×

North Carolina to lose millions in sports tourism over 'bathroom law'

A file photo showing a gender neutral sign posted outside a bathroom at Oval Park Grill on May 11, 2016 in Durham, North Carolina.
Getty Images
A file photo showing a gender neutral sign posted outside a bathroom at Oval Park Grill on May 11, 2016 in Durham, North Carolina.

College sports are big money, and losing them can cost a state, big-time.

The Atlantic Coast Conference's announcement Wednesday to relocate all neutral-site championships from North Carolina was yet another hit to the state over its controversial "bathroom law."

The ACC decision comes just two day after the NCAA announced it will pull all 2017 championships from the state as well. In July, the NBA announced the decision to relocate its 2017 All Star Game from Charlotte due to the law, also known as HB2. The economic cost as a result of lost sport-related business could top $100 million, experts say.

Sports business professor Patrick Rishe, writing at Forbes, identified four areas the state will likely lose out based on the NBA and NCAA's decisions to pull out of the state:

  • Loss of new spending by non-North Carolina residents (coming to the state for sports events)
  • Leakage of spending by North Carolina residents (going to other states to see sports events)
  • Loss of new spending by non-local organizations (event-related expenditures)
  • Loss of local spending through the multiplier effect (money injected into the NC economy gets spent at local businesses who then spend money at other local businesses)

It's tough to put an exact number on any of those, but by looking at spending for previous games and tournaments, Rishe puts a conservative estimated loss for 2017 at $112.5 million. And that estimate was made before the ACC's decision was announced.

"With the ACC events pulling out," Rishe, the director of the sports business program at Washington University in St. Louis, told CNBC in an email, "I'd say we're looking at lost spending between $125 million - $175 million in 2017 due to lost sports-tourism spending."

Conservative estimates

The ACC's decision means eight championships will be relocated from the state, including December's title football game. The move also adds pressure on other sports and businesses to follow suit.

"The ACC Council of Presidents made it clear that the core values of this league are of the utmost importance, and the opposition to any form of discrimination is paramount," ACC Commissioner John Swofford said in a statement. "Today's decision is one of principle."

Other sports-business experts agreed overall with Rishe's $112.5 million estimate, though some had tweaks.

"It's certainly plausible," said Scott Rosner, professor at Wharton's Sports Business Initiative. "There are also tax dollars that come into the states from performers, teams, etc. that are lost."

Andrew Zimbalist, an economist at Smith College, said he didn't see Rishe's estimates as conservative, but "they are not unreasonable." He suggested the potential multiplier effect — the spending echo through local businesses to the economy as a whole, which Rishe pegged at 1.5 — might be overstated.

"Rishe suggests that there are multiplier effects which could substantially enlarge his estimates, " Andrew Zimbalist, an economist at Smith College, said. "I don't believe this is so. The multiplier is probably close to one, and may be below one." With a multiplier of 1, Rishe's estimate would be at least $75 million.

The PGA: Last in the clubhouse?

The next question is what will happen with the 2017 PGA Championship, which is scheduled to be held at Quail Hollow in Charlotte. The golf group has said it opposes HB2, but will not relocate the event that's currently scheduled.

"The PGA of America strongly opposes North Carolina HB2," the organization said in a statement in July, following the NBA's decision. "As we look to future events, our willingness to consider coming back to the State of North Carolina will be severely impacted unless HB2 is overturned." A spokeswoman confirmed to CNBC that the PGA position has not changed since July.

"I'm sure they don't want to get bullied by what others are doing," Rishe told CNBC, "but I think it would be a bad look for the PGA of America if they leave that event in Charlotte unless HB2 is repealed."

CNBC's Jessica Golden and Eric Chemi contributed to this report.