The NBA's announcement that it will move next year's All-Star Game out of Charlotte is having ripple effects not only in the world of professional sports but also in the tourism and hospitality industry, which stood to reap a big chunk of the tens of millions of dollars in direct spending the event was expected to bring to the city.
"The loss to hotels is in the millions of dollars because here's one piece of business that would've created a citywide — in other words, a regional — sellout," said Sid Smith, executive director of the Charlotte Area Hotel Association.
"There are approximately 33,000 rooms in the Charlotte region and virtually all of them would've been sold," he said, adding that hoteliers would likely have been able to charge a premium of up to 20 percent that weekend.
The NBA's decision came after negotiations to amend HB2, the so-called "bathroom law" viewed as discriminatory to LGBT people, failed to lead to a compromise. The organization held out the prospect of returning to Charlotte in 2019, but the window of time was narrowing for next year's event, given the months-long preparation timeline hotels and other vendors require.
The Charlotte Regional Visitors Authority did not calculate a projected economic impact, but it noted that recent NBA All-Star Games in similarly sized Southeastern cities contributed in the neighborhood of $60 million in direct spending.
The decision to leave Charlotte also will cost the NBA, said John Foster, a lawyer who works on hotel and event contracts. "If they want to pull out and cancel, they can do so, but they'll have to pay the damages," he said.
Although the NBA's tab might be lower if Charlotte hoteliers are able to resell some of those rooms, the league will have to pay liquidated damages to the hotels it contracted with, along with other venues and service providers, Foster said, adding that its liability could be higher if it also contracted for banquets, receptions or other functions that would have brought the hotels revenue from food and beverage sales.
"The hotel sector in Charlotte is going to be screaming because of this," said Richard Burton, the David Falk professor of sport management at Syracuse University.
Other local business owners that depend on tourism were upset by the loss, as well. "The travel and tourism dollars that would have flooded Charlotte for the NBA All-Star event would have been significant," Kymberly Brantigan, president of destination-management firm the Charlotte Destination Group, said via email. "We felt pretty good about our chances of getting significant business associated with the NBA All-Star game."
Now, Brantigan said companies like hers are just hoping the league reconsiders the city in the future. " We are thankful that the NBA is considering Charlotte for the All-Star game in 2019," she said.
In trying to put its best face on the situation, the city's tourism industry also is looking ahead. "We hope to be able to work with the NBA in the future to show them the inclusive and welcoming spirit our community prides itself on," CRVA CEO Tom Murray said in a statement. "We'll continue to work to bring events and conventions that create substantial economic impact to Charlotte," he said.
As long as HB2 in its current form remains in place, though, that could get increasingly difficult to do, Burton said. Aside from replacing the revenue from next year's All-Star Game, the bigger concern is that other big sports and entertainment organizations from the NFL to NASCAR are going to reconsider doing business in the state now that the NBA has put a stake in the ground.
"This is going to spread until this law is probably repealed," he predicted.
In the meantime, Brantigan said the hurt will continue to extend beyond the hotels to impact other travel and event-dependent businesses. "We have dozens of local vendors such as transportation companies, florists, entertainers, etc. that will not get the business they were expecting," she said.
Burton echoed this observation.
"The ramifications are significant and the fallout will be felt in a number of sectors, and some of those sectors are things people don't think about," Burton said, ticking off security guards, limo drivers, stadium concession workers and a host of other workers who would lose the extra hours or opportunity to earn overtime. "The hourly employee in Charlotte may be the person who feels this the most and has the least capacity to influence this situation," he said.