Is the Super Bowl a cash bonanza? Many economists say no

Amid claims from politicians that the game will boost the NY and NJ economies, economists warn of dubious math

Ads in New York’s Times Square, where Broadway has been renamed Super Bowl Boulevard for the game.
Andrew Burton/Getty Images

Light posts all over New York City already heralded the forthcoming Super Bowl earlier this month when U.S. Rep. Carolyn Maloney held a press conference with tourism and NFL officials at a sports bar in midtown Manhattan to announce that part of Broadway, perhaps the most famous street in the United States, would be renamed Super Bowl Boulevard for the four days preceding the game.

More officially, the new temporary name is Super Bowl Boulevard Engineered by GMC.

The 10-block stretch is now decked out with a concert stage, a Vince Lombardi Trophy display case and an eight-lane toboggan run (also sponsored by GMC). It’s all in an effort to boost the tourism ripple effect that many expect the Super Bowl to create.

“It’s going to be a huge economic boon,” Maloney said. “Thanks to the Super Bowl, we’re seeing more hotel rooms booked and restaurant tables reserved and even more excitement than usual for this time of year.”

To the people involved in bringing Super Bowl XLVIII to New Jersey this year, the economic impact couldn’t be more clear: They’ve estimated that 80,000 people will arrive for the game and 10,000 temporary jobs will be created. The NFL host committee has said the Super Bowl will generate $500 million to $600 million for the region.

But to others who aren’t directly responsible for convincing the region to host the game, the economic picture looks less rosy. Some local business owners say the flood of people and dollars promised by local politicians has failed to materialize, and many economists seem to agree. They say that, at best, the Super Bowl will provide a small or moderate economic boost to the economy and, at worst, it might even be a drain.

Managers at Best Western Robert Treat Hotel in Newark, N.J., are downright disappointed.

“We were under the expectation that we’d be packed,” said Winston Reyes, the front-desk manager. “But reservations are slow.”

He blamed the media frenzy for the high vacancy rate. With newspapers across the country reporting that tens of thousands of people with dollars to burn were making their way to the metropolitan area, Reyes’ hotel changed prices accordingly. But those people didn’t materialize, and the price increases dissuaded non–Super Bowl visitors, he said.

Plus, Reyes said, New Jersey didn’t do a very good job of advertising.

“We didn’t see a great promotion from the state,” he said. “As of right now, the Super Bowl is in New Jersey, and everybody thinks it’s in New York.”

According to economists, this kind of story is pretty typical for businesses in Super Bowl cities: Politicians and sports franchises promise big money, it rarely materializes, and the process repeats itself the following year.

But even as more evidence comes out that the Super Bowl is a lackluster economic booster, economists say a sporting event can look like the best — or at least the most politically palatable — option for an area looking for a quick cash infusion.

“Cities have a bit of a tough time selling the public on public financing, but the NFL makes a convincing argument,” said Robert Baade, an economics professor at Lake Forest College in Illinois who has studied the Super Bowl’s economic impact. “They (NFL officials) want people to think of it not as an an expenditure but as an investment.”

But, according to Baade and several other economists, the NFL host committee’s math is fuzzy.

A Customs and Border Protection helicopter over MetLife Stadium on security detail for the Super Bowl, Jan. 28.
John Moore/Getty Images

The NY/NJ Super Bowl Host Committee didn’t return calls for comment for this story. Its members did talk with The Associated Press but refused to disclose how they arrived at the $500 million to $600 million figure.

On the basis of publicly available reports issued after previous Super Bowls, Baade and others said the committee is most likely basing estimates on surveys of a small number of Super Bowl attendees that asked how much they spent on hotels and restaurants. That, economists say, is a very flawed way to figure out how large an impact the Super Bowl will have on a city’s economy.

For one, it doesn’t take into account the costs of the Super Bowl. While the construction of MetLife stadium was privately financed, New Jersey spent about $250 million for transportation and infrastructure upgrades. And that doesn’t include the untold millions that New York and New Jersey will spend on security, extra buses and trains to the event and cleanup.   

And perhaps most important, the host committee’s numbers don’t factor in any loss of economic activity because of the Super Bowl.

“There’s an assumption that football fans aren’t displacing other tourists,” said Andrew Zimbalist, an economist at Smith College in Massachusetts.

But, because of higher hotel prices and more traffic, economists say they probably are.

“Suppose 300,000 people come (for the Super Bowl) and buy some beer and hot dogs and stay in a hotel in Manhattan. What would the person who they are displacing do instead? When you go to New York for Broadway and food and museums, much more of the money goes to New York,” Zimbalist said.

And, he suggested, people who visit the New York area for the Super Bowl are there for one thing only, the game, so they may be less likely to promote New York through word of mouth after they get back home.

There’s no way to know for sure just how much or how little each Super Bowl contributes to the local economy. Some economists say that with all the costs laid out by the host cities and states, it may actually drain money. But most seem to agree that $50 million to $100 million is injected into the economy.

The NFL disputes those low numbers.

Brian McCarthy, the league’s vice president for corporate communications, said the NFL hadn’t done any studies of its own but agreed with the host committee’s assertion that each Super Bowl is indeed a boon.

“You can see (the economic activity) when you walk down the street,” he said. “These economists have never been to a Super Bowl, but they’ve made a cottage industry out of criticizing.”

Even if the host committee is right, Zimbalist and others point out that the basic economic principle of opportunity cost is rarely considered when localities try to lure the Super Bowl to their backyard.

Opportunity cost basically covers what the governments could have spent money on if they hadn’t spent hundreds of millions on infrastructure for a new stadium and for transportation and security increases for the event and what effect that alternate spending would have had on the local economy.

Joshua Pitts, a professor of sports management and economics at Kennesaw State University in Georgia said using that money to attract a more permanent investment could lead to more sustainable economic results.  

But, he said, regardless of logic, spending hundreds of millions on football is much easier of a sell than spending the money on virtually anything else.

“If you take that money and use it to attract, say, a cardboard-box plant to the area, income and employment in the area would grow significantly more,” he said — but most people care less about boxes than they do about football. “There’s no 24-hour news network or section of the newspaper dedicated to the cardboard box industry.”

Gail Chalef ‎[]‎
Gail Chalef ‎[]‎
Gail Chalef ‎[]‎

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