Saturday, August 28, 2010

The $100 Million Hawkeyes' Football Team

August 28, 2010, 11:00 a.m.

Hawks: "How Do I Love Thee? Let Me Count the Dollars"
-- with apologies to Elizabeth Barrett Browning
(bought to you by*)

The Iowa City/Coralville Area Convention and Visitors Bureau says the Hawkeyes' Football Team is about to bring $100 million to Johnson County this fall. Emily Schettler, "It's true: Hawkeyes are worth millions," Iowa City Press-Citizen, August 28, 2010 ("The University of Iowa's home football season brings more than $100 million into the Johnson County community . . .."). [The story is reproduced in full at the end of this blog entry.] For another, very similar story two days later, see Max Freund, "Football Season Brings Millions to Johnson County," The Daily Iowan, August 30, 2010.

Really? $100 million?

Now don't get me wrong. Clearly, the University of Iowa with its academic programs, professional colleges, research and entrepreneurial endeavors, UIHC (the largest employer in Eastern Iowa), and entertainment venues (including the athletic programs), is a major economic engine throughout the midwest, Iowa, Eastern Iowa and Johnson County generally, and Iowa City in particular.

But a precise dollar figure on the contribution from seven football games, especially a prediction based on a survey of 465 people during one weekend in 2009, has to be suspect.

Make no mistake, the University of Iowa's football program has a lot going for it. We have a good team, decades of great tradition, one of the nation's top coaches (collegiate or professional), sold-out crowds of loyal and generous fans, and an enviable cash-flow. Moreover, it doesn't hurt that the Hawkeyes don't have to compete for fans with an Iowa-based professional football team. And this should be another good year for Iowa.

But precisely $100 million?

I acknowledge that the Press-Citizen's story does not contain the details of the research methodology, those details are not otherwise known to me, and that some of the potential problems I see may have actually been taken into account by the researchers.

However, some of the concerns this study raises in my mind seem to me almost impossible of precise resolution -- problems of "but-for," "incremental increase," and "blend."

For those surveyed, the study examined expenditures for "food, transportation, entertainment and retail," as well as presumably hotel and restaurant costs. From the 465 persons surveyed (13 percent of whom did not attend the game, notwithstanding the fact the only folks surveyed were outside Kinnick, on the "Hawkeye Express" train to the stadium, or in hotel lobbies) it was projected that 51,000 persons came into Johnson County that weekend (5100 of whom were from out of state).

For starters, presumably the only sales that can fairly be attributed to football would be those above and beyond those that would have occurred without a football game. What is the average Iowa City/Coralville revenue for (a) all restaurants, (b) hotels/motels, (c) retail (and (d) gasoline, if you want) for all Friday-Saturday-Sunday weekends from September through November -- excluding the weekends when there are home football games? What is the average during weekends when there are football games? It is that difference, that "incremental increase," that is relevant. Otherwise you're counting revenue that would have gone to local businesses even without the games.

Second, how much of that incremental income would never have been earned "but for" the football game, and how much is merely "time-shifting"? Last time I checked, Coralridge Mall was doing about $100 million a year. Much of that retail business comes from folks who live in neighboring counties. If they're going to be shopping in Coralville regardless, and happen to do some of that shopping during a football weekend (with or without attending the game) they've contributed to increased retail income when there was a football game in town, that's true; but they have not contributed more income to merchants for the year in question than they would have contributed anyway without that coincidence. It's not "but-for" incremental income.

Similarly, local residents who regularly eat in restaurants from time to time may choose to go out to eat during a football weekend -- but then, having done so, become less likely to eat out again the following week, when they might otherwise have done so; another example of "time shifting."

The same thing goes for fans who have friends in Iowa City, or children attending the University, or hospital visits to make, who would be coming to Iowa City in any event, but time some of those visits with football weekends. For all I know, business meetings or conferences that would have been held in Iowa City at some time anyway may be scheduled to include a football game. The law school ties in football games with some of its Continuing Legal Education programs for lawyers.

Even if the expenditure is not mere time-shifting, and it meets the "but-for" test, in the sense that the game contributed to the attendance in Iowa City, there may have been other "but-for" factors as well -- without which the trip, attendance at the game, and expenditures, would not have occurred.

The advocates of "attractions" of various kinds -- the venue for a World's Fair, Olympics, Superbowl Game, or indoor rain forest in a corn field -- are notoriously overly optimistic in their predictions of economic value, often by as much as 30-fold beyond reality.

