Armchair Super Bowl Economics

Dawn Gilbertson’s article on AZCentral Thursday, “Super Bowl weekend a bonanza for Phoenix area hotels and resorts,” is unfortunately a typical puff piece and exercise in confirmation bias that will be used to justify the millions of dollars in taxpayer-funded Super Bowl subsidies paid out by Valley cities…not to mention huge bumps in spending for public safety efforts.

[Phoenix area] Hotel occupancy on Friday and Saturday nights topped 90 percent, with Saturday coming in at a staggering 95.7 percent, according to figures from hospitality research firm STR.

I can’t speak for the rest of the “Phoenix area,” but I think Scottsdale hotels would say a Friday/Saturday night occupancy rate of 90% would be a big problem. Scottsdale simply doesn’t need taxpayer subsidies to boost occupancy rates in January and February.

As if to prove my point, Dawn says,

The 95.7 percent occupancy on Saturday night was thought to be a record but statistics from STR show that occupancy rates topped 96 percent last March. March is the peak month of metro Phoenix’s peak tourism season thanks to spring training, spring break and idyllic weather.

There were a couple of interesting comments appended to Dawn’s article.

With regard to the tripling of room rates Dawn cited, Larry Celano said,

What they won’t tell you is that the increase in rates goes to the NFL. Because to get the big game you have to keep the rates the same from the year before. Then the NFL resells them at that higher rate. The NFL keeps the difference. So If a room last year was $200 per night, that is the rate the NFL pays. When the NFL resells, they sell at a higher rate (340) they get to keep the $140. The NFL will not let you make money off them.

I was not aware of this arrangement. If true, the math is even more complex when you consider that, for example, the City of Scottsdale kicked in about $600,000 to the Super Bowl host committee for “block” rooms.

Rick Mueller observed:

So national chains made some money … so what.

It was also the Phoenix Open weekend.

We will see the impact when they announce the first quarter taxes. Who wants to bet that It will not exceed the amount paid out by the cities for the event.

Isn’t it funny …. Super Bowl could not even beat spring break and that costs the cities nothing!!!! ( Chortle, chortle.)

Two additional points related to Rick’s comment:

1. National chains take a lot of money OUT of the local economy in the form of corporate profits. So does the NFL.
2. The City of Scottsdale shelled out over $20 million in cash and forgiven PGA lease obligations for the TPC Scottsdale course…but to Rick’s point:

In the video appended to the article, Dawn says,

The Arizona Sports and Tourism Authority [“the current owner and operator of the University of Phoenix Stadium”] expects official revenue figures in mid-March, and that’s when we’ll know how big of a win this was for the Valley.

I think the AZSTA could easily tally the subsidies right now. We won’t know how big of a win–or loss–the Super Bowl was for the Valley unless we look at net rather than gross. It’s basic business, folks.