- Written by Greg Nelson
15 Nov 2011
FOOTBALL STADIUM ECONOMICS - When the Anschutz Entertainment Group revealed plans to build a professional football stadium in downtown Los Angeles, it followed Rule #2 in the Stadium Developer’s Handbook and wildly overstated the economic benefits of the project.
Rule #1 is to meet privately with key elected officials, overstate the benefits to them, and set them aglow with promises of publicity and public adoration.
Like any good political campaign, stadium construction plans are hyped as solutions to whatever the problem of the day happens to be. Today that’s jobs.
Each time a proponent spoke about the AEG plan, the jobs estimate inflated, eventually climbing to somewhere around the 30,000 when the City Council agreed to the Memorandum of Understanding.
Of course, the lion’s share of these jobs would go to temporary construction workers, and would exist whether a stadium were built downtown or in the City of Industry.
Those who conduct independent analyses of stadium projects laughed at the jobs projections. And they added that no football team has had anything more than an insignificant economic impact on their nearby community.
You will never find a study that has measured effect on the area around the Coliseum due to the presence of the Rams or Raiders. That’s information that no one at City Hall wants to know, and wants you to know.
AEG knows that a stadium that hosts 10-12 football games and tractor pulls a year can’t boost the city’s economy, so it played the ever-popular Super Bowl card.
AEG asked us to imagine a stadium that could host three Super Bowl games every 10 years, notwithstanding the fact that many other cities want to also host future Super Bowl games.
On its face, it would seem that having a Super Bowl in town would be an economic plus.
But again, those pesky economists who don’t rely upon developers or teams for their livelihood say that the benefits are regularly exaggerated.
The National Football League claims that each Super Bowl boosts the local economy by about $400-500 million.
The independent economists say it’s only a fraction of that.
The NFL touts the bigger numbers because it’s a way to push cities and states into building new stadiums for their teams. That’s how powerful the Super Bowl myth has become.
Economics professor Andrew Zimbalist of Smith College, and co-author of “Sports, Jobs and Taxes,” says the discussion should begin around $40 million.
Victor Matheson at the College of the Holy Cross pegs the benefits between $30 million and $90 million.
Their estimates are backed by other academic economists.
The problem in getting an accurate number is that the studies commissioned by the special interests only calculate the gross spending that occurs during Super Bowl week.
But if the net spending were calculated it would take into account all the people who would normally visit the area but choose to go somewhere else because of the Super Bowl. The goal should be to measure how much additional income would be generated by the event.
It’s common for hotels to spike their room rates when the Super Bowl comes to down. Draining the wallets of visitors is a good business practice.
But the reality, which is never factored into the figures, is that the hotel staffs don’t also get a hike in their salaries. The windfall doesn’t go to the workers, but to the corporate headquarters that are usually out of state.
The Ritz-Carlton and Marriott hotel corporations are both in Maryland. The Wilshire Grand Hotel is owned by Korean Air … and the list goes on.
Next: How the Olympic Games drain local economies.
Tags: football, football stadium, Downtown Stadium, AEG stadium, AEG, Anschutz Entertainment Group, Super Bowls, NFL, National Football League, City Hall, jobs, economics, economy, local economy, economists, Rams, Raiders, Los Angeles
Vol 9 Issue 91
Pub: Nov 15, 2011