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Pro Sports and Economic Development: What it means to gain major league status, the case of Oklahoma City.

August 29, 2011

­Over the past two decades, billions of dollars have been invested by various government bodies on the construction and renovation of sporting facilities for professional teams, mainly in the name of urban regeneration.  This kind of investment has faced much criticism, especially when the expenditure has been made toward pre-existing teams where economic activity is not created, but merely redirected.   However, the case can be different if the subsidy attracts a new team.  Oklahoma City is the market that has most recently gained ‘major league’ status with the arrival of the NBA’s Thunder, thanks in large part to a city referendum approving $121 million from a sales tax extension toward improvement of their downtown arena to attract the team.  I wanted to explore what the Thunder has meant to Oklahoma City from an economic development perspective.  To do so, I spoke with the CEO of the Oklahoma City Chamber, Roy Williams.

The Chamber is a non-profit organization that works closely with the City toward economic development in the Greater Oklahoma City Metro Area.  I asked if the Chamber had determined what the direct economic impact of the team has been on the City.  Williams replied with information that stemmed from the temporary relocation of the New Orleans Hornets; “Back when Hurricane Katrina hit… the City of Oklahoma City and the business community entered into a contractual agreement with the NBA to guarantee an amount of money to that relocation effort to keep the Hornets whole.  Because of that agreement, they were required to provide us with close to 100 per cent of their financial data while they were here.”   The information included figures about ticket sales, sponsorships, etc., which allowed the Chamber to do what they determined to be a very thorough and detailed economic impact analysis.  “When the Hornets were here, the (direct) economic impact was in the $45-million to $50-million range.”  Although the Thunder is not required to report similar financial figures because it is privately owned, Williams and the Chamber believe that impact is even greater now because the team is permanently located and headquartered in Oklahoma City and attendance figures have grown to nearly 100% of capacity.     

While it is certainly positive from an economic development perspective to have this additional annual impact on the local economy, I wanted to know if the team has altered the perception or profile of Oklahoma City from the perspective of outsiders.   Williams noted the importance of the television coverage the City has received in this regard; “The exposure that the City gets when (the Thunder) play to a national audience is exposure that we never could have afforded.”  He noted that when the team plays at home, the on-air announcers always have positive things to say about Oklahoma City as the broadcaster displays shots of the community, in particular, shots of Bricktown, the city’s popular entertainment district which features many converted historic buildings.  

The success of the team on the court has led to increased media coverage, and in turn this has helped to raise the profile of the City both around the US and abroad.  Williams indicated there is immense anecdotal evidence from staff and associates that when they travel, those from outside Oklahoma City always want to talk about the Thunder.  Williams recalled an encounter of his own, when he was at a hotel in Dubai, waiting for an elevator, “I was wearing an Oklahoma City shirt, not a basketball shirt and this guy came up to me and said ‘Ah! The Thunder and Kevin Durant!’  I hear these stories everywhere…and the Thunder has become our connection with a lot of the world.”

Recognizing that the Thunder has heightened Oklahoma City’s profile, the Chamber has used the team as a focal point in their marketing materials.  The Chamber has developed a website, that has hundreds of videos marketing nearly every aspect one could think about when trying to attract both companies and talented professionals to a city.  There are several main videos available to view directly from the homepage.  The Thunder takes a prominent role in both the first and last of these.  The first video available follows the theme of things on the rise.  It boasts about how there is no housing or construction bubble in Oklahoma City and how the city ranks at the top of the lists of business and technology publications about the best places to launch a new business, or being the most affordable city in the US, among other plaudits.   Shots of the Thunder and the arena are shown several times.  The presentation comes to a close with the voiceover narrator speaking of Oklahoma City and how “you will see an exhilarating, accelerating, rise" as the video cuts to a slow motion sequence of the Thunder’s Kevin Durant elevating to dunk the ball through the hoop – a dramatic exclamation point.

The second video involves a brief interview with Tom Ward, the CEO and Chairman of SandRidge Energy, talking about how Oklahoma City had been outperforming economically under the media’s radar during the recent recession.  Ward believed that the Thunder was the catalyst to open people’s eyes to Oklahoma City’s economic success.  “It was a surprise to the media especially as they focus on New York or the East Coast and Los Angeles or the West Coast, that there was this city in the middle of the country that people hadn’t looked at so much that was actually doing a lot of good things, and starting with the Thunder.  That team brought us to the national forefront as far as at least having an audience to say that there’s something going on here that appears to be different.”  For an indication of recent economic conditions in Oklahoma City, between February and June of this year, Oklahoma City’s average unemployment rate was 5.3% whereas the national average for the same period was 9.0%.

While the Thunder has brought Oklahoma City to national and international attention, the presence of the team has also been a boon to the local community, helping it grow from within.  Oklahoma City has been long-known as a college sports town with allegiances that have been formed based on the ties of the alumni.  In most cases, fans are tied either to the Oklahoma Sooners or Oklahoma State Cowboys.  However, due to the migrant nature of young professionals, not everyone that lives in Oklahoma would count themselves as a fan of either of these two major universities or their teams.  The Thunder however, is different in that they have made a connection with the entire community.  Williams noted the difference between the crowds at a college game and a Thunder game; “What amazed people here in Oklahoma City, was when they go to a Thunder game and they look at who’s sitting out there.  It doesn’t look anything like who’s at a college football game.  It is totally different.  It’s black, yellow, white.  It’s low-income, high income.  It’s three year-olds, 30 year-olds and it’s 80 year-olds.  Pretty much everyone that goes to a college game is rooting for that team because they are connected to it.  (With the Thunder) it truly is much more of a cross-section and representation of your entire population as opposed to your alumni organization.”

While difficult to measure, Williams believes 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.  He indicated that his organization is always worried about talent drain as there are 18 universities in the Greater Oklahoma City Area with approximately 120,000 students.  The Chamber is constantly working with the local business community to encourage internships to develop connections with this constant flow of graduates that pour out into the workforce every year.  Williams noted that the Thunder are not merely a point of pride as an organisation to this group of students, the players themselves have become a point of connection; “Anything you do to add to the quality of life experience that is appealing to that age group, the better chance you have of connecting them to the community and keeping them here.  And they love this kind of sports environment because these basketball players are their age.  Kevin Durant, Russell (Westbrook) and (James) Harden and all those guys are really aggressive tweeters, and so there are a lot of young people here who follow them and are engaged in them, all the time.  I hear it constantly because we (the Chamber) have a young professionals program, and the Thunder is always talked about.”

It would be foolhardy to think that the tremendous growth Oklahoma City has experienced over the last few years has been the result of its first major league sports team.   However, the recent economic success of Oklahoma City has been mirrored by the Thunder’s success on the court.  As such, this young, exciting and successful team which plays in the most internationally popular American sports league has become both a symbol of the City’s success to outsiders and an unprecedented point of pride to its residents.  Without the investment made by the City to renovate its downtown arena to attract the team to relocate from Seattle, Oklahoma City’s rise would undoubtedly have remained a well-kept secret.        

Data sources accessed August 2011: