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The Score - Anthony Schoettle

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Sports Business

Hosting NBA All-Star Game not a financial slam-dunk for home team

January 19, 2017
KEYWORDS Sports Business

While considering whether to put their headband in the ring for hosting the NBA All-Star Game, officials with the Indiana Pacers likely are weighing the significant costs that the home team must shoulder.

In the big picture, the payoff for hosting an NBA All-Star Game is substantial. By most accounts the game scores the host city about $60 million in visitor spending. The event’s economic impact—which includes such things as spending by local businesses and workers due to the event—swells to $100 million, according to multiple sources.

An Indianapolis contingent—including executives from the Indiana Pacers, Visit Indy and the Indiana Sports Corp.—went to Toronto in February to scout last year’s NBA All-Star Game and came back with the conclusion that the four-day event’s economic impact is even larger than they anticipated.

The NBA All-Star Game is much more corporate and much more international—with a massive contingent coming from Asia—than an NCAA Final Four, said sources familiar with the event.

NBA Commissioner Adam Silver has said on multiple occasions over the last year that he would like to see the all-star game return to Indianapolis. Silver told IBJ as early as December 2015 that the idea of holding the game in Indianapolis “has been very well received by me.”

Silver reiterated that support at a press conference on Jan. 12 in London, where the Pacers played the Denver Nuggets.

Pacers President Rick Fuson told IBJ through a spokesman this week the team recently received the bid specs for hosting the NBA All-Star Game and will be reviewing them over the next few weeks. He indicated that 2021 could be the best year for the team and city to host the game.

Fuson added that it’s too early to speculate on the costs of hosting the event. For the city and team, they can be significant.

While the NBA pays for a chunk of game operations, many costs fall to the host city and team, including enhanced security surrounding the weekend’s events, much of the marketing, myriad signage required all around town, transportation and operating the local organizing committee.

Their costs run in multiple millions of dollars, said Marc Ganis, a Chicago-based sports business consultant who counts several NBA teams as clients.

The host team alone would likely ring up expenses between $3 million and $9 million in the two- to three-year run-up to the game, Ganis said.

There also are lots of soft costs, such as time-consuming demands on the team’s staff, that could run the bill even higher.

“The NBA All-Star Game doesn’t just happen,” said Ganis, president of Sportscorp Ltd. “I wouldn’t underestimate the distraction this event will have on the entire [host] team’s staff. It can be all-consuming. It’s a massive distraction for multiple years.”

Asked if the city of Indianapolis had begun assessing the potential costs of hosting the game, spokesperson Taylor Schaffer replied to IBJ in an email: "The city is aware and excited by the NBA’s interest in having the Indiana Pacers host an All-Star Game. As preliminary discussions begin with key stakeholders in the coming months, we are looking forward to learning more about what hosting such a high-profile event could mean for Indianapolis."

The NBA doesn’t pay to rent the venue or make any cash payments to the host team or city, according to a source familiar with how the event operates. 

The NBA declined to comment on the financial arrangements for its all-star game.

The team also would be on the hook for building modifications—some temporary and some which could be permanent—required by the NBA, Ganis said, as well as other details big and small.

The benefit for the host team can be indirect, Ganis said.

“The city and its businesses get a solid payoff,” he said. “For the team, the payoff is increasing the strength of their brand which does of course help with sponsors and season-ticket holders.”

The team also can offer some inside access to the game and surrounding events to season-ticket holders and sponsors, Ganis said, which could help the team’s overall sales.

The only time Indianapolis has hosted the NBA All-Star Game was in 1985—at the RCA Dome.

A lot has changed with the event since then.

“It’s a much bigger enterprise now. Much, much bigger,” Ganis said. "You can't even compare it to then."

The game could be held in Banker’s Life Fieldhouse, the Pacers' 18,165-seat home. But earlier this month, Silver said the NBA could consider holding the game in a bigger venue in Indianapolis—presumably Lucas Oil Stadium, where two NCAA men’s Final Fours have been played since it opened in 2008.

The 2016 All-Star Game took place in the Air Canada Centre, home of the Toronto Raptors, which seats about 19,800. New York City's Madison Square Garden, the host venue for the 2015 game, also seats about 19,800.

The NBA requires the host city to have 5,500 hotel rooms to host the game, and an NBA official recently told IBJ the league would like most of those to be downtown. That shouldn’t be a huge problem for Indianapolis, which has 7,300 downtown hotel rooms, with nearly 5,000 of them connected to the Indiana Convention Center and Lucas Oil Stadium via indoor skywalks. 

The NBA All-Star Game is typically held in mid-February, and while that’s not the busiest time of the year for tourism and events, the city does host the NFL Scouting Combine that month and has held at least one large convention that month in recent years.

There’s one other notable sports event in Indianapolis for 2021: the NCAA men’s Final Four, which would take place April 3-5 in Lucas Oil Stadium.

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