Cleveland Browns Bakermania: Economic Boost for the Region?

Baker Mayfield has already had an impact on the Cleveland Browns. But it’s more than wins and losses. There is also a real economic impact on the region.

Baker Mayfield has already had an impact on the Cleveland Browns. 1-2-1 does not sound great, but it is much better than 1-31. The Browns have been competitive in all four games this season, despite ineptitude in special teams and being dominated by “impact officials” in the last game, who swung at least two touchdowns to the grateful Raiders of Oakland.

So clearly the team is much better. With Tyrod Taylor, the Browns were good enough to tie Pittsburgh but not put a game in the win column. Baker Mayfield put the Browns over the hump.

But it’s more than wins and losses. There is also a very real economic impact on the region. If the Browns are not doing well, there is a chain reaction of negativity in direct employment by the team, as well as the effect of souvenir sales including player jerseys.

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The restaurant and sports cafe industry, tourism and hotels, advertising, concessions and ultimately the valuation of the team. Of course, the bulk of the economic impact is in Greater Cleveland, but the Browns affect the local economies of locales, both within and outside of the state of Ohio.

For example, Dayton is an interesting market because although it is closer to Cincinnati rather than to Cleveland, there has always been a significant Browns contingent, and thus the two teams compete for market share. Bengals fever has been on the rise for the past several years. Even though the Bengals have not been very good, the Browns have been terrible, and that has taken its toll on the fan base.

Accordingly, several sports bars that were formerly Browns oriented now identify with the Bengals or have become more neutral. According to Matt Baker, owner of Tuty’s in Beavercreek near Dayton, a core of support has persisted even through the 1-31 drought.

Business was brisk last Thursday night for the Jets game, based on the expectation that the Browns might have a chance to win the game. By the end of the first half, it was clear that the Jets were the dominant team. But when Tyrod Taylor received a concussion, there was additional excitement in the crowd.

Food and beverage orders started picking up. According to Baker, the crowd started getting bigger and bigger in the second half, which is very unusual as he said when speaking to me:

"“At a certain point, the kitchen started getting weird orders. Usually, the orders come in with the table number marked on it. But then they started to get orders like ‘guy standing next to Todd.’ People were ordering food even though there was no seating available.”"

Although Baker says that his establishment was able to survive in the 1-31 wasteland of the past two years, his game-day business is definitely stronger when the Browns are winning or at least competitive.

Mayfield jersey sales and other NFL/Browns merchandise also took off immediately, as another measure of economic impact. Rookie players typically do well in jersey sales, partly because fans have already bought the jersey years ago, i.e., for veteran players like Tom Brady.

As reported by Jen Steer of Fox 8, Mayfield jersey sales had settled down to about fortieth best the previous week. But after the Browns’ win over the Jets, Mayfield’s jersey sales jumped to tenth overall.

Myles Garrett’s jersey was third among defensive players, and Denzel Ward’s jersey was third among 2018 rookies. Dick’s Sporting Goods publishes a list of top selling jerseys on a weekly basis but does not give dollar figures. Still, the license fee alone for NBA jerseys might be used for comparison, and that figure is in the neighborhood of $100 Million dollars annually. Presumably, the retail value is at least ten times higher than the license fee.

Thus local retail stores are probably seeing a bump from Browns merchandise sales, and if the Browns are not well represented, it stands to reason that there will be a corresponding drop in revenue of many millions of dollars per year. Baker Mayfield is making a significant impact on the fortunes of sporting goods stores in the local economy, to be sure.

Ticket sales also have taken off, after a miserable slump for the past two years. To cite one example, the Dayton Browns Backers decided to forego its annual bus trip to Cleveland this year due to lack of interest. But after the Jets win, dozens of fans called in to inquire about the trip. Alas, too late! Those tickets were already sold.

Other industries affected by the Browns include the hotel industry, tourism, and also advertising on sports broadcasts, news media and internet sites. For example, you may think that the local car dealership or hamburger stand has nothing to do with football, but if they buy advertising from the Browns broadcasts or other sports media, the Baker Mayfield’s fortunes may well translate into cars and hamburgers sold. No doubt Dawg Pound Daily is feeling Bakermania a little.

The total economic impact, or change in the gross domestic product of the local economy, is hard to estimate concretely, but it is probably in the range of hundreds of millions of dollars per year once you add up all the revenue from sports bars, hotels, sporting goods and the effect of advertising.

The economic impact is not the same as the valuation of the team, but it is related. A valuable team generally has more economic activity associated with it (hotels, sports bars, tourism, souvenir merchandise, etc.).

The team itself is declining in relative value. According to Forbes annual valuation estimates of NFL teams, the Cleveland Browns ranked 22nd in total value in 2013. In 2018, after five years of ownership by the Haslams, they are ranked 29th. Without Mayfield, the team might actually be 32nd out of 32. In any case, the current valuation is about $350 million dollars less than it would be if the team had held its position at 22nd overall. Five years of intensive losing will do that to a sports franchise.

Fortunately for the Haslams, the NFL as a whole has increased in value over that time, but the Browns are not growing with the League since they are too busy losing football games. The financial impact of the unprecedented losing is an incredible $70 million per year. Conversely, if the Browns and Bakermania turn it around, they could affect the valuation of the team to the tune of literally hundreds of millions of dollars. The total impact on businesses that depend upon football is likely to vary by a similar amount.

Another way to estimate the economic impact is to determine the amount of investment that state and local governments are willing to make in facilities for their teams, and assume that these are roughly break-even propositions. Making the assumption that local governments know what they are doing is dubious, but at any rate, they are paying about $12 million per year on principal and interest for FirstEnergy Stadium, not including the recent additional cost for renovations.

Presumably, there is a positive net economic effect that this money pays for, with the gross revenues at a much higher level. This is a small amount of the total domestic product of the Cleveland metroplex, equal to $117 Billion dollars, according to estimates published online by the Federal Reserve Bank of St Louis. But it means a lot if you happen to be the owner of a sports bar, say, or if you sell Browns merchandise at the local mall.

If Bakermania continues, it means that there are going to be more of his jerseys seen around town, and better parties at your local sports bar. It might not seem like much, but if you add it up, the effect is in the range of millions of dollars per year. It’s not the only big business in town, but it is definitely big business. A lot of local business owners will be smiling if Baker can do his thing for a while.