It’s Big Lie season again. Super Lie. Specifically, Super Bowl Lie. It’s that giddy time of the year when the National Football League trots out its claim that the city that hosts the Super Bowl can expect more than $350 million in economic benefits from the weekend of partying. Some host cities have claimed to reap $400 million, even $500 million from the phantom ripple effect — all of which goes to prove that if you pay a consultant enough money, he will come up with any number you want.
The projections are preposterous, say economists who have studied the actual economic impact of a Super Bowl. Philip Porter, economist at the Tampa-based University of South Florida, did some of the seminal studies deflating the National Football League’s claims back in the 1990s. I asked him about the impact of this year’s Super Bowl: “I’d say $50 million or less, maybe zero. It may actually cost you to host the Super Bowl.”
Says Roger Noll, economist at Stanford, “I’d say $30 million to $50 million.”
“About $35 million,” says Dennis Coates, economist at the University of Maryland, Baltimore County.
All three economists have written extensively on the so-called economic impact of pro sports, including the onetime events such as the Super Bowl, Olympics, and baseball All-Star Game.
One of the most perspicacious summations comes from Allen Sanderson, economist at the University of Chicago. “The National Football League can add and multiply, but it can’t subtract or divide,” says Sanderson. “If you take the number they give you and move the decimal point one place to the left, that’s probably about right.” That’s also the finding of Rob Baade, economist at Lake Forest College in Chicago, who did a careful study of the impact.
Economists who have looked at the so-called ripple effect of the Super Bowl, All-Star Game, college basketball’s Final Four, soccer’s World Cup, and the Olympics “generally find that the impact is overstated by at least ten times,” says Porter.
That’s because well-paid consultants with sticky fingers report gross figures, not net figures. “They count everyone that comes to town and the money they spend, but they don’t count the people who would have been in town anyway, and they don’t count expenses such as police and fire,” says Porter.
One of the best examples of this statistics-twisting is cited by Neil deMause, who runs the website Fieldofschemes.com and cowrote a book that was revised two years ago, Field of Schemes: How the Great Stadium Swindle Turns Public Money into Private Profit. After basketball great Michael Jordan sat out a year before returning to the sport, Fortune magazine calculated that “his Airness was worth a cool $10 billion a year to the U.S. economy,” says deMause.
He explains, “Someone at Fortune took out a calculator and totaled up every economic exchange that was touched by MJ’s blessed hand: every pair of Air Jordans sold, every pair of Hanes underwear worn, every ‘Space Jam’ video rented. Total up all the Jordan merchandise, Jordan-endorsed products, and Jordan-linked TV contracts, and you get $10 billion.”
But what’s missing is what economists call the “substitution effect.” Says deMause, “Most people, presumably, would have watched videos and worn underwear even if Jordan hadn’t been around to tell them to do so.”
Similarly, there would be tourists in town even if there were no Super Bowl. And setting aside all hotel rooms for game guests can backfire. Porter explains that when Tampa got the 2001 Super Bowl, 35,000 rooms were reserved. Hoteliers insisted that the guests get a minimum seven-day reservation. But the guests only stayed for the weekend. The hotels did fine pocketing the money, but local restaurants, bars, retailers, and the like were shortchanged the rest of the week.
In Miami, the cost of a $150 hotel room can escalate to $450 on Super Bowl weekend, says Porter. But do hotel maids and clerks enjoy a tripling in their pay? Of course not. The difference goes to the hotel’s coffers. And the hotel is generally owned out of town. “Paris Hilton gets that [extra money], and she is not in Miami,” says Porter. (In fact, she may be in jail somewhere.)
“The Super Bowl does draw people from out of town, but these numbers get inflated because most of the money collected goes to the NFL or to the hotels, which are national companies,” says Noll. Local vendors, retailers, and restaurants do bring in some money, but the local tax take is $2 million or $3 million, says Noll. Generally, he says, the Super Bowl is “a modest benefit if you are willing to put up with the noise and traffic jams.”
Cities have computerized economic models that try to capture tourism’s ripple effects. Onetime events such as the Super Bowl befuddle those models, says Porter. If the price of a hotel room triples, the model may assume that three people, rather than one, came to town and conclude that three times as many T-shirts were purchased and restaurant meals eaten. The model may suggest that because of this manna, the city should build more hotels and restaurants and expand its airport, “but it is a short-duration effect,” says Porter. (In San Diego, city fathers want to expand the convention center because of one event, Comic-Con.)
One way economists try to measure actual impact is to look at tax revenues from before a game and after. Coates did a study of the 2004 Super Bowl in Houston. He figured that sales tax revenues might have gone up by $5 million. “For a city the size of Houston, that is piddling,” he says. Coates didn’t take costs into account. Houston’s comptroller did and concluded that, overall, the city came out only $900,000 ahead.
Boosters will claim that the city gets all that free publicity from a huge international TV audience, as well as worldwide press coverage. “But you have no idea what kind of press you are going to get out of it,” says Coates. Porter points out that because press people couldn’t find sufficient watering holes, Jacksonville became known as a sleepy town that rolls up its sidewalks at night. Coverage of a riot during Super Bowl time hurt Miami. At one Tampa Super Bowl, the media got obsessed with titty bars.