Super Bowl's Economic Impact Debated
Saturday, January 27, 2007; 1:30 PM
MIAMI -- Football fans living a lifelong dream, executives with expense accounts and throngs of rich tourists are certain to inject millions into South Florida's economy after they arrive this week for Super Bowl XLI.
They'll stay in four-star hotels, eat at fancy restaurants, take limousine rides and shop at high-end malls.
The official estimate is that the Feb. 4 game and the surrounding festivities will give the region a $400 million boost. But some economists who study the game's monetary impact say that's a pie-in-the-sky estimate, that the actual amount is one-tenth of that.
"If you move that $400 million estimate and you move the decimal point one place to the left you're much closer to what it is that it actually provides," said Robert Baade, an economics professor at Lake Forest College in Chicago who has looked at the financial impact of Super Bowls, Olympics and World Series.
South Florida already is an international tourist destination, with enough hotel rooms, convention halls, concert venues and arenas to accommodate almost any marquee event. Despite the glamorous image, Miami also is one of the poorest cities in the country, facing big-city issues such as a lack of affordable housing, homelessness and bad schools.
Politicians and civic leaders team up to lure big events, a key to making Miami a tourist hotspot and a place where corporations would like to do business or hold conventions, said Rodney Barreto, chairman of the Super Bowl Host Committee. The game and the surrounding festivities also raise millions for charity.
"The Super Bowl, in my opinion, shows corporate America at its best," Barreto said.
Miami-Dade County _ which will provide roughly $1 million in fire and police services, shuttles and other services _ and the committee offer the $400 million estimate. That includes not only direct purchases by visitors, but also indirect spending by suppliers and vendors, such as a party promoter paying a local limousine company to ferry guests.
PriceWaterhouseCoopers estimates direct spending will be about $195 million in South Florida, which includes Miami, Fort Lauderdale and West Palm Beach.
But Baade discounts the $400 million estimate because he says it only captures increases in taxable sales and does not consider other important economic factors.
For instance, Baade said the estimate does not consider that fans coming to Miami for the game will be replacing other visitors who would have come if the game was not happening. He also says the county does not consider that local residents will cut back on their spending because of higher prices, crowds and other factors.
"A lot of people who might frequent, let's say, hotel areas where they know Super Bowl fans are going to be staying are going to avoid the chaos, the congestion, the peak utilization of sidewalks and roads," Baade said.
Third, Baade suggests there usually is a significant "leakage" of money out of the community, meaning that profits made by restaurant and hotel chains, for example, will go to the companies' headquarters in another state rather than being re-spent locally.
Baade cites the 1999 Super Bowl in Miami, which was credited with bringing a $670 million increase in taxable sales. In a December 2005 study he completed with Victor Matheson and Robert Baumann of the College of Holy Cross, they concluded the game actually generated $36.9 million for the area, when also considering other factors such as population growth and inflation.
Baade contends that the NFL uses these large estimates to lure local governments into building new stadiums that could be potential Super Bowl sites. Politicians can use a successful Super Bowl to gain favor with voters, he said.
However, his research does have critics. Kathleen Davis, executive director of the Sport Management Research Institute, said the Super Bowl stimulates economic activity to the point that the $400 million estimate is more realistic than Baade's research suggests. Davis' company has studied the impact Super Bowls have before, during and after the game.
"I guarantee you that 99 percent of these economists have never been to a Super Bowl and never collected data on the ground," said Davis, who was hired by the host committee to study Super Bowl XLI's economic impact. "They're not capturing the local spending habits and they focus on whatever factors will justify their arguments."
Carlos Sarmiento, general manager of the 91-room Hotel Victor on South Beach, disputes the assertion that Super Bowl profits will not be re-spent locally. (The hotel is owned by Zom Inc. of Orlando and is operated by Hyatt Hotels & Resorts, based in Chicago.)
"That's very short-visioned," Sarmiento said. "It affects everybody in some way. Some of the money we generate will be put right back into our operations."
In the long term, the free exposure Miami will get in television programs and newspaper articles leading up to the event, and in cutaway shots during the actual game, can reinforce Miami's image, experts said.
"That's the equivalent of a 30-second spot, and during the Super Bowl, those cost what, $1 million, $2 million?" said Don Grimes, senior research analyst with the University of Michigan.
Regardless if the impact is in the tens or hundreds of millions of dollars, it's generally accepted that South Florida stands to gain from a successful Super Bowl. For example, the NFL already has earmarked more than $14 million for 400 minority-owned companies that will provide vending services, Barreto said.
Peter Roby, director of the Center for the Study of Sport in Society in Boston, said the estimates are probably somewhat inflated "because people are trying to justify why they want to bring that particular event to the city." However, Roby stills calls the event an "major economic catalyst" that could provide benefits for the community and charities.
Organizers want to say, "Not only did we put our full face out to the public to see, but we used some of the revenue from this event to benefit some of those things," Roby said.