to Decipher
By Becky Yerak, Plain Dealer, Cleveland, Ohio, 1.14.96 In their fight to keep the Cleveland in the Cleveland Browns , city officials and civic boosters argue that economic activity would be greatly crimped if the team makes good on its threat to move to Baltimore. But several economists punch more holes in that reasoning than the Browns' offensive blockers did all season against opposing defensive lines. They say civic leaders overstate the financial importance of professional football to Cleveland. Last week, after a study was released that rocketed estimates of the Browns' annual economic impact from $47.9 million to at least $79 million, some economists suggested the figures had moved from overstatement to gross exaggeration. "The overall economic impact of the Browns' exit will be next to nil," James Coons, chief economist for Huntington National Bank in Columbus, wrote in a recent report about Cleveland's economy. To be sure, pro football brings immeasurable psychological pleasure to fans. During football season, the Browns are a common topic of conversation, bonding area residents. Civic leaders, already touting Cleveland as a Fortune 500 colony, say the prestige of pro sports gives the city a major-league image, helping to attract and keep businesses. And Browns majority owner Art Modell got his nomadic urges just as the Rock and Roll Hall of Fame and Museum opened last summer and as the Indians regularly packed their new Jacobs Field digs. Coons and other economists acknowledge that businesses serving the Dawgs will suffer short-term pain. Cash registers will be quieter at some hotels, parking lots, charter-bus operators, sporting goods retailers, travel agencies and cab service companies, among others. "It will have a material impact, not just at the stadium but across the city," said Larry Lisy, general manager of Beverage Distributors Inc. The Cleveland distributor of such brands as Miller, Stroh's and Heineken beers might be forced to lay off some of its 150 workers if the Browns move, he said. While Beverage Distributors and other individual businesses figure their possible losses, the team's total impact has been a moving target. In early 1995, the Greater Cleveland Growth Association estimated the Browns were worth $36.4 million a year to the local economy, making certain assumptions on its own and depending on previous studies by the Convention & Visitors Bureau of Greater Cleveland. In recent months, the Growth Association, factoring in higher ticket prices, boosted its estimate to $47.9 million - $28.6 million from local fans and $19.3 million from fans traveling from outside an eight-county metropolitan area. And Thursday evening - six days before NFL owners begin meeting in Atlanta to consider the team's planned move - the Growth Association released a new estimate: $79 million. And that's just for non-local fans; the association hasn't finished analyzing local fans' spending data. By contrast, the rock hall is estimated to pump $85 million a year into the local economy.
"You're bringing in dollars from outside the region that wouldn't otherwise be here," said Jack Kleinhenz , the Growth Association's chief economist. Kleinhenz is aware that many economists pan the inclusion of local spending because they say that's money that local fans would just spend elsewhere even if football becomes kaput in Cleveland. After all, if fans buy hot dogs at the game, that means they might not buy them at the grocery store, the economists say. Still, several economists say the Growth Association's changing of economic impact figures is the sort of financial gymnastics making them skeptical about the true impact. The new $79 million figure was based on surveys of 437 fans - 54 percent of them non-local visitors - during the Browns' last three games at Cleveland Stadium, against the Green Bay Packers, the Pittsburgh Steelers and the Cincinnati Bengals. "It's a more complete way of making estimates associated with sport attractions," Kleinhenz said, adding that interviewing fans is a more accurate method. "The other figures were based on assumptions, and those were very conservative assumptions." The $79 million also includes a "multiplier," an economic tool used to measure the ripple effect of spending by, say, a beer vendor who turns around and spends his tips in the area economy. Asked if the $79 million would hold true if the Houston Oilers, the Miami Dolphins and the San Diego Chargers had been the last three home opponents instead of three relatively close Midwest teams, Kleinhenz said, "I can't answer that question. But I don't have facts that would tell me otherwise. And if the Browns had an even better-performing team, that would have increased the number of attendees." Dean Baim, a Pepperdine University economics professor in Malibu, Calif., is wary of economic impact figures tied to sports teams. "When you were growing up, your mom probably said `seeing is believing,' Baim said. "This is one area where believing is seeing. If you want to show economic growth, you're going to come up with the numbers to prove it." Non-local spending might not go away with the Browns, he said. "How do you know that those fans wouldn't have come to the rock hall instead of a Browns game?" Baim asked. "If they're that mobile that they can come to Cleveland for the Browns, they may come to Cleveland for some other entertainment." Andrew Zimbalist, an economics professor at Smith College in Northampton, Mass., said the Growth Association's estimates of spending by non-local fans should reflect only spending that stays in Cleveland. In its previous study, the Growth Association estimated that non-local fans each spend $16 in retail shops. Even if that's true, Zimbalist said, that doesn't mean that, say, a Galleria merchant walks home with $16 in his or her pocket. The retailer, after all, had to buy merchandise, and in fact might pocket only $2. Of the new $79 million estimate, Zimbalist said, "The idea that these figures changed is a product of how illusory these studies are." Rodney Fort, a Washington State University economics professor, questioned the Growth Association's latest estimate that 38,150 non-local fans attend Browns games - compared with the 4,780 estimated in the previous study. In the last three home games, the average attendance was 59,510.
