Thursday, March 15, 2012

Build a new stadium and host a Super Bowl? But is that worth it?

Posted By on Thu, Mar 15, 2012 at 2:02 PM

The Georgia Dome was opened in 1992

Mayor Kasim Reed told All-Around Good Guy™ Jim Galloway today that by building a new Atlanta Falcons stadium the city would likely be awarded the opportunity to host a Super Bowl.

Just think! Athletes! Tourists! Celebrities! Sports anchors saying the word "Atlanta" on worldwide TV! Traffic! Stolen cars! Rowdiness! Hundreds of millions of dollars in hotel rooms, food, parking-lot fees, unlicensed sports merchandise, and skunk beer from area convenience stores. All this can be ours so long as we kick in up to $400 million in public cash to build a new stadium.

But do Super Bowls really generate as much of an economic impact as one would think? It's not so cut and dry, as Forbes' Patrick Rishe reported in late January:

On the one hand, the NFL is biased to report large estimates in part because it helps drive up future bid fees by hopeful host cities. The logic being that if cities are told that a game will boost the visitor spending within their region by $500 million, then this increases their desire to host the game…thereby creating greater competition among cities to want to host the game…which ultimately drives up bid fees and concessions that the NFL can command.

Furthermore, local politicians and civic leaders who wish to place a feather in their collective caps may be inclined to hire a consulting firm that will take a more liberal and aggressive approach to estimating economic impact.

On the other hand, you have several academic studies and commentary strongly suggesting that the economic impact of Super Bowls is grossly overstated because — in their view — most contracted studies don’t account for things such as visitor point of origin, monetary leakages and displacement…all of which can act to significantly reduce the net economic impact of the game. (Visit this story for a brief education on these terms and how they influence economic impact calculations.)

The answer, Rishe writes, is somewhere in the middle. Hell, maybe the extra publicity for the city might provide some benefit that's difficult to measure (is anyone really talking about — or dying to visit — Indianapolis, the host of this year's Super Bowl?).

So it's a bit of a gamble. Is that something the city wants to do with public cash?

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