The world of professional sports is big business. U.S. consumers spent more than $22 billion last year on spectator sports alone, according to the finance group WR Hambrecht + Co [PDF]. We know that winning a championship greatly benefits a team franchise’s bottom line, but how much of that success is shared by the small businesses operating near the stadium?
Conventional wisdom holds that entrepreneurs who set up shop in the same neighborhood as a winning sports team with a devoted following can only be good for business. Recent studies show, however, that this may not always be true.
Rather than increasing consumer spending in the surrounding neighborhood, championship games or series often displace existing economic activity. Economists call this the “paradox of championships” [PDF]. Especially during tough economic times, when many sports fans have limited disposable income, would-be patrons of locally-owned businesses must choose either to go to the game or to dine out. Rather than unleashing droves of big spenders on the local mom-and-pops, winning teams tend to keep the revenues for themselves, according to a Goldwater Institute review of sports-related economic studies.
So, does this mean that small-business owners operating in the shadows of a major ballpark should close up shop and move to greener pastures? Not exactly. The Intuit Small Business Blog asked Mary Sperber, co-owner of Town’s End Restaurant and Bakery, how her eatery is affected by the San Francisco Giants — her neighbors and the winningest team of all time in the MLB’s National League.
Mary opened Town’s End with her husband, David, in 1991, when the Giants still played at Candlestick Park on the outskirts of San Francisco. When groundbreaking on AT&T Park began in 1997, just blocks away from the Sperbers’ restaurant in the SOMA neighborhood of San Francisco, they weren’t sure what to think. “Opening night was scary,” Mary recalls. “We sat there in a completely empty dining room.” But business has stabilized since the team came to town, and she now considers the Giants to be “great neighbors.”
Because the Giants are such a huge asset to San Francisco, Mary says that the neighborhood is often given special consideration by the city government. For example, the streets that provide access to their restaurant used to be shut down for local events on a regular basis, but now that the stadium is nearby, road closures and other city-imposed inconveniences are a problem of the past, she says. The restaurant also gets frequented by star athletes, which provides a considerable amount of excitement to the atmosphere — and is great for business.
Fringe benefits aside, Mary still acknowledges that operating a business in the same neighborhood as a world-champion sports team “has been a roller coaster ride.” “The playoffs and the World Series will empty you out,” she says. High-profile sporting events at the stadium can discourage regulars from dining at the restaurant for fear of battling crowds, and sports fans are more interested in being at the park than they are dining out, she explains.
Key to the Sperbers’ success is that their business doesn’t depend on the Giants’ success. Mary was quick to point out that of the approximately 80 home games the Giants play each year only about half of them are held during her business hours. “40 days is not make or break for us,” Mary says, “we just roll with it.”