Super Exaggeration

I just added to my stack of Super Bowl Economics clippings a recent Wall Street Journal article by Erica E. Phillips entitled “Arizona officials look to score economic points with Super Bowl XLIX.”

The focus of the article is more on using the Super Bowl as a vehicle to move past the embarrassing political shenanigans of Arizona’s elected officials (which are sure to continue); a soft goal that–even if effective–is very difficult to measure as effective in an objective cost-benefit analysis. However, a couple of paragraphs in the middle of Phillips’ article go right to the point of my many writings on the voodoo economics of sports subsidies:

An economic-impact study after the 2012 Super Bowl in Indianapolis found that the event contributed a net $278 million to the metro area’s GDP and $18.2 million in additional local tax revenue. But Alberta Charney, an economist with the University of Arizona’s Economic and Business Research Center, said it is hard to tell how much Super Bowl-related spending will end up in local coffers and support local residents and businesses. For big sporting events like these, Ms. Charney said, “professional teams seem to extract a lot out of these communities, and they almost always keep everything.” [emphasis added]

It is POSSIBLE that in a community which doesn’t have a broad tourism base, and/or where a big event like the Super Bowl is held during the normal slow season for whatever tourism there may be, that such an event COULD have some SMALL positive NET economic impact. Conversely,

In 2013, Arizona’s tourism industry supported more than 163,000 jobs and generated $2.7 billion in local, state and federal taxes. Travel spending in Arizona, a traditional winter getaway, has grown steadily every year since 2009, nearing $20 billion in 2013, according to the Arizona Office of Tourism.

The effect of super-events like the Super Bowl have statistically insignificant impact on year-to-year variations in those broader tourism numbers. E.g., Scottsdale hotels don’t have a problem with excessive vacancy rates at the end of January when the rest of the country is buried in snow drifts.

However, these super-events have VERY significant impact on taxpayer burden, for example, through public safety costs and outright cash subsidies like the $1.1 million in Scottsdale taxpayer money handed out by Mayor Jim Lane and the city council majority. With a billion dollars in municipal debt (highest per-capita in the Phoenix metro area), seemingly perennial multi-million dollar budget deficits, and a billion dollars in deferred infrastructure maintenance, you’d think Scottsdale would have a few things higher on its list of priorities than Super Bowl parties ($400,000 for that alone).

Taxpayer-funded subsidies to private, professional sports events and venues are not a win-win proposition, and they are not part of an economically sustainable model of government.

 

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