Bob Reilly, missing the point

The chief opponent of MMA in New York is Assemblyman Bob Reilly. Reilly has spent some time trying to counter proponents' claims that legalizing MMA will provide economic benefits to New York. Reilly's argument rests on two points.

First, that whatever money will be made from an MMA event will not go to New York or New York businesses but instead go to Nevada companies i.e. the UFC and Zuffa. It is essentially the Wal Mart argument. For those unfamiliar with the Wal Mart argument it goes like this: when Wal Mart enters a community it is harmful, since it undercuts local prices, creates only low paying jobs and sends any profits to a corporation that has no interest in building an economically viable community. For those from small towns you be familiar with such an argument. 

The second economic argument that Reilly is making is that MMA legalization is akin to gambling legalization. In other words, legalized gambling doesn't generate 'healthy' economic activity, instead creating low paying jobs and generating revenue off of the poor and disenfranchised.

The second argument doesn't make any sense --how does MMA take advantage of the poor-- so I won't deal with that. But the first argument has some merit. However Reilly is forgetting about third party operations that occur when a UFC event comes into a city. I am not talking about low-level fight promotions, which would generate local revenues, but instead, all the industries that benefit from a live, popular sporting event. Restaurants, bars, hotels, tourist facilities, public transportation all receive financial benefits when a UFC event comes to town. For instance, MMAJunkie and Cagepotato are both holding pre-UFC 96 parties in Columbus, Ohio. Local Columbus radio stations are already holding promo events. Fans that come in for the weekend purchase hotel rooms, spend money on restaurants and go shopping. All of this consumption is good for industries that have taken serious blows, some estimates have restaurants sales dropping 60%.

This is indirect revenue that Reilly and his supporters are ignoring. Instead they are solely focused on the event itself, ironically the current form of the New York bill would have gate revenue be taxed at 10% the highest of any state. In the end it is better to think of a UFC event as a similar economic model to conventions. Would a city or a state ban conventions that bring in a significant up tick in tourism dollars? The answer is of course no.