Is the Super Bowl Economic Impact Overstated or Vastly Overstated?

By Parrish Walton, January 30, 2015

The Super Bowl economic impact numbers always sound so good, don’t they? New Orleans claims it brought in $480 million when it hosted the big game back in 2013. New York/New Jersey claimed Super Bowl XLVIII brought the region $600 million after last year’s game. This year’s hosts, Phoenix/Glendale, Arizona, are expecting a $500 million boost when Seattle aims to repeat as champions.

But are those numbers accurate? Some economists don’t think so.

“The economic impact studies do a fairly good job at measuring the economic impact that does occur but don’t do a good job at measuring the economic impact that doesn’t occur,” Victor Matheson of The College of Holy Cross, told CBS News.

Essentially, if a local couple goes out to eat in Glendale or Phoenix this week who otherwise would have gone out whether the game was in town or not, their spending is added to the total tab. Matheson believes this Super Bowl will contribute between $30 million to $130 million in true economic impact. That’s nothing to scoff at, of course, but “it’s a far cry from $500 million,” he said.

Matheson isn’t the only skeptical economist. Robert Baade, an economics professor at Lake Forest College in Chicago, told the AP back in 2007, “If you move that $400 million estimate and you move the decimal point one place to the left you’re much closer to what it is that it actually provides.”

That same AP report cited Baade’s contention that when money is spent at a hotel chain, the increase in profits—due to higher room rates, for example—doesn’t stay in the community. Instead it flows to wherever the hotel’s headquarters might be. Baade referred to this as “leakage.”

This is not to say the Super Bowl isn’t worth the investment. If the event brings in an extra $30 million to a city that’s big business. The problem, however, is when a city builds a new stadium at a cost of $400 million and uses the Super Bowl as a selling point to the tax payers—looking at you, Atlanta Falcons. For cities like New Orleans and Miami hosting a Super Bowl makes sense. Those cities get to wine and dine the corporate elite while showcasing the destination to 100+ million viewers on television.

It’s almost as if the Super Bowl is one massive—and affective—marketing tool.

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