Dade Data No. 9

Hotel taxes aren’t enough to pay Miami-Dade’s Super Bowl tab

 

dhanks@MiamiHerald.com

Can a Super Bowl generate enough hotel taxes to pay Miami-Dade County government’s tab for hosting the big game? Past collection figures suggest the answer is no.

Mayor Carlos Gimenez wants Miami-Dade to establish a system of bonus payments for the Miami Dolphins that would let the team earn $4 million for playing host to the Super Bowl at Sun Life Stadium. A central part of the deal: owner Stephen Ross would arrange a $350 million renovation of Sun Life without county help, and that upgrade is sure to bring a Super Bowl back to Miami Gardens.

In touting the plan, Gimenez has not tied it directly to gains in hotel taxes. Instead, he has pointed to the tourism dollars a vibrant Sun Life brings to the entire Miami-Dade economy, which sees increased staffing, catering expenses, restaurant revenue and traffic at local airports and taxi stands during a major sporting event.

Increased economic activity boosts Miami-Dade collections of sales and gas taxes, along with other fees. There’s also the the intangible benefit to Miami’s tourism brand from the exposure a Super Bowl brings at the height of winter vacation season.

“The Super Bowl is a global event,’’ Ed Marquez, Gimenez’s deputy mayor for finance, wrote in an email Monday. “ In essence, it is a week long advertisement for our community.”

But the money behind the Gimenez plan will come from hotel taxes, and that’s a sought-after source of public dollars. What kind of windfall would a Super Bowl bring, and would the hotel-tax payout be a wash given the flood of high-spending ticket holders that come to town?

Dade Data looked at a collection figures from past Super Bowl months to try and calculate an answer.

While the NFL gets accused of over-hyping a Super Bowl’s economic punch, tax data show the big game definitely has an impact even during the height of tourism season in South Florida.

Miami Gardens has hosted two Super Bowls in the last 10 years — one at the end of a tourism boom in February 2007, and one at the start of a sharp tourism rebound in February 2010.

Both appeared to bring a spike in hotel-tax collections. But neither looked large enough to cover an additional $4 million expense.

The chart above tracks changes from the prior year in revenue collected from Miami-Dade’s six-percent hotel tax. [Can’t see a chart on your mobile device? Click here.] Because each month brings significant changes in the tourism market, analysts consider year-over-year comparisons the best gauge of changes in the hotel market, rather than month-to-month.

So to see what impact a Super Bowl has on hotel-tax collections, we’re comparing the game’s month to revenue from the prior year.

In 2007, when hotels were still bustling despite a looming recession, Super Bowl month saw a 17 percent spike in hotel-tax collections from the prior year. For sure, that was a strong showing for the famously soggy Feb. 4 match-up between the Indianapolis Colts and the Chicago Bears, but it only produced an additional $1.3 million in hotel-tax revenue for Miami-Dade. Thanks to inflation, that money would be worth about $1.5 million today.

In 2010, as the region was lagging a national recovery, the tourism industry began surging ahead. The Feb. 7 Super Bowl clash between the Colts and the New Orleans Saints seemed to give the comeback momentum.

Spending at hotels was far better than in the previous February, when the nation was still officially in recession. Hotel-tax revenue soared a stunning 33 percent in Miami-Dade. But the actual revenue gain for Miami-Dade was just $2.2 million ($2.4 million in today’s dollars).

That’s for the entire month, while most hotels require four-night stays during Super Bowl weekend. So unless tourism was declining throughout the month of February in 2007 and 2010 — unlikely, given the gains seen throughout both years — Super Bowl accounts for just a portion of the total figure.

The extra $2.2 million in hotel-taxes from 2010 amounted to less than half of the $4.7 million in cash and free services like police and fire that Miami-Dade’s finance department estimated the county spent as host of the 2010 game. Gimenez aides say there is no plan to cut back on the local government’s Super Bowl expenses under the Dolphins’ event-subsidy program, so the tab could be double for future games.

[Update: After this article posted, a source favorable to the Dolphins wrote to note the Gimenez plan calls for the NFL to keep its official team hotels out of Broward County, a change from the regional approach the league took for past Super Bowls. The source argued that should mean a bigger boost in Miami-Dade hotel taxes for future Super Bowls. But the official team and headquarters hotels make up a small portion of the nearly 20,000 hotel rooms the NFL reserves in advance for a Super Bowl, and those come from both Broward and Miami-Dade hotels.]

None of this data reveals whether the Gimenez/Dolphins plan is a good idea or a bad one, or whether major events at Sun Life provide substantial boosts to the local economy.

But past collection figures show no evidence that Miami-Dade government can cover its Super Bowl costs through hotel taxes.

This post is part of Dade Data, an online series from the Miami Herald’s County Hall team. Dade Data explores the numbers driving Miami-Dade County’s government and the challenges it faces.

Read more Miami-Dade stories from the Miami Herald

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