Tuesday, February 08, 2011

Super Boosters' Super Bowl

February 8, 2011, 8:40 a.m.

Champions' Wins Can Be Taxpayers' Losses;
Lessons for Iowa

(bought to you by FromDC2Iowa.blogspot.com*)

There is at least one significant way in which Super Bowls are far less super than the claims in its super boosters' hype.

Sunday's [Feb. 6, 2011] game between the Pittsburgh Steelers and the community-owned Green Bay Packers was by many measures a truly "super" bowl game. It was a great game to watch; which a record 111 million did in front of TV screens and an almost-record 110 thousand did in the Texas-sized and styled super stadium in Arlington. Whether the TV commercials will have a super impact on increasing sales remains to be seen, but they produced some super laughs for the audience, potential super awards for the creators, and at $3 million for each 30 seconds some super revenue for the broadcasters.

The two-year-old Dallas Cowboys' stadium used for the event, Cowboys owner Jerry Jones' three-million-square-foot "Palace in Dallas," the world's largest domed stadium, cost $1.15 billion to build -- of which the taxpayers of Arlington contributed $325 million.

However, its likely impact on the economy of Arlington, Texas (and its Dallas-Ft.Worth environs), is going to be far less super than Super Bowl boosters and promoters routinely claim when their billionaire owners approach local taxpayers, hat in hand, begging for their equivalent of public housing.

With no pro teams in Iowa, and open stadiums during Iowa winters, it's unlikely there will ever be a Super Bowl game played in an Iowa town. Nonetheless, there are still lessons here for Iowans -- for the Iowa City City Council's love affair with the corporate benefits from local taxpayers called "TIFs," and Governor Branstad's apparent belief that transferring taxpayers' money to the bottom line of for-profit corporations (and campaign contributors) is ideologically consistent with "free private enterprise" and an efficient way to "create jobs."
The Super Bowl host committee commissioned a report that says the region will see a $611-million windfall as a result of Sunday’s game. . . . Robert Baade, a sports economist at Lake Forest College, . . . says host committees forget to factor in things like tourists and convention goers who are crowded out during mega-events like the Super Bowl, money that goes home with the players, team owners, and national hotel chains, and costs the city bears in clean-up and safety. 'If you move that decimal point one place to the left, you’re much closer to reality,' Baade says. '[T]he $60 million figure is likely to be far more representative of what we’ll see.' And, Baade says, the real figure might be closer to $30 million. . . . [Do pro teams and Super Bowls bring new businesses to town?] Professor Baade says, corporate sponsors and business executives have much more tangible things to think about . . .. '[T]hey’re going to consider things like: "Is there a skilled labor force?," Baade said. ' . . . the tax environment . . . the school system. . . . [O]ther factors . . . are far, far more important for the bottom line than a Super Bowl or even the presence of a pro sports team.'
"Dallas Expects Super Rewards for the Super Bowl," "Only a Game," WBUR-FM/NPR, February 5, 2011.

The $600 million benefit claimed this year is 50% more than last year's NFL estimate of $400 million -- when economists found the League's math equally flawed.
"'All they do is add and multiply,' [University of South Florida economist Phil] Porter said. 'They never subtract and divide.' . . .

Economists say the NFL-sponsored studies look at the 'gross' spending by Super Bowl visitors but not the 'net' effect.

Some tourists, economists say, may intend to visit South Florida for vacation, but will avoid the area because of the Super Bowl. Also, with Super Bowl attendees spending much of their money with national hotel and rental-car chains, most of the influx is going to corporations headquartered elsewhere, such as Hilton, Marriott, Hertz and Avis.

'The airfare being spent on American Airlines isn't ending up in Miami,' said Craig Depken of the University of North Carolina-Charlotte. 'A lot of it is being repatriated to Dallas.' . . .

'I'm estimating north of $400 million,' said Rodney Barreto, chairman of the host committee. 'This is a huge event.' . . .

But independent economists have tossed the challenge flag and demanded a closer look at what they consider the puffery behind the big game's economic effect.

'If you can move the decimal point one digit to the left, you would get a more realistic estimate,' said Andrew Zimbalist, a prominent sports economist at Smith College. 'If they were arguing $40 million, I would say that's a realistic impact; $400 million is not.'

Victor Matheson, an economist at the College of the Holy Cross, said Super Bowls generate a boost of $30 million to $90 million.

'Absolutely, you'll take it,' he said. 'But on the other hand, it's one-quarter to one-tenth of the figure the NFL is publicizing.'

Economists from the University of Chicago, the University of North Carolina-Charlotte and the University of South Florida have reached similar conclusions.

Phil Porter of the University of South Florida sees a link between the NFL's optimistic economic impact estimates and team owners' lobbying for public money for stadiums.

'The NFL is not in the business of giving us $400 million every year,' Porter said. 'They're in the business of telling us they're giving us $400 million every year so we'll give them things.' . . .

[I]t's unclear when the Super Bowl and Pro Bowl will come back to South Florida. NFL executives say the Super Bowl might not return for an 11th visit without $250 million in improvements to the Miami Gardens facility now known as Sun Life Stadium."
Jeff Ostrowski, "Super Bowl economic impact of $400 million? That's super-inflated, scholars argue," Palm Beach Post, February 4, 2010.

