Economics 051 Economics of North Carolina Carolina Panthers: Changing Gas Station Strategies in Charlotte Sarah MacDonald November 28, 2006 Football is not just a game. It is a lucrative component of the multi-billion dollar entertainment sports industry. The National Football League or NFL is comprised of 32 teams divided into two conferences. Of these 32 teams the Carolina Panthers are the 29th franchise established in the NFL and only the second team owned by a previous NFL player, Jerry Richardson (Pro Football Hall of Fame, 2006). Charlotte, North Carolina was unanimously chosen as the site for the new expansion franchise and it is not hard to understand why. Charlotte is a rapidly growing city with world class cultural institutions, dining, shopping and sporting events. So, it was only natural that the football pride of the Carolina’s made its home in the diverse city of Charlotte (About Charlotte, 2006). Jerry Richardson expressed the general enthusiasm and sentiment of the people of the Carolina’s when he was quoted by the NFL as saying, “This is a dream come true for me and my partners and for the 10 million people in the Carolinas”. For the most part, football fans, sports enthusiasts, business owners and the city of Charlotte really embraced the idea of the construction of the Bank of America Stadium and the arrival of the NFL expansion team, not only because of Carolina’s loveCarolina Panthers: Changing Gas Station Strategies in Charlotte (MacDonald) 2 of football but because of the potential substantial economic development impact the team would have on the surrounding area. Carolina’s fans are among the most loyal in the league. This means that the privately funded 73, 298 seat Bank of America Stadium sells out nearly every home game. (NFL Team History, 2006). The Bank of America Stadium is unique in the sense that it was privately funded through the sale of permanent seat licenses or (PSL’s). Of the total 160 million dollars it cost to build the stadium, over 100 million dollars of it was funded through PSL’s. (Conway, 2006) The arrival of the Bank of America Stadium and the Carolina Panthers has caused many changes within the city. The increase in out-of-state game attendees has created a greater need for hotels and overnight accommodations on game days. Parking has become a lucrative business for some in downtown Charlotte for Bank of America Stadium events and many local business owners are strategizing accordingly for the 73,000 people in uptown Charlotte on game days. Many of these 73,000 people come from outside of Mecklenburg County. This means additional money is circulated through the economy of Charlotte. The coming of the Carolina Panthers and the Bank of America Stadium has caused many businesses to flourish as well. For example, there are approximately thirty three gas stations located within a three mile radius of the Bank of America Stadium (Mapquest, 2006). Larry Welsh, manager of Ray’s AMOCO which has three locations within a one mile radius of the stadium, is directly impacted by the stadium and the fan base that theCarolina Panthers: Changing Gas Station Strategies in Charlotte (MacDonald) 3 Carolina Panthers bring to the city. He and an employee at Ray’s AMOCO Svc on 325 W Summit Ave. collectively agreed that the arrival of the Panthers has caused them to change their business strategies in order to receive the utmost benefit for their proximity to the Bank of America Stadium. Through the interviews of employees at Ray’s AMOCO it will become apparent that each gas station owner has had to consider different opportunity costs with the arrival of the Panthers and the Bank of America Stadium as well as various strategies to optimize their business and give them a competitive edge. After talking to Larry Welsh, from Ray’s AMOCO, it was evident that he has had to readjust to downtown Charlotte’s exponential population boost during Panthers home games. Ray’s AMOCO gas station is conveniently located 0.74 miles from the Bank of America Stadium and as a consequence, his gas station is extremely busy on game days. Welsh then went on to describe the activity in his store on a typical game day. He said that the store is really busy for a couple of hours before the game. They sell a lot of gas, because people from out of town are filling their tanks after arriving in Charlotte. He mentioned that you will also see things like drinks and snack foods sell more rapidly then usual. Then, when the game starts the crowds will die down. The store will literally go from full capacity to empty within a matter of minutes. When the game is finished, the crowd will increase once again. When asked whether or not his business is affected by the Panthers’ wins or losses Mr. Welsh gave an unexpected response. He admitted that when the Panthers win, less people come to the gas station afterwards. Fans are more likely to go out and celebrate by dining in a restaurant with friends, or going to local bars.Carolina Panthers: Changing Gas Station Strategies in Charlotte (MacDonald) 4 To do these things you have to drive farther away from the Bank of America Stadium and this draws clientele farther away from the business’s located close to the Stadium. Welsh also noticed that fans just want to get out of the congested traffic after the game and their gas stations are located right in the middle of it. However, when the Panthers lose the crowd is disappointed and they are less likely to go out after the game. Then, Ray’s AMOCO receives more consumers in the store after a Monday night game because fans just want to gas up the car, grab a few snacks and drinks for the road and head home. So although Welsh admitted he loves to see the Panthers win, it is often a welcome sight to see them lose as well. This goes to prove that a person does not need to attend a game or tune in to a broadcast to gain consumer benefits from a local sports team (Noll, Zimbalist, 1997). Consequently, a major league sports event generates an archetypal “externality”, or in others words, a benefit enjoyed by people who are neither buyers nor sellers of the production of the game. As authors Noll and Zimbalist mention in their book: Sports, Jobs, and Taxes: the Economics Impact of Sports Teams and Stadiums, the existence of this externality is often forgotten and this causes the direct demand for games