A. Scott Anderson: Why Salt Lake's Fortunate to have Both Basketball and Symphonies
Utah Jazz forward Derrick Favors (15) takes a free throw shot during an NBA regular season game against the San Antonio Spurs at Vivint Arena in Salt Lake City, Tuesday, April 5, 2016. Chris Samuels, Deseret News
The relationship between business, culture and sports in creating economic vitality and life quality can be hard to quantify. A community is often greater than the sum of its parts. It is more than just physical assets and economic output. Both making a living and enjoying a comfortable standard of living are essential to our quality of life.
The National Basketball Association (NBA) selects franchise cities that have sufficient population and economic vitality to make teams financially successful. Meanwhile, communities that support a symphony orchestra with an annual payroll of $2.5 million or more enjoy a special status. Such symphonies are identified as 52-week symphonies. Salt Lake City is fortunate to have both an NBA franchise (the Utah Jazz) and a 52-week symphony (the Utah Symphony).
The correlation between a flourishing business environment and vibrant cultural and sports opportunities becomes more obvious when capitalization (cap) rates for class “A” office buildings are examined. A cap rate measures the value of real estate investments or assets, usually calculated as the ratio between net operating income produced by an asset (like a building) and the original capital cost, or its current market value.
Integra Realty Resources released a national commercial real estate report indicating that the 2015 average cap rate for class “A” office buildings in 63 major cities across North America was 7.05 percent. A lower cap rate reflects greater value, as purchase prices rise relative to income.
Corporations looking to expand or relocate look at cap rates to help make site selection decisions. An analysis of the 63 cities surveyed clearly indicates that cities with both an NBA franchise and a 52-week symphony enjoy significantly better cap rates than other locations.
In fact, the 10 cities with the lowest cap rates all have both an NBA basketball franchise and a 52-week symphony. Their 2015 average class “A” office building cap rate was an excellent 5.27 percent, a very attractive rate.
Salt Lake City, with a very good cap rate of 6.75 percent, should be proud to have the community and business support needed to support both the Utah Jazz and the Utah Symphony. In return, these two entities help our business community to be among the most prosperous in the nation.
Clearly, Utah’s thriving business community, high-level sports organizations and excellent cultural opportunities are mutually beneficial. They are interdependent and create synergies that strengthen each other.
Site selection experts at the Economic Development Corporation of Utah are quick to note that investors and business executives choose cities and regions in which to expand and operate businesses that have strong economies, along with excellent sporting and cultural opportunities.
Certainly, the Salt Lake area’s “business, basketball and symphony” — along with many other attractions — combine to make the area a great place to live and do business. This is confirmed by Salt Lake City’s 18th ranking in Livability’s “Top 100 places to live.”
Staying in the top echelons of sports, culture and business is very competitive, nationally and globally. It requires a broad community effort. Utah’s governor, Legislature, local governments and citizens are to be commended for supporting arts and culture with such programs as Zoo, Arts & Parks; sponsorships of the Utah Symphony to perform in state parks; and for supporting professional, college and high school sports teams.
A recent article in The Economist notes that the world continues to urbanize, and vibrant cities continue to attract the best and brightest businesses and people. In 2001, the richest 50 cities/regions in America produced 27 percent more per capita than the country as a whole. Today’s richest cities make 34 percent more.
Thanks in part to “business, basketball and symphony,” the Salt Lake region is keeping up. But we must be ever vigilant in strengthening Utah’s business environment and quality of life with sports and cultural opportunities.
A. Scott Anderson is CEO and president of Zions Bank.