For years I wrote in a similar vein about Senator Grassley's belief that spending $50 million of federal taxpayers' money on an indoor rainforest in an Iowa cornfield could somehow pass the laugh test and make any economic sense. See, e.g., the entire Web site I devoted to the subject: "Earthpark."

More recently I've addressed the triumph of boosterism over economic analysis in some blog entries and Press-Citizen columns.

Nicholas Johnson, "Making 'Shop Locally' a Meaningful Suggestion," Iowa City Press-Citizen, December 3, 2010, p. A9, embeded in "Downtowns' Future: 'Shop Locally' Column & Dialogue; Making "Shop Locally" a Meaningful Suggestion," December 7, 2010 ("[T]he Press-Citizen Editorial Board is urging us to 'shop locally.' But what does 'buy local' mean? [Money spent here doesn't necessarily stay here.] To analyze in detail what happens to each portion of the dollars we spend in Johnson County establishments would require more data and degrees in economics than most of us would ever have or want. . . . [But without it, 'buy locally'] is just a rousing bumper sticker of a slogan, and, as Tom Joad says to the filling station attendant in Grapes of Wrath: 'You're jus' singin' a kinda song.'").

"The $100 Million Hawkeyes' Football Team; Hawks: "How Do I Love Thee? Let Me Count the Dollars," August 28, 2010 ("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. . . . Really? $100 million? . . . [T]he 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 . . . 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'? . . . [Coralridge Mall shoppers who do not attend football games may have] 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.").

Nicholas Johnson, "Flying Video Screens, Stories and Tourism," Iowa City Press-Citizen, August 30, 2008, p. A15, embedded in "Tell Me a Story; The Stories Project," August 30, 2008 ("[A]n Iowa City monument to stories is certainly more appealing than 'a rain forest in a cornfield' -- the earlier proposal for Coralville. But good ideas are a dime a dozen. The challenge? Finding the next dime. Something rain forest promoters never found. Whether Stories makes sense requires the same analysis to which I subjected the rain forest. . . . In fairness, Stories’ promoters acknowledge their details aren’t nailed down – ‘"flying video screens" and holographic projections,' school, bookstore, restaurant? But it’s hard to be 'for' or 'against' a thing not knowing what the 'thing' is – the rain forest’s persistent problem. ('It’s a floor wax, it’s a desert topping; it’s whatever they want it to be.') So all I can offer is an all-purpose sampling of issues for any attraction.").

"Chicago Wins Olympics Bid; Why Chicago Won the Olympics Bid," October 5, 2009 ("The fact is that, most of the time, winning an Olympics bid, like many other efforts at local boosterism, turns out to be a Pyrrhic victory. . . . [M]ost community cheerleaders, like modern day George Babbitts [Sinclair Lewis, Babbitt (1922)], with confidence and pride in their town truly believe that their idea -- whether an indoor rain forest, the world's largest ball of string, or hosting an Olympic event -- really will 'put their city on the map,' while bringing tourists and their tourists' dollars to town. Who needs a business plan when 'everyone knows' what a great idea it is? . . . All too often the construction money can't be found, or the project is built but it turns out that 'build it and they will come' only works in the movies. Or enough public debt is incurred that it is, with the declining revenues that could have been predicted but weren't, the death knell for the project and then -- like paying for a dead horse -- takes years, if ever, to pay off. But there is no effort at community promotion for which there is a greater disparity between the promised economic benefits and the ultimate disappointment than Olympic venues.").

For more on our excessive focus on sports reaching from pro to college to high school to junior high and elementary schools, see "Fandom; Super Bowl, Super Mystery," January 30, 2011.

And for more on use of taxpayers' money for campaign contributors, see Nicholas Johnson, "Branstad and Public Transparency," Iowa City Press-Citizen, January 5, 2011, p. A7, embedded in "Governor Branstad's 'Transparency;' Making 'Transparency' in Government Meaningful," January 5, 2011. Accord, see Donnelle Eller, "Study Questions Branstad's Economic Proposal," Des Moines Register, February 2, 2011 ("States that have switched to public-private partnerships like the one Iowa Gov. Terry Branstad has proposed have experienced misuse of taxpayer money, excessive executive bonuses and questionable awards, a national group [Good Jobs First, a Washington, D.C., research group] says. . . . [S]tates like Iowa that are considering public-private partnerships should focus on improving existing economic development efforts rather than seek to create agencies. 'Turning economic development over to public-private partnerships is fool's gold,' said Greg LeRoy, Good Jobs First executive director. 'What really matters is business basics: strategic public investments in skills, infrastructure and innovation - not privatized smokestack chasing.'"). See the similar observation of sports economist Robert Baade in the first major blocked quote in this blog entry, "Professor Baade says, corporate sponsors and business executives have much more tangible things to think about . . .. '[T]hey’re going to consider things like: "Is there a skilled labor force?,"' Baade said. ' . . . the tax environment . . . the school system.'"


* 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
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1 comment:

Nick said...

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