Thursday, August 29, 2013

More Super Bowl Lies

You absolutely cannot believe anything that is reported in the local news media when it comes to spending your tax dollars on sporting activities. The local news media is all gaga over a not so surprising report that Mayor Greg Ballard is going to make a push to win the Super Bowl for Indianapolis in 2018. Before the 2012 Super Bowl, local officials estimated the Super Bowl would have an economic impact of $150 million. Following the Super Bowl, CIB officials conceded the event cost the city a net loss of $1.1 million, which was about $200,000 more than officials had expected to lose. Actual revenues from the food and beverage tax, the hotel tax and auto rental tax only increased by $2.9 million over the same period from the year prior to the Super Bowl. My conservative estimate of how much Indianapolis invested in hosting the Super Bowl in 2012 was at least $50 million before it was all done and said. The fact is that most of the economic impact from the Super Bowl never enters the local economy; rather, it flows to the owners, players and others. The state and city, for instance, had to forego taxes it would ordinarily collect from such an event simply as a concession for hosting the Super Bowl. Other revenues were allowed to flow to the NFL instead of state and local officials.

What city officials claimed at the time was that hosting the event would have a spin-off effect of close to $300 million over a several year period of which there has been little or no evidence to date. Well, in all the excitement, the facts get lost on the media and folks who should know better. Professor Matt Will proves once again that he is completely lacking in any credibility when it comes to predicting the economic impact of public spending on sporting events. Check out this fairy tale he shared with WTHR's Mary Milz:
"It's a fantastic move," said University of Indianapolis business professor Matt Will. "The economic impact was more than we'd ever dreamed it would be."
More than 100,000 people came to Indianapolis during the week of Super Bowl XLVI, bringing an economic impact of nearly $300 million. Half of that was spent on hotels and shopping and 20 percent on food and drink.
"We brought $295 million dollars from outside the city into Indianapolis. That is an incredible impact, definitely something we should try to do again," Will said.
The $295 million figure Professor Will tosses out is total bunk. One can't help but ponder if he is getting some consulting money on the side which has totally warped any sense of academic credibility he might claim to possess. Fellow blogger Pat Andrews studied the tax revenues reported by the CIB over the past decade and figured out pretty quickly that all of the investment the City of Indianapolis has made in making the City a favorable place to host sporting events and conventions relied heavily on higher tax rates as opposed to growth fueled from additional spending by visitors to support its ever-growing budget. As she surmised, "[I]nflation accounts for nearly all, if not all, of the growth in several entertainment/tourism market segments in recent years." "The only thing growing beyond inflation is the amount of taxes being levied to feed the CIB," Andrews concluded.


Flogger said...

There is a whole industry dedicated to supporting the the Corporate Welfare-Crony Capitalism of Professional Sports. Not only in this city but in others. The fact that public dollars (read taxes) must support the building and maintenance of these stadiums should be proof enough the Professional Sports Model for sustained economic growth is a bust.

Thus, to justify the huge out lays to build stadiums we have the supposed economic impact "reports." Lets face it the Superbowl is a one week event. One week of increased spending by visitors is NOT sustained growth.

It is true restaurants and hotels would see an uptick in revenue from a Superbowl but a week later it is back to normal.

The idea that hosting a Superbowl puts you on the map as a world class city is a joke. If you stopped 100 people on the street at random how many would remember where the Superbowl was hosted in 2007, 2008 0r 2009.

The Mega-Media simply reads its script or teleprompter re-wording press releases and never investigating or questioning the so called "experts." They act more like cheer leaders than reporters.

Gary R. Welsh said...

I'm not even sure about that one week uptick, Flogger, because you will recall that the convention center had a large blackout period where they essentially could not book any conventions because of the Super Bowl. Since the NFL paid nothing for the use of any of the facilities, but hauled away all of the big bucks, the city gave up visitor spending it might otherwise capture from convention spending for a surge in spending over one week. Many of the hotels complained that even though it booked rooms for several nights, many of the visitors stayed fewer nights than anticipated. With so many of them flying in on their corporate jets, Indianapolis wasn't enough of an allure for them to want to stay for several days. They flew in shortly before the game and left. Most of the visitors were day visitors who drove in from the surrounding region for a day trip to the Super Bowl Village and the NFL Experience at the convention center.

Indy Rob said...

According to Prof Will, $300 million in revenue, half of which went to hotels and shopping. If his numbers are to be believed, $125 million or so went to hotels (I would find it hard to believe that visitors spend much on shopping as Indianapolis really does not offer such unique goods that it would be worthwhile carrying them home).

$125 million in hotel revenue would result in a bump of about $21 million in hotel taxes which is at least 10 times more than the actual measured revenue bump.

Prof Will has done no honest analysis.

Anonymous said...

Who asks a business professor for economic commentary? That's like asking a car salesman to add insight on the merits of road building.

If one seeks a proper economic viewpoint, there's an entire Department of Economics at all respectable colleges and universities. Economists are the ones qualified to answer economic questions thoughtfully and accurately.

Business folks want more revenues, profits, markets, and it's irrelevant to them how they increase revenue or whether they do so honestly or ethically.

Reputable publications don't seek economic comment from Kenny Tarmac.

Unknown said...

Ohh really nice post...
Thanks for sharing!!!
50 shades of grey movie said...

"It's a fantastic move," said University of Indianapolis business professor Matt Will. "The economic impact was more than we'd ever dreamed it would be."

Dreams are a form of delusion.

Then he can pay for it. Business professors know even less than economists, and that takes a lot of effort. Drunken sailors dancing on a sinking ship.