Why the NBA Should Be Important to Louisville

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This entry was composed before the release of the article discussing an independent economic analysis that was done to judge the potential impact an NBA team would have on the city.  This analysis stated that the city would see only a $2.4 million increase to the local economy.  Not only is that embarrassingly low, it stinks of being incorrect.  With a salary cap of $58 million plus salaries of executives and other workers, the local payroll tax revenue alone would equate to nearly $5 million annually.  And this doesn't even begin to include increases in revenue from merchandise sales, taxes on lease revenues to the Yum Center, and increases in spending in the Special Tax District which surrounds the arena downtown.

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I've written in the past that I thought the NBA in Louisville might be far-fetched, slightly off-based, and a stretch for the city to truly pursue.  But the day I wrote the post "Oklahoma City vs Louisville: A Basketball Case Study" I must have been drunk or high, or both.  I was being a moron.

When I met with the city's Director of Economic Growth and Innovation last winter he stressed to me that the city's main focus was trying to attract as much outside investment as possible that made sense for it to pursue.  Things where infrastructure might already be in place, but more development was needed.  Businesses that Louisville already participated in on some level, but might need a slight kick-start to improve upon.  When considering all of these facts, and the economic impact various industries might have, why an NBA franchise would ever be overlooked is beyond me.  We already have the infrastructure: a great NBA-ready arena (the Yum! Center), a plethora of 5-star hotels and restaurants for NBA opponents to stay at and chose from, and a concentrated amount of nightlife options within walking distance of both said hotels and the arena for players and coaches to frequent (because we know that Ballers gon' Ball).  And we have a huge fan base of basketball lovers within a 100-mile radius; one might even argue that it's the biggest basketball fan base in the country.  Sure the population of Louisville might not be big enough in-and-of itself to support a franchise, but when you consider the basketball lovers in Southern Indiana and the entire state of Kentucky you now have a population of followers that would be as big as any large market team in the League.  And we have capital.  With Papa Johns, Yum, Humana, Anthem, and UPS all headquartered within Jefferson County we have the start of a sponsorship base that would be as good as any around the country.  And what we lack in that area could easily be made up through partnerships with national firms that have a presence here such as Northwestern Mutual, United Healthcare, Kindred, and PNC Bank.  We aren't far off.

The arguments against a team are numbered and poignant: people who would support the NBA franchise aren't likely to also buy their season tickets to UL, UK, or IU games - hurting the already established college teams.  Attendance would be so low that the team would quickly be delegated to the annual conversation of contraction.  Local media outlets wouldn't have the capital to adequately support and market the team's games.  The Yum Center would need major renovations to house a team.  The University of Louisville, specifically, would be murdered by having to split dates with the team, and for having to share sponsorship dollars.  So on and so on.

Listen, these are all small items that, if people would really work together for the greater good of the city, would easily work themselves out in a positive way over time.  Starting with season tickets and attendance.  I am a UK fan.  I do not have UL or IU season tickets, and, while I'd love to have the opportunity to go to all of Kentucky's home games, I do not own those either.  But if an NBA team came to Louisville I would jump at the chance to support them because of the talent that would come through the arena, and the quality of basketball that would be played.  Fluff games like those that occur with the Long Beach States, Quinnipiacs, and Monmouths of the world would never take place.  Each of the 41 games played would be competitive, and would matter.  And even if the team were bad, how excited would people be to watch Kobe, Lebron, or Kevin Durant perform in our fair town?  Thousands of people would be interested in this spectacle!  And what if one of those guys were to say "Hey, Louisville is really cool!" wouldn't that just make our day?  On a pure numbers basis, the Yum! Center holds 22,090 folks (per their website).  Most nights there might only be 12,000-14,000 people in the stands depending on the opponent.  However, if the team is successful or the game is big this number could easily climb to 20,000+, allowing the team to average somewhere around 16,000 fans a game - and the average NBA game attendance last season was 17,273.  Not too far off.

Oklahoma City cited a statistic that attendance to nearby Oklahoma Sooner basketball games fell by 15% or so after the Thunder came to town, however this is in a state that is extremely football crazed and whose population isn't nearly as dense as ours in the immediate outlying areas of the city.  If UL were to see any drop in attendance after a franchise entered the picture I believe it would be minuscule as it is much more likely that the NBA team would suffer the loss of a patron if that person was given a choice between their longstanding favorite team or the new thing in town.  And while TV rights could be an issue, as there might not be many big dollar contracts available between a team and any of the local stations, I would guess that a regional institution like Fox Sports could be an option.  Or if the team wanted they could start their own station, keeping all the revenue from ads and television buys from Insight (Time Warner) that would ensue.

