Why LeBron James’ Move to Los Angeles Could Boost the City’s Economy
LeBron James’ move to Los Angeles is expected to have more than just an impact on the Lakers — a once-dominant team that has sagged in recent years. His move might also boost the local economy.
According to a study conducted by legal document website FormSwift in February, LeBron James will likely have a positive economic impact on the food and drink industries in Los Angeles based on data from the previous cities he’s called home, including Cleveland and Miami, before and after he left.
FormSwift used the economic forecasting model from a 2017 Harvard study, which found James had a “statistically and economically significant positive effect” on employment and restaurants within a mile of the stadium where he played.
“Specifically, his presence increased the number of restaurants within 1 mile of a stadium by about 12.8% and the number of eating and drinking establishments by about 13.7%,” according to Harvard Study. James’ presence also increased employment by 23.5%.
Using that model, and mapping out the number of food and drink establishments a mile from Staples Center where the Lakers play, FormSwift estimated that James’ move to Los Angeles would bring 2,989 new jobs, have a five-year local economic impact of $396,985,680, and that the five-year state tax revenue would be $29,376,940.
This study was done long before the news broke that James would be signing a four-year, $154 million contract (its numbers are based on a five-year stay in Los Angeles). Fortune reached out to FormSwift to see if they have updated their numbers given the Sunday announcement of James’ move but didn’t receive an immediate response.
Already, James’ announcement is having an impact on ticket prices, and his addition to the team is a boon for the shopping app Wish, which has its name on the Lakers jersey. And, of course, the move is financially beneficial for James.
Cleveland bar and restaurant owners, however, are worried about an economic downturn downtown near the stadium with James’ departure. James’ return to the Cavaliers in 2014 (after four years playing for the Miami Heat) had a positive impact on the Cleveland’s economy. Still, Mayor Frank Jackson was optimistic about downtown’s growth, citing new tenants, development, and private company investments.
“The downtown neighborhood will continue to be the epicenter for entertainment in Northeast Ohio,” Jackson said in a statement. “LeBron’s achievements on and off the court will leave behind a remarkable legacy in the City of Cleveland and I thank him for all that he has done. While LeBron James will be missed, Downtown Cleveland will continue to thrive as a world-class place to visit; live; eat; work; play and do business.”