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Fantasy football: PolitiFact looks at Super Bowl economic impact

 

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The statement: "Super Bowl L by everybody’s estimation is a $500 million economic impact to the state of Florida."

Ron Book on Wednesday, March 6th, 2013 in a state legislative committee hearing.

The ruling: First, Book uses numbers from a study commissioned by the Host Committee. The numbers take a broad measure of all spending that went on during a Super Bowl week in 2007, without accounting for usual economic activity. In fact, it’s among the highest estimates we reviewed for economic activity generated by a Super Bowl. But the main problem with Book’s claim is that "everybody" agrees on that number. Economics professors argue that studies by boosters routinely inflate costs and fail to take into account net costs or fully account for the fact that some spending locally is sent to corporate chains.

We rate this claim: False.


asherman@MiamiHerald.com

The Miami Dolphins are seeking tax break subsidies to help pay for a $400 million stadium renovation.

Project supporters hope that such a massive investment will lead to more Super Bowls in the future. South Florida is competing with San Francisco to host the 50th anniversary Super Bowl in 2016. The NFL will announce the winner in May.

Stadium supporters told a state Senate committee March 6 that the public will reap benefits from the big bucks that come from a Super Bowl.

“A single Super Bowl generates over $300 million in economic benefits to South Florida and its businesses,” said Sen. Oscar Braynon, a Democrat who represents Miami Gardens, where the Sun Life stadium is located.

Longtime Dolphins lobbyist Ron Book upped the ante:

“Super Bowl L by everybody’s estimation is a $500 million economic impact to the state of Florida,” Book said.

That’s a pretty strong claim. Is there widespread agreement on that number?

The Dolphins are seeking about $200 million in public financing for about half the cost of a major stadium renovation. It would include state sales tax rebates and an increase in the Miami mainland hotel bed tax from 6 to 7 percent. County voters would have to approve the hotel bed tax increase.

A recent poll showed 73 percent of county voters are against the financing plan.

Book points to host committee study

Book pointed us to a study — commissioned by the Super Bowl Host Committee — about the 2007 Super Bowl in South Florida done by Sports Management Research Institute, whose clients include the NFL and other major sports entities. Total economic impact to South Florida: $463 million.

“I cannot share all of the information that we have as to the NFL’s plans for Super Bowl L,” Book wrote in an email to PolitiFact Florida. “You must just accept that everybody in the country that wanted the opportunity to bid for Super Bowl L believes it’s a $500 million-plus economic impact to host that game.”

The 2007 Super Bowl drew about 75,000 visitors to watch the Indianapolis Colts defeat the Chicago Bears 29-17. The study Book cited examined spending on hotels, restaurants, transportation, entertainment, retail and other services during the game day and associated events.

Researchers collected data from about 3,000 visitors at airports and a half-dozen hotels — including some lavish spots such as The Breakers in Palm Beach County. Researchers also examined other economic impact studies, hotel occupancy, surveyed businesses and other information.

The study concluded that direct economic impact from spending was about $298 million. Then it added in the spending to prepare for the Super Bowl and the induced spending from new money flowing through the area, and the total came to $463 million. The biggest winner was Miami-Dade County, followed by Broward, and then neighboring Palm Beach and Monroe counties.

The study did not subtract out the normal tourist spending that would have happened during the period without a Super Bowl.

While South Florida is already a tourist mecca in the winter even without a Super Bowl, these visitors were richer — with an average household income of about $220,000 a year — and spent more, the study concluded. Attendees spent more than four times the typical Broward County visitor and nearly three times that of a Miami-Dade visitor. They stayed an average of five nights and spent about $668 per day.

The same firm did a study of the 2010 Super Bowl in South Florida and concluded it was $333 million amid the economic downturn.

Experts say studies inflate benefits of Super Bowl

There is no dispute that a Super Bowl in South Florida draws some high-rollers who rent limos, wine and dine at our best restaurants and clubs, hit the shops at tony malls and book luxurious hotel suites in South Beach, Coral Gables, Fort Lauderdale and other cities. Businesses that cater to these tourists can rake in some hefty profits.

