A little under a year ago, LeBron James magically rejected Andre Iguodala's layup attempt in the final moments of Game Seven of the NBA Finals. With that superhuman season-saving block, he brought Cleveland its first championship in more than five decades. By defeating the Golden State Warriors, who had led the series by three games to one, he cemented his superstar status and brought glory to his home team. That night – June 19, 2016 – was the greatest night in Cleveland sports history for generations, if not ever.
There's another night that should be memorable to Clevelanders – or at least to its restaurateurs and barkeeps: Oct. 30, 2014. That night was the night of LeBron's first home game since his return from South Beach, attended by a capacity crowd of 20,562. Attendance at Cavaliers games during the previous seasons had averaged 3,000-4,000 fewer people per game, but from Oct. 30, 2014 onward, the Cavs would play, without fail, to sell-out crowds.
In a new research paper, we document how those increased crowds and the heightened excitement generated by LeBron's presence drove business activity close to Quicken Loans Arena. To measure the "LeBron effect", we collected data on all restaurants and eating establishments in Cleveland and Miami (a city where LeBron played briefly) by their distance to the stadium. The most straightforward approach would be to compare how many restaurants and other eating and drinking establishments there were close to the stadium before LeBron's return compared to afterwards.
The problem with doing that is that all kinds of other things may have changed as well: for example, the economy was in the process of recovering from a deep recession. To deal with that we need a control group. The obvious candidate there is restaurants farther from the stadium, presumably not affected by LeBron's presence or the Cavs' (or the Heat's) accomplishments, and that is precisely the control group we use. In effect we draw a number of concentric circles around the stadium, and then compare business activity in the inner circle to the outer rings. We do this for LeBron's entire career in the NBA, following him around as he went from Cleveland to Miami and back.
What we find when we carry out this analysis is that with LeBron present, the number of eating and drinking place within a mile Quicken Loans Arena and American Airlines Arena goes up by about 13 percent, and those bars and restaurants are larger than before as well. Total employment at eating and drinking establishments close to the stadium increases by 23 percent. At the same time, there is no significant change in either the number of establishments or in employment farther from the stadiums. So there it is: the LeBron effect, a boon for bars and restaurants close to his place of work. Interestingly, this effect is much larger in Cleveland than in Miami: The popular YouTube video claiming that Cleveland's "economy is based on LeBron James," was overstated but not entirely wrong.
To be fair, this result wasn't unexpected. Local business leaders at the time reported significantly increased sales, and Cuyahoga County projected large increases in tax revenue. Still, these results run counter to a quasi-consensus among economists on the impact of sporting events. Recent studies have failed to find an impact of sports facilities, college football games, and even the Olympics on local economic outcomes. Of course, these researchers were not studying LeBron James. The easily demonstrable "LeBron effect" is just another way in which #23 is truly exceptional.
Daniel Shoag is an associate professor of public policy at the Harvard Kennedy School. Stan Veuger is an economist at the American Enterprise Institute. Disclosure: Shoag is from Cleveland, and his bias may shine through in some of the phrasing used here.
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