"I don't believe it," Fort said of the new 38,000 estimate. "The guts of the issue are season-ticket holders. I've not done that analysis in football," but in baseball, most season-ticket holders live nearby. And not only might the $79 million be skewed by the fact that the three final games were against three Midwest teams - including the playoff-contending Steelers and Packers - but the $79 million also might be affected by the fact that those were possibly the last three home games of the storied Cleveland Browns . "I have no trouble at all believing that longtime Brownies fans from all over the country might have jumped on planes, swept into town and populated those last three games to a much higher non-local percentage," Fort said. "It's a real bad survey time." Economists also question why the Growth Association includes ticket costs in the team's economic impact; after all, they say, that money goes to the team. But Kleinhenz defended including ticket costs. "If you spend money at May Co. or for some other business, should you not calculate those sales? Ticket sales are part of the output generated by local fans," he said. "And not all of those dollars go directly to the Browns. The money also goes to people who work for the Browns who live here. To not put the ticket price in there would minimize the impact of what it really does to the economy." In response to the Browns' thumbing their nose at Cleveland, the Convention & Visitors Bureau will ask area residents in 1996 "to become tourists in their own hometown," bureau President David Nolan said. While he believes the economic loss of the Browns would be high, his greater concerns are the harder-tomeasure cost to community pride and the diminishing of Cleveland's status as a major-league city. Tourism sales are driven partly by visitors coming to Cleveland on the recommendation of friends or relatives proud to live here, he said. While the economists acknowledge that professional sports add to a city's image, many agree with Huntington's Coons that Cleveland's economy would survive the loss. "The idea that 10 football dates a year can do a substantial amount of economic good for a community just flies in the face of logic," said Robert Baade, an economics professor at Lake Forest College in Lake Forest, Ill. Investing $175 million in a renovated stadium would primarily benefit team owners and players, Baade said. The bulk of TV revenues pays the salaries of players, many of whom live outside Cleveland. "It's not like building a new factory," Baade said. Such workers could be well-paid and spend the cash in town. "The $175 million that [Mayor Michael R.] White is talking about is really a payment to maintain the economy. It's like a blackmail payment rather than something that advances the economy. If the money was invested elsewhere, it may have a greater payoff. That's not to say that the community shouldn't invest in the Browns, but the reasons for the investment should be made clear - it's about ego, quality of life, culture," Baade said. Tell that to Geppetto's Franchise Systems Inc., seller of ribs and barbecue sandwiches at stadium concession stands and loges for the past two seasons. The Cleveland business is suing the team, charging the move to Baltimore will cost it $250,000 in sales and bad publicity. "We had an advertising program tied to us as `the official bone of the Browns.' We had a lot of printed material, and it all backfired,' said Michael O'Malley, Geppetto's president.
Caption: BRYNNE SHAW / PLAIN DEALER PHOTOGRAPHER Northern Lites Aviation, a Willoughby company that flies advertising banners over Cleveland Stadium, will lose half of its business when the Browns leave. In response to the heavy turbulence, owner Ron Cola is advertising in Youngstown, Kent and Akron to snare business during college games there.