The 2016 World Series: An Economic Tale of 2 Cities

The Chicago Cubs and Cleveland Indians played in the World Series in 2016. The series went the maximum seven games; four of which were played in Cleveland and three played in Chicago.  The event effected the city’s economy in different ways; while the close proximity of both cities also played a role in the overall economic impact.

Jacob Duritsky, vice president of strategy and research for Ohio-based business development firm Team Neo, noted the imbalance of incoming funds of the two fan bases.  The money coming into the city of Cleveland was a reflection of the spikes in airline travel, bars, hotels, restaurants, retailers, and 2nd party home retailers such as Airbnb.

A common note from several reporters is the value of entertainment budgets.  Local sports fans make the decision to allocate their funds to these types of sporting events, however “the pool of dollars generally doesn’t change” said Duritsky.  This reinforces how any noticeable economic impact to a city hosting the World Series will come heavily from individuals traveling into the city, and the money spent will be focused on the immediate area.      

Cleveland’s major jump in their economy came in the hotel market.  Occupancy rate and revenue spikes were higher than the Cavaliers’ and Golden State Warriors seven-game NBA Finals series.  Laurel Keller, VP of Hotel & Leisure Advisors cites the travel distance between Chicago and Cleveland as the impetus for extremely elevated hotel demand.

The time of year and participating cities are important factors when predicting cities economic impact on sporting events.  A potential log jam is created in October during convention season as hotels can experience a high demand for rooms in the fall.  The distance between the two competing cities, roughly 344 miles and just over 5 hours by car, put pressure on traveling fans to find these accommodations.

Crain’s Cleveland Business points to the influx of Chicago Cubs fans and their hope for an end to the historic 108-year championship drought as the biggest factor in the boost in the local Cleveland market.  On the other hand, the boom in Chicago was focused on local businesses.  The immediate area surrounding Wrigley Field is packed with restaurants and bars, while the hotels are downtown several miles from the ballpark. Most bars in close proximity to Wrigley Field were charging as much as $1,000 at the door watch the game.

To put baseball’s postseason financials in perspective, New York City estimated the Met’s 2015 postseason run generated $81.2 million for the economy of New York. To put that figure in perspective, Jade Scipioni of Fox Business reported that New York City’s overall tourism generated over $61 billion in that year.

Royals win World Series in 5 games against the New York Mets
Source: Jeff Curry/USA Today Sports

Lake Forest College economic professor Robert Baade looked at Major League Baseball’s postseason economic effect for all host cities during 1972-2001.  His estimated the impact per home game was roughly $6.8 million. In regards to the Cubs World Series run in 2016, using Baade’s outlook this estimates the impact on Chicago’s economy was 0.003%.

Efficient planning of the World Series can be difficult, considering the many outside factors the host cities cannot control. 

In both cities circumstances, hotel rates and occupancy will be an indicator of how the remainder of the series will affect the city’s economies.  Location of the participating ballparks and options for fans outside of the stadium will play a major factor as well.  While a city cannot build a hotel overnight, cities like Chicago can integrate new methods of cash flow; such as street vendors, expanded menu options at local eateries, or longer business hours.

The year after the Series victory, the Chicago Cubs completed Hotel Zachary. Sitting across the street from Wrigley Field, they can now take advantage of the hotel piece the neighborhood was missing.

Hotel Zachary completed in 2017 as part of the Wrigley Field 1060 Renovation Project
Source: http://www.hotelzachary.com

Most economic impact comes from individuals traveling into the host city. When examining the World Series, the clearest and most predictable rise in economic growth is the immediate area around the event.  Neighborhood bars and other business benefit most from the event; the city as a whole sees little impact economically.