Bottom line? Clearly, the Hawkeye football season contributes to the Johnson County economy. If there were a way to define what we mean by "contribute to the economy," how much of that contribution is attributable to the game, and then to measure that contribution precisely, I have no doubt it would be in the millions of dollars. But there's not.

So, enjoy the home games coming up. Spend some money. But don't expect anybody to be counting it precisely.

Here's the story:

Emily Schettler, "It's true: Hawkeyes are worth millions," Iowa City Press-Citizen, August 28, 2010

The University of Iowa's home football season brings more than $100 million into the Johnson County community, according to a study released Friday by the Iowa City/Coralville Area Convention and Visitors Bureau.

The Visitors Bureau partnered with a UI graduate class to perform the study, which was conducted Nov. 6-7, 2009, when the Hawkeyes played Northwestern.

Josh Schamberger, president of the Iowa City/Coralville CVB, said the numbers are encouraging but not surprising.

"I honestly believe this isn't a surprise to area residents," Schamberger said. "Businesses, organizations, hoteliers, grocers, all of these retail operations very clearly know the economic impact of an Iowa football home season."

The study included data from 465 surveys distributed to randomly selected fans near Kinnick Stadium, riding the Hawkeye Express and in the lobby of five area hotels.

In addition to asking why people were visiting, whether they were staying overnight and how many people were in their party, the survey asked people to detail their expenditures on things like food, transportation, entertainment and retail.

The study found that the Northwestern game attracted more than 51,000 visitors to the county, of which about 10 percent came from out of state, while those who stayed overnight spent an average of $944 while they were here.

Thirteen percent of those who participated said they were not attending the game but were in town to tailgate or go shopping.

Rick Klatt, associate director of external affairs at UI, said the results provided data for what many in the community already assumed.

"We know that the seven home football weekends are incredibly important to our business community," Klatt said. "It just confirms what our intuition has always been. These are important events to this community. These events require literally hundreds of people to be involved to successfully stage them.

"It goes way beyond our coaching staff and student-athletes."

Schamberger said the Visitors Bureau is planning to survey fans on two game weekends this year: against Ball State on Sept. 25 and Ohio State on Nov. 20. He said the goal is to identify the economic impact of a conference game weekend versus a non-conference game weekend.

"This fall, I would expect the weekend that has the least economic impact, and we're still talking millions and millions of dollars, would be probably Ball State," Schamberger said.

He expects fans of conference teams, including Penn State, Ohio State and Wisconsin, to contribute considerably.

"(Big Ten) teams travel just as well as Iowa does to their stadiums," he said. "Those ticket blocks are automatically going to fill our hotels."

Schamberger said there's a likely connection between the team's success and its impact on the local economy.

"I wouldn't think there's probably any question that a successful football program has a direct correlation with the impact our community receives," Schamberger said.

Klatt agreed that excitement surrounding this year's team could boost the number of fans and the amount of money they spend in Iowa City even more.

"I think it's fair to say, given the excitement and anticipation for this football season, it's possible this number might grow," he said.

* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself.
-- Nicholas Johnson
# # #


John Neff said...

Kinnick Stadium has a capacity of 70,585 and in the recent past all games have been sold out. If we use a low estimate of $300 for cost of a season ticket the minimum estimated revenue is $21 million. If we assume a low estimate of $100 per ticket holder for games related expenditures in a season that totals another $7 million. If we assume the average number of tailgaters is 20,000 and they also average $100 per season in game related expenditures that amounts to an additional $2 million.

This gives an unrealistically low estimate for game related expenditures of $30 million. The $100 million estimate appears to be unrealistically high but the average estimate of $65 million may not be that far off. For discussion purposes a range of $55 to $75 million might be a good choice.

Nick said...

Just a very brief response to the calculations of John Neff -- an excellent numbers guy.

My sense from the story is that the focus/purpose of the study was income to local merchants, not income to the football program.

It quotes Josh Schamberger as having said, "Businesses . . . all of these retail operations very clearly know the economic impact . . .."

The Rick Klatt quote is "the seven home football weekends are incredibly important to our business community."

Neff multiplies 70,585 times a $300 season ticket and adds $21 million to football's contribution. However accurate the $21 million may or may not be, my guess (and that's all it is) is that ticket sales (and fans' "contributions" to the Foundation for athletic programs) was not something that this study would include.