Chamber's model
The Greater Oklahoma City Chamber of Commerce retains an Arizona-based economics firm, Applied Economics, to create models for all the economic forecasting it does. The firm created the model for the New Orleans Hornets economic impact study.
"Although this type of shell is something we use across the country, it's really very specific to Oklahoma City, which I think is important in measuring the impact accurately,” said Sarah Murley, a partner at Applied Economics.
The crux of the study is an assumption that 20 percent of the people who attended Hornets games were from out of town and spent $200 per event outside the arena. Local residents, the remaining 80 percent, were assumed to have spent $35 per event outside the arena.
That spending accounted for about $74 million of the total impact. Contributions people on the team and support staff's payroll made to the economy accounted for most, about $62 million, of the rest.
Does it make sense?
There are standard mistakes in the study, said Rodney Fort, a University of Michigan economics professor.
Fort said these types of studies often overstate actual economic impact by using inflated numbers and factoring in things that shouldn't be considered economic benefits.
Fort said he has found that people from out of town are more likely to spend about twice what residents do outside the arena. For the Hornets study, that would be $70 per event rather than $200.
He also said payroll should be considered a cost of running the operation, not an impact, and that local residents' spending isn't new spending and also shouldn't be included.
Chamber president Roy Williams disagreed.
"You shouldn't write it off and dismiss it and say just because someone went to a Hornet game that that money would have stayed in our economy, anyway. That's not true.
They could have gone to Dallas that weekend and spent that money,” Williams said.
He said payroll is an impact because: "What you also have to think about is this is a new company. New payrolls, new player payrolls, new staff payrolls.
"It's a business. They make local purchases and they have supplies and services that they purchase as part of their everyday operation.”
Fort said using his model, the Hornets' total economic impact would have been between $10 million and $16 million.
