Economists downplay Super Bowl's financial benefits
The National Football League is fond of boasting how the Super Bowl rains hundreds of millions of dollars on the cities that host it - $550 million is the bid committee's gross estimate for New York and New Jersey - but economists who study the issue say the benefit isn't nearly so big.
"I think this is not great news for the New York City economy," said Andrew Zimbalist of Smith College, an expert on sports economics. "The NFL likes to pretend that it is."
Economists say economic impact estimates are usually inflated and unrealistic. Such estimates count money that will be spent as a result of an event, assume a "multiplier effect" of local people spending more because they have more and fail to count money not spent because of an event - what economist Craig Depken of the University of North Carolina at Charlotte called the "substitution effect."
New Yorkers will spend money on the Super Bowl when it's here, but he said they would have spent money in the area anyway. Instead of going to a museum or a Knicks game, they'll spend on the Super Bowl, he said.
And although hotel occupancy in the area is down in February, it's not as if the city is empty. But when hotel rates spike because of the game, he said tourists who might have come and spent money on Broadway and in restaurants will avoid the area instead. In other Super Bowl cities, some tourist attractions were empty around game time.
"It's easy to see the Super Bowl attendee," Depken said. "It's not so easy to see who doesn't come."
Depken, who said hotel occupancy rates for cities hosting a Super Bowl are 1.24 percent to 7.3 percent higher than the same month of the previous year, was similarly dismissive of the multiplier effect. People who make money off the Super Bowl might spend more, but not necessarily around here, he said. It's just as likely to be used to pay off credit-card bills, he said.
But some believe.
"The NFL has got this down to a science," said Jim Kirkos, president and chief executive of the Meadowlands Chamber of Commerce. "They monitor and fully understand the total economic impact - direct, indirect, induced, direct spending by visitors. There also is a multiplier effect on local businesses."
Half of the economic impact could land in New Jersey, Kirkos said. And New Jersey will gain attention, he said. "People will want to know more about the Meadowlands," he said.
The months of January and February usually are New York City's slowest for tourism, according to NYC & Co., the city's marketing office.
An NFL spokeswoman declined to elaborate on how the league arrived at its forecast.
Zimbalist said gross estimates usually overstate the net gain by a factor of 10.
"So if they're saying $500 million, it's more realistic to say it's going to be $50 million, and even that tends to be an optimistic projection," he said. "It's not likely to have a major effect."
With Bloomberg News
