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Economic Impact of Lebron’s Homecoming

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By Carl Koenemann

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The city of Cleveland and its citizens were elated when the “King,” Lebron James, decided to return his hometown team four years after

he infamously departed to showcase his talents in South beach. In fact, it was the polar opposite reaction to Lebron’s Decision. Instead of rioting and burning his jersey, the citizens of this Ohio city paraded around in jubilation praising their hometown basketball product.

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Their joy did not only stem from Lebron’s dominance on the basketball court, but also from the boost he will provide the city and state’s economy.

The question is how robust is this increase in economic activity. Some

experts estimate that Lebron’s return will engender an increase of more than half a billion dollars in one year alone. The “Return of the King” will also help

bring a return in jobs and a lower unemployment rate.

The “Return of the King” will also help bring a return in jobs and a lower unemployment rate. The Cavaliers will easily cover his twenty million dollar salary with the increase in ticket sales. If Lebron’s previous tenure with the team is an indicator, the Cavaliers will most likely sell out

every regular season home game. Cleveland fans bought out all the available season tickets within twenty four hours after he made the decision to return home. In fact, demand is so large that the organization has begun to create a raffling system

to give everybody in the city a relatively fair chance of procuring a ticket to watch their

golden boy.

Varying estimates are out there regarding just how large the “Lebron stimulus” is, but they range between $250 million and $500 million. In

order to achieve the upper limit, it must be assumed that all the people who make money off Lebron will spend the extra-cash in Cleveland, thus providing a high multiplier effect. If this estimate is

realized, more than 500 jobs will be created. !

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$250 Million - $500 Million

Some argue that estimate is wildly over-estimated as it is only displacing economic activity out of the suburbs into the city center. However, what these type of estimates don’t account for is that Lebron is acting as an

ambassador for the city of Cleveland. Keynes famously noted how “animal spirits - a spontaneous urge to action rather than inaction” are an integral

driver of economic growth. The return of their beloved king, Lebron James, might suffice to satisfy these animals, spurring growth within Cleveland and

beyond. !