How to make sense of the NFL’s fanciful Super Bowl economic impact numbers

MinnPost photo by Pat Borzi
Eighth Street in downtown Minneapolis is blocked off for a concert stage.

You may have heard there’s a Big Game coming to Minneapolis. 

You may have heard a lot of things.

Some of what you’ve heard about the Super Bowl, to be played Feb. 4 at U.S. Bank Stadium, is actually true. (That the Vikings aren’t in it, for instance.) And some of it is guesswork mixed with wishful thinking. 

Take economic impact, or the amount of money expected to pour into the area the week of the game. It’s difficult to quantify, though that hasn’t stopped the NFL and Super Bowl host committee from trying.

After Glendale, Ariz. hosted the game three years ago, a study from the Seidman Research Institute and the Arizona State University School of Business claimed a gross economic impact of $719.4 million for the state of Arizona. That was the highest of any Super Bowl held since 1988; most fell between $150 million and $400 million. Here in the Twin Cities, a pre-event estimate commissioned by the Minnesota Super Bowl Host Committee projected a $338.4 million net impact for this year’s game.

Rockport Analytics, which produced the report, presumes 125,400 expected visitors will spend $610 per day. The impact total does not include “displaced tourism,” or money tourists usually spend here now. Even so, economists who examined previous Super Bowls say the impact usually is much less than organizers claim.

In their 2004 paper “Super Bowl or Super(Hyper)Bole?: Assessing The Economic Impact of America’s Premier Sporting Event,” economists Robert Baade and Victor Matheson studied Super Bowls from 1970-2001 and concluded the game contributed about one-quarter to the local economy what boosters promised. With additional research, Baade thinks it’s closer to one-tenth.

“Economists have a rough rule of thumb: Move the decimal point one place to left, and you’re far more likely to come up a better measure of economic impact than the NFL number,” said Baade, a professor of economics at Lake Forest (Ill.) College.

Andrew Zimbalist, an economics professor at Smith College who has written and consulted extensively about sports-related economics, said the Twin Cities could fare better than most because tourism lags here in the winter. Meet Minneapolis, the convention and visitors association, said hotel occupancy around this time usually runs about 55 percent. Occupancy should be significantly higher Feb. 1-4, since about 86 percent of surveyed properties this week reported no availability for those dates, according to a Meet Minneapolis report. There are roughly 43,400 hotel rooms in the Twin Cities metro. 

“If everything works out favorably, you’re probably looking at somewhere in the neighborhood of $30 million to $50 million of incremental impact,” Zimbalist said. “That’s in a situation where you’re presuming there’s a great deal of excess hotel capacity during those weeks in February.”

Why are these estimates so far off? Blame the NFL, Baade said. The league promises the Super Bowl to cities that build new stadiums (as was the case here), and the lure of a major cash grab from the country’s most-watched event often convinces cities to pony up while exaggerating the benefit. Even if the $338 million estimate proves more accurate than most, it falls far short of the $498 million taxpayer contribution toward U.S. Bank Stadium’s $1.1 billion price tag.

Zimbalist said estimates often don’t account for residents leaving town to escape logistical hassles, disruption of businesses near the stadium due to closed streets, and security costs. Minneapolis police will be augmented by the National Guard, Homeland Security and police from outside the city, according to Richard Davis, one of the host committee’s three chairpersons.

And daily spending estimates based on hotel occupancy are often wrong. Many hotels require three-to-five night minimum stays. Some wealthy guests, Zimbalist said, book the minimum but fly in only for the Saturday night parties and the game. Empty rooms tend to spend less money.

“You put all those things together, and you can’t anticipate a priori [derived by reason alone] that there’s going to be a positive impact,” Zimbalist said.

American Birkebeiner International Bridge
MinnPost photo by Pat Borzi
Ninth Street drops from three lanes to two at Nicollet Mall to accommodate the American Birkebeiner International Bridge.

Already, downtown workers are presuming the worst. Super Bowl Live, a free fan festival, takes over Nicollet Mall this week. Eighth Street is blocked off for a concert stage, and Ninth Street drops from three lanes to two at Nicollet Mall to accommodate the American Birkebeiner International Bridge, a skiing overpass trucked in from Hayward, Wis. 

Davis, the US Bancorp executive chairman, said his company offered downtown employees the option of telecommuting or working from a satellite location next week instead of their Nicollet Mall skyscraper. Other downtown businesses are taking similar precautions, especially near the security perimeter around U.S. Bank Stadium. 

