By Hillel Aron
By Joseph Tsidulko
By Patrick Range McDonald
By David Futch
By Hillel Aron
By Dennis Romero
By Jill Stewart
By Dennis Romero
Although people who held no ticket to the Jackson event were kept out of the area, the big-spending celebrities cited in the $4 million number had access to the restaurants but apparently had little effect on one popular nightspot just a few doors north of Staples. Uno Thimansson, manager of the Hotel Figueroa and its Moroccan-themed bar, noticed no increase in business. “I don’t think it was anything major,” he says of the day.
A 2003 study by then–City Controller Laura Chick, which estimated that “Staples Center contributes approximately $36 million annually” to the city’s economy, included the effects of such events as 20,000-audience Lakers games and concerts where fans and tourists buy T-shirts, patronize concessions and eat at L.A. restaurants.
Using Chick’s $36 million number as a baseline, the rushed, city-touted e-mail estimate of $4 million in benefits to L.A.’s economy would mean that the Jackson memorial somehow contributed a whopping 11 percent of Staples’ annual economic impact.
That would mean that the memorial generated more than one-tenth of Staples-related spending by consumers citywide over the course of a full year, an outsized amount of economic activity for a single event in an arena that holds roughly 250 major, 20,000-plus-capacity events annually.
The economic-benefit numbers “don’t make any sense,” says Dennis Coates, economics professor at the University of Maryland, Baltimore County, and an expert in the public financing of sports facilities. “They might have just as well come up with those numbers by drawing them out of a hat.”
Coates has been critical of studies that show economic benefits from public sporting events, arguing that money people spend because of a venue like Staples Center is almost always money that’s displaced from another part of town.
Moreover, anecdotal evidence emerged after the 2002 Salt Lake City Winter Olympics that people avoided the crowds, which dampened revenues. Coates thinks that might be the case with the Jackson memorial: People were scared off by the possibility of dealing with 1 million fans downtown. At one point during the day of the memorial, then–LAPD Chief William Bratton estimated that there were just 600 people outside Staples.
“It very well could be that a bunch of people said, ‘I don’t want to go there and hang out with those loonies,’” Coates notes. “So you had a small number of people who came to town, and others who wanted to avoid a mass of people.” In fact, he says, “The net impact could have been negative.”
An AEG spokesman said he has no comment on the city’s $4 million benefit claim. Carol Martinez, associate vice president of LA Inc., insists the $4 million number didn’t come out of thin air. “We have a research department and they don’t just make this stuff up.” When asked for a breakdown, she says, “I don’t have the answer to your question, but I will tomorrow morning.” She never called back.