Or is it money-loser?
Here’s an utterly fascinating look at the economics of sports which challenges the conventional wisdom on the topic. The common assumption — all too common among the Uptown crowd — is that hosting events — especially megaevents like bowl games or post-season play — is a great deal for cities. Turns out reality is much more complicated than that.
Craig Depken, a University of Texas in Arlington sports economist, finds that some events are money losers for cities once all the costs are factored in. What kind of costs? Well, there are the direct costs of hosting the event — the clean up, traffic control, security, etc. — and the indirect ones, like the tax revenue you lose when people spend money on a sporting event rather than something else.
As we’ve noted around here for years now, big sports or cultural events do not create more income for people to spend, the events just make that income land different places. Depken further notes that an event does not just need to attract a lot of people, it needs to attract a population of people who otherwise would not have spent money in a city without an event. That is tricky, especially for cities with large populations which can absorb a 50,000 or 70,000 person event without much of a ripple.
Depken and co-author Donald Coates, of the University of Maryland, Baltimore County, also have other observations of interest to the Queen City:
For example, an NCAA football bowl game costs the host city a bit less than $1.5 million dollars in sales tax revenue and a bit over $20 million in sales activity. These estimates raise serious doubts about the efficacy of creating a bowl game as a source of tourism, added spending, and greater exposure for the host city.
Hmmm, bowl game, not a good deal, huh? How about a NASCAR Hall of Fame? A publicly-built one?