Hennepin Health closed its walk-in service center in the Grain Exchange Building last week and this week because of traffic and parking concerns, rerouting clients to two other locations. Hennepin County District Court at Government Center will hold only emergency hearings next week.  North Central University, about 10 blocks from the stadium, cancelled classes through Feb. 5 because MPD is using its campus and nearby Elliott Park as a security staging area.

New England Patriots and Philadelphia Eagles fans seeking hotel rooms downtown this week were largely out of luck, and properties on the outskirts of town asked exorbitant rates. As of last Wednesday, the Marriott Courtyard Bloomington near the Mall of America offered rooms with a king bed for $699 a night, or $2,995.22 for a four-night stay, prepaid, per marriott.com. The same room, a week later, goes for $89 to $161 per night. 

To gauge the true economic impact, Baade recommends waiting a year or more, “We found the only way you can really assess what the impact is, is to do an audit,” he said. “There’s no way to do that before the fact.” 

Comments (11)

  1. Submitted by Dale Moe on 01/30/2018 - 11:29 am.

    Super Bowl

    North Central University is only 3 blocks away from US Bank Stadium

  2. Submitted by Arthur Himmelman on 01/30/2018 - 01:02 pm.

    Super Bowl investment – who benefits and who is harmed?

    Thank you for providing a reality check on the grossly exaggerated benefits of the Super Bowl for host cities. Hype of this type also is used by those claiming “investments in development” will more than compensate the public for huge financial subsidies of private sports businesses. The most recent related to the Minneapolis Super Bowl was in The New York Times on 1/23/2018 in a completely uncritical article titled, “Super Bowl’s Minneapolis Stadium Brings a Surge in Development” by Joe Gose. Gose asserted the public subsidy for the Vikings Stadium will be more than matched by development in Minneapolis East – downtown close to the Viking’s stadium.

    However, many highly credible studies have concluded such public investments are not justified by the public gains from them. For example, see Economics Of Subsidizing Sports Stadiums | St. Louis Fed https://research.stlouisfed.org/publications/…/the-economics-of-subsidizing-sports-stad…

    Those who hype claims about economic benefits rarely identify who benefits most from development or those most harmed. In Minneapolis, the most harmed include those trying to secure rapidly disappearing affordable housing as it is replaced with new “upscale” units by developers with largely unquestioned support from local and state elected officials.

  3. Submitted by Henk Tobias on 01/30/2018 - 03:34 pm.

    When a large powerful monopoly

    like the NFL, comes to town telling you what a huge favor they’ve done you by allowing you to host an event for them, just assume you are going to get screwed because that what going to happen.

  4. Submitted by Paul Udstrand on 01/30/2018 - 04:38 pm.

    Two or three more things

    The public “investment” is actually closer to a billion dollars because it was issued as bonds that will be paid with interest, so that $380 million falls way way short of the cost.

    Second, the NFL never promised anything, MPLS had to bid for the SB just like everyone else and they handed out tens of millions of public dollars worth of free stuff to the NFL in order to sweeten the pot. Apparently the phrase: “At no cost to the NFL” appears 63 times in the contract… does the phrase: “At no cost to the taxpayers” appear even once?

    Finally, anyone who tells you this is all great publicity that will bring in future fortunes is nearly delusional. We don’t have the transit infrastructure for this and all the marketing is directed at NFL related activities rather than metro or regional attractions and amenities.

    • Submitted by Pat Borzi on 01/30/2018 - 07:20 pm.

      One quibble with you, Paul

      The NFL’s implied promise of a Super Bowl to any city that builds a new stadium is real, regardless of location. Indy. New Jersey. Arlington. Here. Sure, there was bidding. But as long as Minneapolis gave the NFL what it wanted, the game was coming here.

      • Submitted by Paul Udstrand on 01/31/2018 - 08:07 am.

        One counter quibble…

        The stadium in and of itself wasn’t the NFL’s only demand, so when we talk about stadium “promises” we should be clear about that. Getting the Super Bowl was two step process, built the stadium, then bid for the Super Bowl. In other words, had the MN NOT agreed to all various demands that were part of SB bid, would we still have gotten the SB?

  5. Submitted by Ray Schoch on 01/30/2018 - 07:26 pm.

    On point

    The list of things to complain about (or praise, if you’re a booster) in connection with the Super Bowl is a long one, and since I’m not a football fan, I lean toward the criticism. That said, however, Paul Udstrand’s final two points bear much more attention than they’ll likely get from local TV or the ‘Strib.