That leaves us with the issue of how they would fit with the University of Louisville.  And this really is the weakest argument in my opinion.  In my previous blog I did an analysis of the game schedules between UL's Men's and Women's programs and that of the Oklahoma City Thunder in order to see what the possibilities are for conflict.  And while there would be some, the reality is that only a few games a year (less than 10 total between all three teams) would really have to be moved around.  Something that is more than easily doable, to the point that that is really a non-argument.  And besides, with all that has come out on how little the University pays to rent the arena for a game, they should be more than willing to be flexible on dates when given the choice of that or paying a higher cost to put on their contests in the Yum Center.  Beyond that, imagine the synergies that could take place with a franchise and UL as students in their Sports Marketing, MBA, Sports Medicine, and Design programs might all have the opportunity of internships, temporary jobs, and other learning opportunities.  For students looking to gain a foot in the door to the ultra-competitive job market that exists within Professional Sports Franchises, this would be huge boon!  It would be a win for the University without a doubt.

At the end of the day, if the city wants to look for a way to increase payroll tax, increase its brand, and continue to push interest in a Downtown area that needs more consistent traffic, then an NBA franchise is the instant fix for all of this.  Millions of dollars would pour into city coffers through ticket sales, increases in tax revenues (from the added $58 million+ in salaries that the team would bring in), and increased foot traffic downtown.  This is something that would bring instant credibility to our city, and would go a long way towards re-establishing ourselves as the preeminent town in the South.  We'd have the best 2-minutes in sports, the best 2-week festival in America, the best college sports, and (potentially) the best NBA franchise in the country, to go along with all the other new and spectacular developments that have already begun coming to fruition throughout the past five years.  While it could take years and years to acquire, it's time for our city's leaders to stop being divided, to stop saying why we can't, and start realizing why we should.  In the 1960's and 1970's Louisville had two opportunities for Major League Sports teams, and has admittedly paid the price for ignoring them.  Please, for the sake of our town and the momentum we've developed, lets not do that again.

Job Growth in the Ville: Growing the Pot vs Enriching the Soil - (Unexepected) Part 2

I must admit, this morning I am eating crow - the thing I hate the most to do.  Not because I was called out or corrected by a peer, but because I had a realization.  I was fortunate enough to network over coffee with one of the city's bright, young, minds in the sphere of local economic development, and he motivated me beyond belief. After my last rant about the mental thrashing I felt I took with our Director of Innovation, it was extremely uplifting to commiserate with someone of like mind and beliefs about the potential of our town.  But it made me realize that Mr. Smith is not wrong in his views about how to develop Louisville (although I disagree with some of his views), but just a contrasting point in the overarching argument that we both share.

Rebuilding Louisville into the great city she used to be a century ago is no easy process.  Like any old home in a state of disrepair, there are many steps to the cleansing and beautification process that must take place before the finished product comes to fruition.  Luckily we have workers tending to many phases of the revitalization.

To achieve true exponential growth there are three phases of achievement that must take place.  In one sector new businesses must be brought in to add immediate job creation and revenue generation for the city.  These additions bring excitement to the city because they are the most detailed and publicized developments we see.  This is Mr. Smith's task of "growing the pot."  The second phase of development is to parlay the current infrastructure for better use - transportation, public education, parks and city services.  This was my point on enriching the soil.  But the third area, and one that is greatly overlooked, is the cultivation and development of the start-up and entrepreneurial community.  These would serve as our shots of nitrogen and fertilizer in the hypothetical pot analogy I made in the last entry.

You see start-ups bring energy and new blood to the community.  They bring a more robust buy-in towards the community because people now have to come together and unite under the common goal of making this new idea into a reality and molding a successful company out of a dream.  When you get many successful start-ups in one community at the same time you now have a group of thinkers and doers who can unify under the umbrella of not only turning ideas into reality, but also making their overall environment a place that is nurturing towards their whims.  Once this energy combines with the renewed growth generated through the consolidation of other systems, and the expansion of the pot through outside investment, you now have an equation for success that creates exponential explosion throughout the entire system.  This combination of factors can only take place when there's a total system buy-in from everyone involved, and the entire community is committed to making a Major League Louisville.

