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NRO’s domestic-policy blog, by Reihan Salam.

Does the Super Bowl Stimulate the Host City’s Economy? Maybe, but Take the Under



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As I mentioned in NRO’s Super Bowl predictions, one of the best bets on Super Bowl Sunday is that the host city’s tourism authorities and the NFL have overstated the economic benefits of hosting the event. The number being thrown around for this year’s event is $600 million for the New York and New Jersey economies — which, it should be noted, is negligible, even if true, for a metropolitan area with a $1.41 trillion economy (that’s .042 percent of annual economic output).

This estimate has been touted by league officials, local politicians, and local tourist boards — but, Catherine Rampell of the New York Times recently asked, where does it even come from? One Super Bowl fan, New York City congressman Carolyn Maloney, has talked it up, but her office had no idea where it came from. Rampell never got an exact answer, except that it was produced by the N.Y./N.J. Super Bowl Host Committee when it was preparing the bid for the event several years ago. The committee won’t release the study — and they have every reason, of course, to exaggerate the numbers. (Most of the host committee’s $70 million budget comes from corporate sponsorship deals, by the way, but at least $5 million of it was New York State money.) In fact, almost all the actors involved, besides the taxpayers themselves, have a reason to exaggerate the benefits: Local politicians get the prestige of an event (and get to host and attend parties surrounding it), policemen get overtime, tourism and development authorities get to justify their existence . . .

In fact, estimates like the $600 million number have been repeatedly shown by academics to overstate the benefits: One study found that Super Bowls, on average, boost a city’s income by one-fourth of what the NFL claims, and it’s almost statistically impossible that the games have contributed as much as the NFL says. The league and other event advocates tend to use models, such as the Bureau of Economic Analysis’s RIMS II model, that are notoriously overgenerous when applied to these purposes. Those models inadequately account for the fact that some tourists who would otherwise go to a city (a huge number for New York) tend to avoid it when there’s a large event going on, count spending that they count for the region “leaks” out of it because it goes to firms elsewhere, and more.

And none of them take into account the costs to the taxpayer of hosting such an event. New York and New Jersey probably won’t publicize just how much it’s cost them in extra policing and transit costs to put on the Super Bowl, but it runs easily into the millions. These models are the same ones used to make the case for taxpayer-funded stadia and convention centers (and tax-incentivized casinos, sometimes, too). At least in those cases, taxpayers get something besides a lot of litter and traffic to show for the deal, and a permanent stadium for the local team could be considered something of a public good in the way an event usually is not — but the investments required are much larger, and the case is usually made for them that they’re economic investments. In the vast majority of cases, they’re not.

The problems with the economic models used to justify bidding for an event like the Super Bowl are exacerbated for a place like New York City. The city, by some estimates, attracts 50 million visitors a year — making the (to be generous) 200,000 visitors the Super Bowl attracts a rounding error. New York City is an incredibly dense and successful city, but it’s also not a city with a lot of slack capacity in its infrastructure: Manhattan actually could accommodate a lot more people, but as it’s built right now, its transit systems have been overloaded by a one-weekend boost in visitors, which means economic losses for a lot of businesses. (If you’ll excuse the Friedmanism, two different cab drivers remarked to me yesterday that the event has been terrible for cabs: There’s been much more traffic, and they don’t need the extra business this weekend anyway.) 

Attracting tourists to New York used to be a problem, though, you might remember. How’d they fix it? By making the city into a place you’d want to visit and live in, by providing competent basic services, especially public safety, and allowing rather than squeezing the development that ensued. That’s how you build an economy that performs more like the New England Patriots than the New York Jets: Less talk, but a much better record.



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