How Much Money Does the Super Bowl Host City Really Make?

How much money does the Super Bowl really bring a host city?

Urbanful – Football teams and the NFL often say that a Super Bowl host city brings in close to a half-billion dollars in revenue. All those tourists paying for hotel rooms, rental cars, food, and merch adds up, after all. This year, the Super Bowl host committee is telling Phoenix to expect 100,000 out-of-town visitors, 6,000 members of the media, and at least $2 million in grants to be given back to the community.

But, some economists say, that figure is bogus. Robert Baade, a sports economist with Lake Forest College in Illinois, told the Phoenix Business Journal that host cities usually net about $30 to $90 million. That’s not chump change but it’s nowhere near the big numbers the NFL claims. (The number cited by the NFL is supposedly from a 2010 study the Sports Management Research Institute conducted that it won’t release, so it’s impossible to check its methodology. “If we release the report, everybody is debating one number vs. another number,” a host committee spokesperson said in 2010.)

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Often, Baade says, there’s a “substitution effect.” In other words, those sports fans may be spending lots of money, but not necessarily any more than the tourists who would have come to Phoenix but have chosen to go elsewhere to avoid the crowds. Broadway attendance fell 20 percent in 2004 when the Republican National Convention was held in New York. (Whether it’s because Broadway fans hate crowds or hate Republicans is up for debate). Hotels are often owned by large corporations, so the money spent there doesn’t stay in the host city (except for the taxes). Tickets and beer and merchandise mostly benefits the teams (except for a small amount for the local vendor). But truly local businesses may do a bit better.

Imagine, sports economist Victor Matheson posits to SportsOnEarth, that an airplane lands in Phoenix, or any Super Bowl city. Everyone gets out and gives each other a million bucks, then gets back on the plane and leaves. “That’s $200 million in economic activity, but it’s not any benefit to the local economy.”

Superbowl-stadium

Limo companies and cab companies tend to be locally owned, so there’s that. And, Matheson says, “strip clubs tend to do well.”

Last year’s Super Bowl, played in New Jersey, was the first played outdoors in cold weather. It also may have been the smartest Super Bowl as far as revenue for cities. For one thing, the new stadium in which the game was held was privately funded, not paid for by taxpayers. For another, there’s much less of a substitution effect when you’re talking about New Jersey in winter.

“This isn’t the same as sending a Super Bowl to New Orleans right at the beginning of Mardi Gras, or sending a Super Bowl to Miami Beach during February and January when their hotels are usually full of tourists anyway,” Matheson told NJ.com.

Last year’s big game was also between two non-local teams, which in theory brings double the out-of-towners than a game where one of the contenders is local.

As an aside, Arizona has changed how it hosts Super Bowl-related events since it last hosted the championship in 2008. In 2008, the “NFL Experience,” a temporary theme park for football fans, was located outside of the University of Phoenix stadium in Glendale, Arizona. This year, Super Bowl XLIX takes place in the same suburban stadium, but fan activities will be centralized downtown, where city officials hope fans will walk or take the new light rail. That’s new, and represents one of America’s sprawliest cities making an attempt at bringing back downtown.

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“It’s really going to be a return on our investment in terms of attracting tax revenue from hotels, retail, restaurants, galleries, concerts, theaters and everything that involves just spending money here in Phoenix,” said councilman Mike Nowakowski.

But the challenge still remains: How do you keep that economic boost in the local economy, whether local in this case means downtown or the suburbs? Only time will tell how the 2015 Super Bowl plays out.

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