Job Growth in the Ville: Growing the Pot vs Enriching the Soil

Recently I had the pleasure of meeting and having a long discussion with one of our city's great assets, recently appointed Director of Economic Growth and Innovation for Metro Government - one of Mayor Fischer's right-hand men.  In our meeting I nervously meandered through a list of ideas, problems, and solutions that I had tried to thoroughly construct over the week I had to prepare, and, despite my best intentions, there were no groundbreaking solutions, no job offers, and little gained from our talk other than a better understanding of what Metro Government aims to do as a leader in growing the city's economic base.  Grow the Pot.  A phrase I heard at least 50 times during our discussion.  And while it is well-intentioned, and certainly is the ultimate aim of any economic developer, shouldn't we consider easier options within the confines of our great city first?  For sake of context, some of my ideas were as follows:

- A program that allows young JCPS teachers to get tuition assistance for the pursuit of advanced degrees in exchange for agreeing to teach at some of the county's most under-performing schools for an extended period of time.  (As it stands now young JCPS teachers can transfer out of the "doldrums" of poor schools as soon as they have tenure enough to do so within the confines of the union).

- A partnership with one of the national banking institutions present in the city that would bring young finance workers to the city where they could complete many of the analytical and back-office tasks that are currently performed directly on Wall Street at a much higher price to the company.

- Advanced entrepreneurial incubators where MBA students from surrounding universities could gather and bounce ideas off each other with ease.  A situation that the city, UL, or a donor, could fund in hopes of some of these ideas taking flight and becoming major corporations in the city.

- A revised TARC route that would lend the transport service to actually being used.  Could you imagine actually trusting that a certain bus would arrive at its pickup and drop-off locations on time?  And that the routes would be easy and clear to understand?

All of these ideas were brought up amongst friends before I even began thinking of presenting them to Mr. Smith, all of them were met with strong approval, and they all were quickly rebuffed as the meeting progressed.

I understand his point, for Louisville to grow we need to get more dollars injected into the economy by direct investment from currently foreign entities.  That's the easiest way for our city to grow its employment base the fastest - and that's true.  But it's also the most complicated and the path of most resistance in a lot of cases.  The truth of the matter is that Louisville, as an institution, have a lot of systems in place that are really good in purpose, but have been half-assed (sorry mom) in execution.  For example, when we discussed the teacher education idea Mr. Smith launched into a deep diatribe about how the problems with the school system really root in the downfall of the busing system and how the private school system has cannibalized the cities best students - both valid points.  But what if the cities best and brightest teachers chose to stay at the schools which needed them most?  The students there would be exposed to professionals who participate in their craft at its most rudimentary of levels: to mold and shape young minds, and to make a positive impact.  Believe me, it's the kids at these places who need it most.  Restoring hope at the lowest levels of schools would span greater confidence in ALL of our cities public schools and bring many students back into the fold whose parents would have otherwise had them home-schooled or sent to one of the many private institutions locally (many of whom employ these very same young teachers anyway).

The TARC idea was another one I was passionate about, and something I was prepared to personally take on if given the chance.  Unfortunately I was told that TARC was a private entity and that the city could not ask them to do anything - BS!  The city has every right to ask TARC to evaluate its operations in order to improve efficiency and its reputation around the city.  While I have no public records to back this up, I am certain that TARC receives SOME type of funding from City Hall.  And even if they don't, I doubt it would take much more than the offer of a grant or future funding to help get the ball rolling.  I surveyed countless young people who said that if they had reliable info on how the TARC routes operated, were confident in the promptness of their arrival, and felt like the service was affordable, that they would frequent TARC as much as possible for the purposes of transport for commutes and for leisure activities on the weekends.  And what better advertisement to a national organization looking to move 5,000 jobs than by saying "We don't have a subway or any sort of light rail, but our bus system is among the most efficient and effective in the country"?  Mr. Smith didn't seem to care.

The downfall of outsiders coming into Louisville and making big decisions, as Mr. Smith is, is that they often fail to see the usefulness that abounds in many of the city's most aged institutions.  Like trimming a plant in the spring, often times things must be consolidated in order for new growth to begin, and while growing the pot might be the goal it's extremely shortsighted to say that the only way to do it is through the attraction of new businesses.  Simply adding a new taxpayer to the community only creates one or two points of impact on the local economy, but expanding or improving a current asset to provide more growth provides exponential impact.  It might take a little longer to get new growth by enriching the soil, but in the long run it will create a much more fruitful plant.