How much of an economic impact will the College Football Playoff’s national championship game have on the Tampa Bay area?
Depending on whom you talk to, place it somewhere near $300 million on the high end down to … well, practically nothing.
David J. Berri, a sports economist and economics professor at Southern Utah University, scoffs at the promise of a huge economic generator when the title game comes to Raymond James Stadium on Jan. 9.
“You have this big giant party for people and then it’s over,” he said. “It’s great that you can do it, but the idea that it creates economic growth is ridiculous. … It typically does not have much of an impact at all.”
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Berri is not alone in his assessment.
It’s one thing for a community to want bragging rights as a perennial contender for luring major sporting events, from the Super Bowl to the Final Four to the College Football Playoff. But numerous sports economists for years have derided what they see as using overblown economic impact numbers to justify the multi-million expense of wooing and paying for a major sporting event to pick your area.
“In terms of data, there’s simply no evidence that these things have an economic impact,” University of South Florida economist Philip Porter said.
Tampa Bay Sports Commission executive director Rob Higgins projects a $275 million to $300 million economic impact based on 60,000 hotel visitor room nights under a similar methodology of spending used by the previous two championship games in Glendale, Arizona, and Arlington, Texas.
Last season’s title game, held at the University of Phoenix Stadium, had a “direct, indirect and induced” total economic impact of $273.6 million, according to an Arizona State University report released last April. Direct visitor and media spending alone was estimated at $120 million.
If hosting this event cost us nothing, that would be one thing. But hosting this event ain’t cheap.
University of South Florida economist Philip Porter
Dr. Robert Baade, an economics professor at Lake Forest College in Illinois, said the rule of thumb among sports economists is to take such “exaggerated” economic impact projections and move the decimal point one place to the left. So an event of this scope could have an impact of $20 million to $30 million, arguably not too much more than the cost and effort to pull it off.
The problems with rosy impact estimates, sports economists says, are numerous:
▪ They don’t include the “crowding out” effect of both tourists and residents who might have spent money at bars and restaurants or other entertainment around the venue that day, but stayed home because of the influx of game-day visitors.
▪ From game day tickets to meals to hotel stays to merchandise, much of the money spent here doesn’t stay here. It goes to national hotel chains and restaurants in what’s commonly referred to as leakage.
“You swipe your credit card in Tampa, but it’s deposited in New York City,” Porter said.
No one has ever heard of Tampa before? And it’s not like you’re going to buy a condo there because of (the city hosting) the Super Bowl. Find me one person that says that’s their reason.
David J. Berri, a sports economist and economics professor at Southern Utah University
Adds Victor Matheson, an economist at the College of Holy Cross in Worcester, Massachusetts: “The single biggest thing a person will spend money on is a hotel or airline ticket in addition to the game itself. None of those areas of spending typically stick in the Tampa Bay area.”
▪ This is peak tourism season anyway. A January game in a cold-weather setting could have a much larger impact increasing net tourism than one in a warm-weather locale. Hotels in the Tampa Bay area would be fairly full with or without the game and the higher room charges during the weekend of the event may dissuade others from coming here.
▪ Job creation statistics may be deceptive. When Tampa was awarded this championship game three years ago, promoters said it would create 1,700 to 1,800 full-time jobs.
Higgins said he focused on tourism and visitor spending and could not address the origin of the job creation figure. But sports economist Matheson said job estimates typically refer not to direct jobs but those expected to be created throughout the economy – in area retail, restaurants, promotions and other areas – because of increased spending.
Like the overall economic impact, Matheson says, that number is inflated. He suggests moving the decimal point to the left to wind up with the equivalent of 170 to 180 jobs lasting a year.
▪ Promoters of major sporting events often tout them as branding opportunities.
Berri said that argument may work in some cases, but not for well-established metro areas. Among other non-sporting events held in Tampa this decade were the 2012 Republican National Convention and the 2014 International Indian Film Academy’s Weekend & Awards, known more simply as the “Bollywood Oscars.”
Even a Super Bowl … is fairly small in the grand scheme of a metropolitan economy.
Victor Matheson, an economist at the College of Holy Cross in Worcester, Massachusetts
As if “no one has ever heard of Tampa before?” Berri asked rhetorically. “And it’s not like you’re going to buy a condo there because of (the city hosting) the Super Bowl. Find me one person that says that’s their reason.”
▪ Time, effort and money spent on the multi-year effort to win the game could have been devoted to other causes.
Tampa’s winning bid submitted in 2013 to host the game was 7,200 pages long and took up 13 binders. Hillsborough County Commissioner Ken Hagan, who worked closely on the package, said at the time that the attention to detail was unprecedented.
Economists use the term “opportunity cost” to gauge how leaders could have devoted resources to other civic causes and issues. Measuring opportunity lost, though, is admittedly an inexact science.
▪ This is a drop in the bucket compared to the size of Tampa Bay’s economy.
The area has a GDP of about $118 billion; so even if the championship game had a one-time impact of $200 million, “it’s too small to have an effect on your economy,” Berri said.
“Even a Super Bowl … is fairly small in the grand scheme of a metropolitan economy,” Matheson added.
That conclusion comes in part out of a study Matheson and Baade conducted that looked at taxable sales in Tampa Bay between 1980 and 2005, a stretch that included four Super Bowls hosted in Tampa. They found an average increase of 2.1 percent in those Super Bowl months over what would have been otherwise expected.
“That’s not statistically significant,” Matheson said. “We couldn’t tell the difference between (those four Januaries) and a normal month because we have that much variation month to month.”
And a Super Bowl, he pointed out, has a much bigger impact than a college championship game as it draws in wealthier people.
On the opposite side of the ledger is how much it costs to lure and host the championship game.
Tampa organizers pegged total costs for the Jan. 9 game at Raymond James Stadium upward of $10 million but would not be more specific. Higgins would only say that $1 million fronted by Hillsborough County is less than one-tenth of the total expected bill. The state is also chipping in $1 million.
Stadium expenses alone are expected to be about $2 million, Higgins said, stressing that using taxpayer dollars to solely pay for stadium and game expenses and keeping those dollars local was very important. Other expenses include transportation to ancillary events, marketing and promotion.
It’s a fun event for the community … and some businesses will come out net ahead. If the taxpayer is not on the hook for too much … if you can have an event like this and come out even, it’s probably a good thing for the city.
Victor Matheson, an economist at the College of Holy Cross in Worcester, Massachusetts
The Tampa Bay Sports Commission also agreed to about $26 million in upgrades to Raymond James Stadium as part of its bid. But those upgrades, additions like new scoreboards, will help keep the stadium viable as a home for the Buccaneers as well as hosting other events.
There are other upsides as well. For the inaugural championship game in January 2015, the Dallas area, for instance, devoted about $10.7 million in tax dollars to defray its costs, far higher than the taxpayer contribution for Tampa’s game.
“If hosting this event cost us nothing, that would be one thing,” Porter said. “But hosting this event ain’t cheap.”
Even some of the harshest critics of economic impact stats, however, say bringing the national championship here can be worth the investment in other ways.
“It’s a fun event for the community … and some businesses will come out net ahead,” Matheson said. “If the taxpayer is not on the hook for too much … if you can have an event like this and come out even, it’s probably a good thing for the city.”