NBA Lockout Endangers Local Businesses

A little over a week has gone by since the NBA locked out its players on June 30, when its collective bargaining agreement (CBA) expired at midnight. Owners and players haven’t been able to agree on a new contract and seem miles apart on just about every major issue.

This labor disagreement not only puts the upcoming NBA season in jeopardy, but also raises concern in many small market areas about a potential decline in sales and job losses. Keeping negative impact to a minimum will be the responsibility of city officials and local business owners, but many are at a loss over how to fix the situation. For a city like Indianapolis, the home of the NBA’s Indiana Pacers, the lockout could mean millions in lost revenue. 

For instance, Indianapolis' Capital Improvement Board (CIB) owns Conseco Fieldhouse arena, and expects an economic impact of $55 million from the Pacers’ 41 home games, pre-season, and (potential) playoff games.

In return for this economic boost, the Pacers expect $15 million annually to operate the arena. If the work stoppage continues and games have to be cancelled — or worse, the whole season — the city is at risk of losing millions of dollars.

The economic impact of a lost NBA season goes far beyond the city’s CIB, especially for local businesses around the downtown area. The Pacers, who reached the playoffs this season for the first time since 2006, gained momentum last season that could be lost if there is no 2011-2012 NBA season.

A 2010 study states that Indianapolis would lose $55 million in economic activity each year, another $17.8 million in tax revenue, and 909 full-time jobs if the Pacers franchise relocated. A lost season would be less severe than a team relocation, but by no means less devastating for the local economy.

Downtown restaurant and bar owners are concerned about the future of their businesses. No NFL and NBA season will result in huge amounts of lost revenue. For many bars one Pacers’ game equals what they would make in a week.

City officials on the other hand are calmer. They are still hoping for a happy ending in the labor discussions between team owners and players’ union. The deadline for negotiations is in mid-October, when the first pre-season games are scheduled. 

"Until that point occurs there really won't be a big financial impact on the city itself,” said Marc Lotter, spokesperson for the city of Indianapolis.

If no agreement is reached, the city will try to minimize the impact on local businesses. However, there are no concrete plans on how to do this. Without backup plans and the lack of governmental support, fall 2011 could spell the death of businesses in downtown Indianapolis and other small market NBA cities.

Photo Credit: JMRosenfeld