“The Super Bowl is a magic event,” said Broward tourism chief Nicki Grossman, who says direct spending for the 2007 Super Bowl was about $65 million in Broward County. Super Bowl visitors “buy things normally any other traveler wouldn’t. Some spend more to say they spend more.”

Studies by the National Football League or the host committee often peg the impact anywhere between $300 million and $600 million, depending on the analysis. We didn’t find a study predicting the economic impact of the 2016 Super Bowl in South Florida — the 2007 study doesn’t actually predict the impact for 2016. (Economists often look at the impact after the event.) But many independent economists say the benefit is much lower than boosters’ totals.

These economists share a joke: take the boosters’ estimates and move the decimal place one point to the left. Economists say boosters dangle the enormous revenue figures as politicians are weighing whether to support public funding.

Holy Cross Economics Professor Victor Matheson, together with Professor Robert Baade, wrote in a 2004 paper that for Super Bowls held between 1970 and 2001, the host city experienced an average increase in personal income of about $92 million and that the game could not have contributed more than $300 million. In today’s numbers, the $92 million means $120 million and the $300 million would equal just under $400 million, Matheson told PolitiFact Florida.

"Not only is our best guess a fraction of the boosters’ estimates, but we are also quite certain that any estimate over $300 million is flat-out wrong," he said.

Studies by boosters often take the number of attendees and multiply that by expenditures to arrive at a gross direct spending total. Then they use a multiplier to calculate an indirect effect of those initial expenditures circulating around the economy. Matheson told us, “Economic consultants seem to be pretty good at adding and multiplying, but not so good at subtracting.”

Economists say boosters ignore some factors that affect the bottom line, which they call the substitution effect, the crowding out effect, and leakages.

Substitution is when someone spends money on the Super Bowl that they would have spent elsewhere in the economy. Since an event such as the Super Bowl draws so many out-of-town visitors, the substitution effect is far less than from a regular game.

Crowding refers to other visitors deciding to stay away from the area to avoid the congestion, resulting in the loss of spending from those folks. That means if hotels are largely full anyway, economists focus on the net effect from the increased bookings (and inflated costs) — not the total revenues of hotels. (During the 2007 Super Bowl, attendance at Monkey Jungle, a south Miami-Dade tourist attraction, plummeted.)

And leakages occur when money spent on chain hotels and restaurants leak back to corporate headquarters — not the local economy.

“The local employees changing sheets or running room service, they don’t get 10 times their wage that week,” said Professor Craig Depken, an economist at the University of North Carolina.

Some economic models used to calculate economic benefits do account for leakage. But Matheson wrote that those models calculate leakage based “on the normal inter-industry relationships that exist in local economies, and during a mega-event these relationships may be anything but normal.”

PricewaterhouseCoopers has estimated the economic impact of multiple Super Bowls. According to its analysis, direct visitor spending has ranged from a low of close to $120 million in Detroit in 2006, to high of about $200 million in Dallas/Fort Worth in 2011. Dolphins spokesman Eric Jotkoff said that Book took the $463 million in the 2007 study and cited a $500 million in 2016 as a result of inflation and increased spending because “Super Bowl L promises to be the biggest Super Bowl in the game’s history.”

Our ruling

Lobbyist Ron Book said “Super Bowl L by everybody’s estimation is a $500 million economic impact to the state of Florida.”

First, Book uses numbers from a study commissioned by the Host Committee. The numbers take a broad measure of all spending that went on during a Super Bowl week in 2007, without accounting for usual economic activity.

But the main problem with Book’s claim is that “everybody” agrees on that number.

Economics professors argue that studies by boosters routinely inflate costs and fail to take into account net costs or fully account for the fact that some spending locally is sent to corporate chains.

We rate this claim False.

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