    Not a native by any means, and probably viewed as a “short-termer” by those who are, it’s nonetheless my considered opinion that the area has woefully inadequate mass transit. Based on what I’ve seen during morning and evening rush hours over the past 8+ years, I’d say we’re as auto-dependent as any of the stereotypically auto-dependent areas in California or elsewhere. That’s not a good thing for the long term, nor for an area with winters like ours.

    Equally on-point, I think, is Paul’s mention of marketing activity surrounding this event. All the TV stations and personalities that are prostituting themselves over this football game are doing so pretty much as Paul has suggested: it’s all about the NFL, and when local or regional attractions or amenities are mentioned on occasion, it’s been in the context of that football game, rather than pointing out that they’re valuable in and of themselves.

  6. Submitted by Ray Lewis on 01/31/2018 - 11:09 am.

    Is it all about the money?

    There may be other aspects of the football game that money sometimes cannot buy. The social connectedness of rooting for a home team to do well can bring the fans, casual band-wagon jumpers and non-fans together in hoping the team representing our state can succeed. While the sense of belonging and being part of something bigger and almost magical is a positive, ie 1980 Olympic Hockey, that few other events can match. While the seasons final game didn’t go the way we hoped, the dream of playing, or attending, or winning the Super Bowl at home was pretty cool. Some of the Legacy programs started in Minnesota have become a part of the annual event, and our values, standards and expectations may spread outward and into the future with the trail we blaze for others to follow.
    Personally, I’ll be working at the Stadium on Sunday, am one of 10,000 volunteers helping host visitors, and advocating for the sustainability and expansion of the Community Legacy Grant program.

  7. Submitted by Paul Udstrand on 02/01/2018 - 08:49 am.

    One more observation

    Way back during the stadium debates people like me pointed out the fact that events like the Super Bowl can be a wash locally because they actually draw people away from other local events and venues. While people stand in the cold Mall watching a Prince tribute on temporary stage, local music clubs lose patrons. There was a study back-whenever-it-was that looked at sales tax receipts during the NHL lock-out and found that city-wide entertainment spending actually increased while Hockey was shut down. We likely see the same phenomena with Event’s like the Super Bowl…. spending goes up in few block radius downtown but decreases in Uptown or St. Paul.

    My wife and I went to downtown St. Paul last night to have some dinner and see the Ice Castle. Sure it was weeknight but we had no trouble finding cheap street parking or a table at a restaurant, and there were at most 200 people in Rice Park, with maybe 30 of them watching the 70’s band on stage. Sure the city is trying to cash in with $10 and $15 dollar “event” parking in the ramps but none of the ramps were full. Meanwhile I’d be willing to bet a lot more spending was going on in Downtown MPLS. So if more local people go Downtown and fewer people go the West End here in SLP, that’s actually not “better” for the economy.

  8. Submitted by John Ferman on 02/04/2018 - 09:29 am.

    Any Losers?

    This past week I saw a short, space-filling clip about one guy who has had to close his shop. Some places will cash-in but others will not. Lets see a factual story on actual impacts. Perhaps a comprehensive survey of actual businesses and services. Broad brush stuff like those ‘surveys’ tell little.

  9. Submitted by Dave Carlson on 02/04/2018 - 10:24 am.

    Downtown $$ Impact

    I was on Nicollet Mall on Monday and Saturday nights for the fun and unique concerts (how often will you see a band perform in the snow?) and the area was packed. Parked outside of downtown and took the LRT and it was efficient and full each ride. However, the businesses on or near the Mall seemed woefully unprepared… the liquor store on 9th Street had only two cashiers and a line to the back of the store, so many of us just walked out… two different bars were crowded but had only two bartenders working, so again I saw many give up and walk out… and after the Soul Asylum concert with tens of thousands still roaming the streets, the restaurants in the IDS Center were closed with the manager standing in front of one of them apologizing to hungry potential customers that “his employees would kill him if he stayed open later.” So I hope we don’t hear about disappointing economic impact from these businesses. Meanwhile, Surly’s was about as crowded as I ever see it.

    All in all, everyone I talked to from out of town was very impressed with the friendliness and fun activities, so some intangible assets can be garnered from all this. Hats off (no, actually you better keep the hats on!) to the wonderful volunteers up and down the Mall.

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