Super Bowl Host Cities Always Lose the Money Game

Super Bowl host cities always lose the money game
Provided by MarketWatch

Super Bowl hosting duties don’t come cheap.

To even be considered to host Super Bowl 50, the San Francisco 49ers had to leave San Francisco itself, get Santa Clara to throw $114 million at a new stadium and put the city’s Stadium Authority on the hook for $933 million more. Santa Clara is wagering that the Stadium Authority’s debt can be easily repaid by selling stadium naming rights to Levi’s, booking a host of other non-NFL events and wisely reinvesting any stadium revenue it can get its hands on.

Yet, Santa Clara’s $3.6 million cost of hosting the Super Bowl is being paid in full by the businesses that comprise its Super Bowl Host Committee. Meanwhile, that same host committee is only reimbursing San Francisco $104,000 for the $4.8 million in city services it will spend as it also takes on Super Bowl hosting duties as the major city closest to Levi’s Stadium. The city already faces a $100 million budget deficit for the upcoming year, and it’s odd to think that it could post a loss for an event that’s supposedly a huge economic engine for host cities.

But this wouldn’t be the first time a city’s taken a bath on the big game. Last year, the city of Glendale, Ariz. — home of the Arizona Cardinals — lost between $579,000 and $1.25 million hosting the Super Bowl, thanks to public safety and transportation costs. That was the second time the city hosted the Super Bowl, and it lost more than $1 million on its first attempt in 2008. Arizona Cardinals President Michael Bidwill, son of owner Bill Bidwill — who moved the Cardinals out of St. Louis in 1988 — blamed it on Glendale city government’s ineptitude.

Not only is that not a nice thing to say about a town that coughed up $308 million of the $455 million cost of University of Phoenix Stadium, but it’s unfair given the Super Bowl’s track record. In 2014, the state of New Jersey gave a $7.5 million sales-tax rebate to the NFL after hosting the Super Bowl in East Rutherford, N.J. New Jersey Transit estimated that it racked up $7.2 million in costs covering the extra Super Bowl ridership, but only made $1.6 million in ticket sales and ad revenue. That’s not great for a state facing a $806 million deficit. Those factors — plus the fact that many of the host events (and much of the Host Committee money) went across the river to New York — made the New Jersey Chamber of Commerce, the group of businesses that’s supposed to reap the benefits of the game’s “economic impact,” vote never to host the Super Bowl in the state again.

If New Jersey’s mad, imagine how cities and states that actually put tax dollars toward their new stadiums feel. Though MetLife Stadium’s costs were privately funded, that wasn’t the case for five of the past 10 Super Bowl host stadiums that were opened five years or fewer before they hosted the big game. An average of $296.4 million in public money went into each of those facilities. And that’s before they put a dime toward the cost of hosting a Super Bowl.

That latter cost just keeps climbing. Back in 2014, the NFL declared that if a city wanted to host a Super Bowl, it had to sacrifice a home game and play it in London instead. That’s a full game’s worth of tax and business revenue lost by an NFL host city, which has already spent ridiculous amounts of money to give a team a place to play eight regular-season games a year. That’s also not where the costs end.

Minneapolis and the state of Minnesota put $500 million toward the more than $1 billion cost of U.S. Bank Stadium for the Vikings and were rewarded for it with the 2018 Super Bowl … and the 153-page list of NFL demands that came with it. Among those demands? Free police escorts for team owners, 35,000 free parking spaces, sales-tax rebates, residential suites at no cost in high-end hotels, free billboards and guarantees to receive all revenue from the game’s ticket sales.

So not only are cities and states starting in the red once they take on a Super Bowl, they’re watching all of their potential revenue dry up even before they attempt to meet the NFL’s base demand. And that touted “economic impact,” like the $720 million that an Arizona State University study says a Super Bowl had on the state of Arizona? Victor Matheson, a professor of economics at College of the Holy Cross in Worcester, Mass., has dedicated a career toinvestigating those claims. One of the problems with them, he notes, is that the Super Bowl isn’t a singular, but a weeklong, event, so spending by Super Bowl attendees from out of town spread out over a week typically isn’t much greater than what displaced residents would spend during that same week.

He also notes that while the Super Bowl may increase spending within a city or region, that spending may not make its way back to the city. A prime example is a national chain hotel that jacks up its rates three or four times their normal levels for Super Bowl week, but doesn’t pay its staff three or four times their wage or bring in three or four times as many workers. That, plus reduced spending by locals, makes the true cost of hosting a Super Bowl as much about the economic activity the game diminishes or discourages as it is about the spending the game generates.

Written by Jason Notte of MarketWatch

(Source: MSN)

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