Beach Arena could bring $Millions to VirginiaOctober 17th, 2012 at 7:21 pm by Bruce Rader under News, Personalities, Sports, Uncategorized
While the Virginia Beach City Council awaits its own $50,000 study, an economic impact report done by CHMURA ECONOMICS&ANALYTICS concludes a new arena with an NBA team as its main tenant, could generate as much as $182 million in visitor spending in Virginia Beach.
According to the report, starting in 2015, the total statewide economic impact (including direct, indirect and induced) of a potential NBA team in Virginia Beach is estimated to be $502.6 million a year, which can support 3,712 jobs in Virginia. State government can receive estimated annual tax revenue of $10.9 million. The sources of those economic impacts are the NBA team operation, new arena operation, and visitor spending.
The report also suggests that while the arena is being built, the NBA team would have to play its games in other Virginia locations for two years, which could also inject hundreds of millions of dollars of economic impact per year into the Virginia economy. While the building is under construction, from May 2013 to September 2015, it is estimated that the construction activities will generate a total cumulative economic impact (including direct, indirect, and induced) of $559.3 million that can support 3,944 cumulative jobs in the state. Among the total economic impact, $317.4 million are derived from direct spending during the construction phase. This spending could directly support 2,229 cumulative jobs in the state from 2013 to 2015.
Once the arena is built, and the team plays there full time, the annual revenue of the team is estimated to be $135 million, including ticket sales and licensed merchandise sales. The potential NBA franchise in Virginia will have between 185 and 201 full-time employees working in the team headquarters in Virginia Beach. The team will have 15 basketball players with annual salaries of $75 million.
The 44 NBA home games are expected to attract 704,000 annual spectators. When the new arena is in full operation, non-NBA events can attract 743,484 annual spectators, for total annual spectators of 1.4 million for both the NBA games and non-NBA events. This would include, the report says, a wide range of sporting events, concerts, and family shows.
The economic impact estimated in the report does not include potential playoff games, NBA All Star weekend, or other events such as draft nights, or fan appreciation nights. The NBA has rewarded teams/communities that develop a new arena with an NBA All Star Weekend within the first 10 years of the venue’s existence. For example, the NBA held their All Star event in the new Orlando Amway Center during the venue’s second year of operation—it generated a $95 million economic impact in Orange County, Florida.
Chmura pointed out other benefits that should put a smile on the face of Virginia Gov. Bob McDonnell. It predicts tremendous media exposure for Virginia as the home of a major professional sports team. This media exposure, the report says, will allow Virginia to showcase its rich culture and history and high quality of life, thereby boosting economic development. States such as Louisiana and Oklahoma have recognized the benefits they receive from hosting an NBA franchise, which is tantamount to free advertising for the state. Business and community leaders in Oklahoma City believe that “the Thunder help Oklahoma City in their effort to keep their talented young people working and living in the City rather than leaving for greener pastures elsewhere.”
The report also compares the economic impact of the proposed arena to other businesses. For example, in 2008, Virginia attracted Rolls Royce to Prince George County. This project is estimated to have over $2.0 billion economic impact in the Virginia’s Gateway region in 10 years, for an annual average of over two hundred million dollars. To attract Roll Royce, Virginia provided an incentive package valued at $56.8 million. The economic impact of the potential NBA franchise will be larger than that project.
The report was prepared for Warren Harris, the director of the Virginia Beach Development Authority. I would assume Mr. Harris is hoping this will help convince officials in Richmond to contribute to the building of the proposed $350 million arena. Council members, who will have the final say on the arena, hope to have their impact study by next month. Prior to that, Comcast-Spectacor is expected to present council with a proposal to run the arena.
Comcast-Spectacor commissioned its own study, prepared last summer by former Old Dominion President James V. Koch, now an economic professor, which estimated the new arena would host 200 events a year, create over 1,200 jobs and generate close to $100 million.
More on the story as it develops.