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Monday, January 29, 2007

Super Bowl is a winner's curse?

Sports economists have long investigated the various cities in which Super Bowls have been held, searching (in general) for the purported benefits the event is advertised as providing. After all, it is the premier sporting event in the United States and the amount of out-of-town visitors, including media types and hotshots in town to hob-nob, should bring a large economic stimulus.

Unfortunately, most economist studies find the impacts of the Super Bowl are considerably lower than advertised. However, it should be noted that most studies focus on the Florida cities in which the Super Bowls are held, and you can add the AZ and LA cities as well. Unfortunately, these are the very cities that already draw a large crowd of visitors in February and therefore it is unlikely that a Super Bowl has a dramatic (net) impact on the local economy.

On the other hand, recent Super Bowls in Detroit and Houston might have had a larger and noticeable impact on the local economy because these two cities tend to have fewer out-of-town visitors during February. Recent research by myself and Dennis Coates suggest that the Houston Super Bowl might have generated $3m net increase in sales tax revenues for the city of Houston (not including the surrounding cities), which would correspond to approximately $300m. However, anecdotal evidence suggests that having a lot of sports finals in Detroit did not offset the negative trends in the Detroit Business Index.

All of this is consistent with the recent opinion piece by Gil LeBreton of the Fort Worth Star Telegram, titled "Arlington, are you sure you're prepared for this?" He has some interesting comments about Arlington pursuing the 2011 Super Bowl tobe played in the new Cowboys stadium currently being built (picture here and web cam here):

You won't get tickets, even if the Jethrodome's capacity ends up pushing 100,000, as Owner Jones has promised. The two Super Bowl teams each get 17.5 percent of the available tickets. The NFL lays claim to 25.2 percent, to be spread among the rights-holding TV networks, the players union and various league sponsors. Each non-participating team gets about 800 tickets to distribute. And the host team receives 5 percent.
This is true, although in the state of Texas, ticket sales are still taxed at the state rate. It is not clear to me whether the tickets would also carry the local user-tax to help pay for stadium construction.

He goes on:
No doubt, they're going to trash Arlington. The Super Bowl media always rips into the host city, unless it's San Diego or New Orleans. They'll compare Arlington to some of the other great sporting hosts of the world, like, say, Paris and Los Angeles.
He might be correct about this, but I wonder if this could be avoided if Arlington didn't go solo in its pitch to host the Super Bowl. While Arlington is the largest city without its own paper, without its own cab company, and without mass transit, those are badges of honor in my book.

Two disappointments of the Arlington Super Bowl bid: a) Arlington will receive little of the economic benefits if the event is held here as most out-of-town visitors will stay and spend in Dallas or Fort Worth, b) Arlington will pay for the event while the surrounding cities do not. I understand the incentive is for the other cities to free ride on Arlington. However, as a resident of Arlington it doesn't sit well with me.

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