Image by Getty Images via @daylife
Football fans of all ages will thoroughly enjoy the NFL Experience in the Indianapolis Convention Center this week. This is not likely subject to controversy.
That is, you will enjoy yourself...unless you miss your one shot at making a 40-yard kick in the Extra Point interactive (which I missed by inches in front of thousands...I feel your pain, Scott Norwood).
On the other hand, the degree of economic impact that a Super Bowl has upon host cities? Well, that's a bit more controversial.
And the controversy stems largely from the wide fluctuations in the impact estimates provided, especially when these projections may influence a city's or county's resource allocation decisions for years to come...which may ultimately impact voters' wallets.
On the one hand, the NFL is biased to report large estimates in part because it helps drive up future bid fees by hopeful host cities. The logic being that if cities are told that a game will boost the visitor spending within their region by $500 million, then this increases their desire to host the game...thereby creating greater competition among cities to want to host the game...which ultimately drives up bid fees and concessions that the NFL can command.
Furthermore, local politicians and civic leaders who wish to place a feather in their collective caps may be inclined to hire a consulting firm that will take a more liberal and aggressive approach to estimating economic impact.
On the other hand, you have several academic studies and commentary strongly suggesting that the economic impact of Super Bowls is grossly overstated because - in their view - most contracted studies don't account for things such as visitor point of origin, monetary leakages and displacement...all of which can act to significantly reduce the net economic impact of the game. (Visit this story for a brief education on these terms and how they influence economic impact calculations.)
As someone that has conducted numerous economic impact studies over the last decade - including 2 Super Bowls - I've come to the conclusion that the truth most likely lies somewhere in between these extremes.
There is no question that Super Bowls attract a lot of non-local visitors during Super Bowl week. And given the demographic at hand, they spend their money much more liberally than is true for other sports demographics I've researched.
There is no question that Super Bowls confer a tremendous degree of visibility and media value upon the host city. Not only does that visibility alone generate value by conferring a cost savings for local tourism groups that otherwise would have to spend millions for similar exposure, but it may encourage future visitorship by viewers watching the festivities of Super Bowl week on ESPN or NFL Network who otherwise wouldn't have had Indy on their radar as a tourist destination.
There is no question that an outsider (be they academic or otherwise) not privy to detailed information associated with a variety of Super Bowl expenditures may be prone to understate the impact of the big game. Those expenditures may include but are not limited to:
- Spending by fans and corporations ascertained from event surveys;
- Spending by media and the teams;
- Spending by non-local visitors who don't have tickets to the game and who aren't staying at a local hotel, but rather, are staying with local family/friends;
- Spending by locals above and beyond what they otherwise would have spent as the result of the Super Bowl's presence. Locals being entertained at The NFL Experience is just one example of this;
- Operational and infrastructural spending by the event rights holder (in this case, the NFL) to help the local community produce the event;
- "Vacationing at Home" component of economic impact that sports economist Dan Rascher discusses eloquently in this piece, which basically argues that big local events help prevent local money from being spent outside of the community.
All that said, many studies overstate the economic impact of events because they:
- Fail to properly sort "locals" from "non-locals"...and though the "vacationing at home" argument has validity, some over-estimate the degree to which this effect is applicable;
- Fail to account for the fact that ticket revenue, NFL merchandise, and similar itemized expenditures don't stay within the host city because that revenue is ultimately slated for the NFL's pockets or that of some non-local supplier;
- Fail to account for monetary leakages of various types...non-local suppliers taking money out is one example, and any restaurant or hotel with a national headquarters based outside of the host city yields some additional leakage which reduces the impact of the Super Bowl;
- Fail to account for displacement or crowding out effects (see this story associated with anticipated displacements for London's Summer Games in 2012);
- Fail to subtract from any impact estimates the amount of money spent by local organizations to outside entities to secure and operate the event.
===
That's a lot of information to digest, so what's the takeaway or teaching point?
In my experience analyzing the impact of the Super Bowl - coupled with the wealth of literature falling on both sides of the debate - it seems reasonable to advise the educated reader that:
- Super Bowls do confer net economic benefits in terms of new visitor spending from fans, corporations, and the media...and that there can be lagged non-local spending benefits as well as real-time cost savings associated with the media value that hosting the Super Bowl can confer upon one's city;
- Most Super Bowl impact estimates tend to be inflated (some widely so) because they don't properly account for all the factors which ultimately pull net impact estimates well below gross impact estimates.
So before putting too much stock in reported economic impact studies for ANY sporting or cultural event let alone the Super Bowl, be sure to investigate who conducted the survey as well as how they conducted their survey. This will add greater clarity and confidence (or lack thereof) in the quality of the impact estimates reported for that particular event.
******************************
Dr. Patrick Rishe is the Director of Sportsimpacts, a national sports consulting firm that has conducted economic impact studies for 2 Super Bowls, 3 Final Fours, and over 70 projects altogether since 2000.
Follow Patrick on Twitter @PatrickRishePhD or visit www.sportsimpacts.net
