August 2023

The Power of Location: What is the Economic Boost Created by the Physical Location of an Athlete's Activities?

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The impact of location on an athlete's influence and decision-making when choosing a team is profound.

Large markets offer athletes unparalleled opportunities to build their brand, attract endorsements, and reach a global audience, resulting in increased influence both on and off the field. On the other hand, small markets already struggle to compete with their larger counterparts in terms of economic value and sponsorship opportunities.

The value of a contract in a large market like New York or Los Angeles is up to 20% higher with significantly more purchasing power and endorsement potential than in a smaller market like Charlotte.

related: If the Charlotte Hornets got the #1 pick, would the NBA Interfere?

This hidden boost creates a substantial disadvantage for small market teams who find it challenging to attract top-tier free agents due to the lack of a world-class city's appeal and the accompanying endorsement opportunities.

The allure of living in a world-class city with its vibrant entertainment, nightlife, celebrity culture, shopping, and luxurious living is not easily replicable in smaller markets. As a result, the salary cap system can seem unfair, as smaller markets often have to offer more to compete, leaving less room for error and over-reliance on the draft to build competitive teams.

Ultimately, the impact of surroundings and the economic value of a city play a crucial role in shaping an athlete's career, influence, and decision-making process, making the choice of location a critical factor in their overall success and financial prosperity.

This information is extremely important for athletes in the NIL market, understanding what impact a locale may have on economic opportunities since the vast majority of deals are between the local community.

related: How are You Trending? The Most Important Thing in Determining Sponsorship and NIL Valuations

The value of a contract extends far beyond the money, location is a big variable. Benchwarmers on high profile teams get shoe deals, while their counterparts on small market teams are relatively unheard of.

related: Is Street Cred Required To Be Awarded A Signature Shoe?

Athletes are well aware that the city they play in can significantly impact their earning potential and overall economic value. Large markets, with their massive fanbases and global visibility, offer athletes unparalleled opportunities for endorsements, sponsorships, and brand exposure.

On the other hand, smaller markets, despite potentially lucrative contracts, often lack the same level of economic value due to their limited reach and smaller audience. Let's delve into the relative economic value of different cities and how they rank based on the opportunities they provide to athletes.

A hypothetical metric to quantify the economic and endorsement boost for an athlete's market value is the "Market Value Amplification Index" (MVAI).

MVAI is calculated by taking into account various factors such as the size of the market, the team's success and popularity, media exposure, and the overall economic health of the city. The index is then converted into a percentage to represent the relative boost in an athlete's market value compared to an average market.

Top 5 cities:

  1. New York City, NY: With multiple professional teams across the NBA, MLB, and NFL, New York City boasts the largest media market in the United States. The Big Apple's global influence and concentration of Fortune 500 companies make it an economic powerhouse for athletes. MVAI - 20%
  2. Los Angeles, CA: As the second-largest media market in the country, Los Angeles offers athletes incredible visibility and numerous endorsement opportunities. The entertainment capital of the world is a hotbed for lucrative sponsorships and brand partnerships. MVAI - 18%
  3. Chicago, IL: Chicago's diverse sports scene and strong media presence place it high on the list. The city's global reputation and economic activity provide significant economic value to athletes. MVAI - 15%
  4. Dallas, TX: The city of Dallas, with its thriving sports culture and strong economic growth, ranks among the top cities for athlete economic value. The Cowboys' influence in the NFL and the city's corporate landscape contribute to its high ranking. MVAI - 12%
  5. San Francisco, CA: The Bay Area's tech hub status and proximity to Silicon Valley provide athletes with unique opportunities. The region's economic strength translates into attractive endorsement deals. MVAI - 10%

Bottom 5 cities:

  • New Orleans, LA: MVAI - 0.02%
  • Sacramento, CA: MVAI - 0.01%
  • Salt Lake City, UT: MVAI - 0.01%
  • Kansas City, MO: MVAI - 0.01%
  • San Antonio, TX: MVAI - 0.005%

*The actual endorsement opportunities and market values for athletes may vary based on numerous factors unique to each individual and market.

It's important to consider the dynamic nature of the sports industry and the influence of various elements on an athlete's overall marketability. Athletes should carefully assess their career goals, personal preferences, and long-term financial plans when choosing the right location to maximize their economic value and potential impact on and off the field.

There's also the element of being a big fish in a small pond vs the many competing interests in a major market with celebrities, influencers, and other superstar athletes competing for the spotlight.

For everyone else, mainly players who have to work a bit harder for sponsorships, this has a significant impact on the amount of effort and number of opportunities available to them.

Once stars attain global popularity, the impact on their location diminishes as the cameras are drawn to their games and marketing deals find them. The article also does not take cost of living into account, which is assumed to be higher in larger markets.

By analyzing the specific geographical factors that impact athlete performance, market dynamics, and audience engagement, JoxStox is at the forefront of reshaping how we perceive the influence of location on various aspects of the sports and entertainment industry.

As the platform continues to collect and analyze geo-location data, connected to teams, conferences, locations, cities, and other relevant metrics, JoxStox is poised to develop a robust and highly localized measurement resource for athletes to utilize when making decisions.

Issa Hall, Esq

Issa has founded multiple ventures, is an author, and founding partner of Hall & Dixon law firm, with over a decade of experience in tech and law.

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