New Orleans Hornets Economic Impact
City of Oklahoma City — Revised Analysis
Prepared by
Brent Bryant, Business Manager
Finance Department
City of Oklahoma City
And
Monty Evans, CEcD, Manager
Research & Information Services
Oklahoma City Chamber of Commerce
May 7, 2006
Introduction
Due to the devastation caused by Hurricane Katrina in New Orleans in September 2005, the City of Oklahoma City (City) was approached by the New Orleans Hornets (Hornets) and the National Basketball Association (NBA) to play their 2005-06 season at the Ford Center in Oklahoma City. Such a relocation definitely brought economic benefits to both the City and the State of Oklahoma (State). The impacts of these benefits are divided into 1) game impact, 2) payroll impact, and 3) economic impact. We have attempted to summarize these impacts based on the best information available.
The original New Orleans/Oklahoma City Hornets impact analysis (done in September 2005) had assumed 41 home games with an average attendance of 12,000 per game. This revised analysis uses actual ‘turnstile’ attendance figures (
18,737) as reported by the City of Oklahoma City. Additionally, there were 38 home games played at the Ford Center during the 2005-06 season (three less than originally estimated). The differences between the estimated and actual figures are summarized in the table on the following page.
I. Game Impact
Direct Spending
Based on actual ‘turnstile’ attendance, the Hornets averaged
18,737 per game attendance, playing a total of 38 home games (36 regular season and 2 preseason) at the Ford Center during the 2005-06 season. That level of attendance generated an estimated
$45,568,384 in direct spending. The assumptions being that 20% of the attendees are from out of town and would spend $200 while the remaining 80% of the attendees are local and would spend $30 per event. Non-resident attendees would account for
$749,480 per game and resident attendees would account for
$449,688 per game for a total of
$1,199,168 in direct spending for each game. For the 38 game season, direct spending is estimated to be
$45,568,384 with
$28,480,240 from non-residents and
$17,088,144 from residents.
Sales Tax Estimates
Also, of the $45,568,384 in direct spending, an estimated 75% (or $34,176,288) would be subject to state & local sales taxes. Based on that, the City could anticipate an additional $1,324,331 (based on a tax rate of 3.875%) in new sales taxes annually while the State would have an additional $1,537,933 (based on a tax rate of 4.5%) in sales tax revenue.
II. Payroll Impact
The estimated player payroll for the Hornets is approximately $57,000,000 annually with additional $3,000,000 in front office payroll, bringing the total annual payroll for the Hornets to $60,000,000. Based on a State income tax rate of 6.0%, this level of payroll could potentially yield $3,600,000 in projected income tax collections.
III. Economic Impact
Employment Impact
Besides the direct game spending impact of the Hornets, the 100 direct jobs (players & front office) would likely generate an additional 129 support jobs in the local economy for a total of 229 direct and induced employment.
Payroll Impact
Based on the assumption that only $6,000,000 (approximately 10%) of the projected teams payroll of $60,000,000 will be spent in Oklahoma (since most of the players reside in other states), the direct & induced payroll impact would be approximately $25,443,078 annually. That would generate an estimated $249,270 in local tax revenues and $1,854,094 in state tax revenues.
Total Economic Impact
Based on the direct game spending impact of $45,568,384 and the payroll impact of $25,443,078, the total economic impact of the Hornets relocation to the City would be approximately $71,011,462. That level of spending and payroll would likely generate $1,573,601 in local tax revenues and $1,854,094 in state tax revenues for the 2005-06 season.
Summary
Based on the above analysis, the economic impact of the Hornets relocation during the 2005-06 season to the City and State was approximately $71,011,462 and likely generated $3,392,027 in state and local tax revenues.