The Economics of the Super Bowl

[mickeyd]

I have never bought into the notion that the SB and quadrennial political conventions are a good financial deal for the host city. I'm betting that Indy, Tampa, and Charlotte will all end up losing money on the events.

This is what it's like to host the Super Bowl: For one weekend, your city is the focus of the sporting universe. Fans flock in droves. They eat at your restaurants and sleep in your hotels. They buy the "I ♥ [your city]" t-shirts.
The NFL estimates that hosting the country's premier sporting event will give the local economy a $300-500 million jolt.
Economist Victor Matheson of the College of Holy Cross doesn't buy it.
In today's podcast, co-hosted from Indianapolis by NPR's Mike Pesca, Matheson presents the case against hosting the Super Bowl.

He argues hosting the Super Bowl pushes out the economic activities that occur on normal, non-Super Bowl hosting weekends. No conventions are held. Museums are closed. Local residents do not come downtown simply because it's too crowded

The Friday Podcast: Is Hosting The Super Bowl Worth It? : Planet Money : NPR

 

[W2R]

What's more, Matheson says, the majority of the money that's being shelled out by out-of-towners does not even stay in the city. It flows to the big, national hotel companies and restaurant chains.
"More money than average is being spent in hotels and restaurants, but is then immediately leaving town...you have lots of dollars changing hands but it's really money being sucked out of people's hands and disappearing, rather than money that goes to build the local economy or repay a big stadium subsidy."

The same could be said for any tourist industry. The Hiltons and Marriotts are going to be getting some of the income as they always do. Still, they won't get all of it and there will be some injected into the local economy as well. New Orleans is pretty happy to have been awarded the 2013 Superbowl, but luckily I don't think anyone here has unrealistic expectations of great and enduring wealth from it. It's one more building block in our lengthy recovery.

 

[easysurfer]

Not to mention, the Superbowl is also the biggest day of business for plumbers with all the consumption going on.

 

[haha]

The same could be said for any tourist industry. The Hiltons and Marriotts are going to be getting some of the income as they always do. Still, they won't get all of it and there will be some injected into the local economy as well.

The Hiltons and Marriotts are part of the local economy. By their nature, these industries have big local payrolls. In many cities, there are more chain restaurants-even upscale restaurants-than locally owned restaurants.

Also, if a city is attractive on its own merits, people may come for the SuperBowl or the Olympics or big track meets and if they have a good time they may come back for another vacation.

Ha

 

[W2R]

The Hiltons and Marriotts are part of the local economy. By their nature, these industries have big local payrolls. In many cities, there are more chain restaurants-even upscale restaurants-than locally owned restaurants.

Also, if a city is attractive on its own merits, people may come for the SuperBowl or the Olympics or big track meets and if they have agood time they may come back for another vacation.

Ha

Exactly, and New Orleans is hoping to showcase our recovery from the hurricane when we host the Superbowl in 2013.

Some people complain about the cost of police and crowd control and so on, but let's face it - - with Mardi Gras here, and other big events, our police here excel at this sort of challenge and the city is well aware of the costs. Right after 9/11 we had the Superbowl and Mardi Gras going on all at once, and even that went very smoothly.

 

[jazz4cash]

I don't think I buy this analysis. Indianapolis breaks the mold. The real prize for XLVI is unseasonably warm weather in Indy. I lived there for a long time. If things continue to go well, it will reinforce the city's efforts to build up it's image as a convention destination. Lots of roads and hotels were built in time to host this event. The payoff, if any will take many years to play out. Everyone I spoke with back there has participated in the festivities. Look at the crowds through the week...they are (local) Colts fans. Very little if any folks traveling to Indy in Feb without the Superbowl.

When we had the East Coast blizzard in '10, it was Superbowl weekend, so things could easily have gone the other way in terms of weather.

 

[TromboneAl]

The news just said that a superbowl ticket cost $3,800.00. Is that possible? What is the demographic of the attendees? If the stadium holds 100,000, that's over a third of a billion in ticket sales.

 

[W2R]

The news just said that a superbowl ticket cost $3,800.00. Is that possible?

Yes, they aren't cheap.

What is the demographic of the attendees?

Probably very well to do, I'd imagine.

 

[MichaelB]

Considering the host city does not have to bid or build anything, seems to me they do all right. Lots of money flying in and out, the local leisure industry is booked solid for the weekend. Thousands more go out and party around the stadium or in the city. And they get a chance to showcase themselves, as pointed out by HaHa and W2R.

 

[Ronstar]

We were in Phoenix a few years ago during the Super Bowl. I was amazed at the amount of parties/events that are part of the game. They went on for almost a week. And it wasn't just near the stadium - big boost of economic activity for the surrounding 30 miles in the bigger suburbs. But I can see how Indy might not get such an economic boost because of their smaller population and amenities.

 

[frank]

I guess with the price of tickets and probably rooms, going out to the game with your kids is not going to happen. this is the same with baseball, its not a family game anymore.

 

[KiraC]

I'm sure Indy is getting an economic boost, especially downtown. There have been enormous crowds all week at the SB Village. Yeah, Indy may not be 'as cool' as some other cities think they are, but this SB is getting rave reviews from out of town press. I was impressed by what I saw and I'm not really a football fan.

 

[TromboneAl]

The stadium holds 63,000, so ticket revenue is around $239 million. I wonder how much of that goes to the city.

 

[Nords]

I have never bought into the notion that the SB and quadrennial political conventions are a good financial deal for the host city. I'm betting that Indy, Tampa, and Charlotte will all end up losing money on the events.

Business Week points out that the Indy500 is a bigger event.

However I think that a big influx of visitors is usually a good thing. Look at what 40,000 screaming fans do for Omaha at the Berkshire Hathaway annual meeting.

I wonder if local govts use events like this as an excuse to repave streets, hire more police/security, build up more infrastructure, levy more taxes. Then the benefit to the community becomes a little more problematic.

 

[Payin-the-Toll]

I'm from Indianapolis and I think the city came out on top for this event. I'm an old retired curmudgeon and don't even like going downtown when it's not crowded, let alone when it's SuperBowl week. A few places were built and added onto, but overall everything else was in place, including our new stadium (built by a 1% tax for restaurant and carry out food for the old stadium-still in place, and a 1% tax of the same for new stadium). With our 7% state sales tax, every time you eat out it costs an extra 9%. Prices overall were pretty outrageous. Places that normally charged $20 a day for parking where charging up to $495.00. Indy really lucked out on the weather though. Last year at this exact same time we had a 3" ice-storm and I couldn't even chisel my way out of the garage or back door---had to wait for it to melt. Overall a great plus for our city. Being a big sports fan, what else can I say but what a great game. Halftime with Madonna and her lip-syncing buddies (except for the last song)--well, guess that will have to be another thread. Congrats to NY and Eli!