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$500 Million For Miami From Super Bowl LIV? Try $50 Million, Says Sports Economist

Jan 25, 2020
Originally published on January 30, 2020 9:38 am

Restaurants, bars and hotels are gearing up for a potential surge in business from visitors ahead of Super Bowl LIV. The primetime game at Hard Rock stadium and the series of events leading up to it are expected to generate millions of dollars in revenues for the region. Miami’s Super Bowl Host Committee hasn’t come up with an official number, but projections from last year’s game in Atlanta from the city’s metro chamber were around $400 million in revenues. But that number could be overinflated.

“The rule of thumb among economists is, take that number that boosters are telling you, move that decimal place one place to the left, and that’s actually more likely what you’ll see in Florida,” says Victor Matheson. He’s a sports economist at College of the Holy Cross in Massachusetts and has studied the economic impact of Super Bowls around the county.  He spoke with Luis Hernandez on Sundial about who the real beneficiaries are from the big game, how much money stays locally and why tax payers should be weary of business projections.  

WLRN: You've argued that researchers have the incentive to exaggerate the amount of money the Super Bowl can generate for a city. Why is that? 

MATHESON: There's two reasons why you might want to give an exaggerated number. Number one is: sports leagues are often coming hat in hand, to try to ask for a big handout when building new stadiums. For example, we had that in Miami a few years ago when you built a new baseball stadium. And of course, there was talk about that with new Major League Soccer stadium as well. So that's number one. Number two: there are also big expenses and lots of hassles associated with hosting the Super Bowl as well. So you might be asking for money, hundreds of millions of dollars for a new stadium, and you might be asking for tens of millions of dollars to host a mega event like the Super Bowl. 

I wonder if Miami is uniquely positioned here. I mean, we get a lot of visitors, especially this time of year. This is really the great time of year because it's not cold down here and the weather is great. Are we better positioned than in Minneapolis or in Atlanta to host a Super Bowl? 

That's a good thought. But actually, it's exactly the opposite. So when it comes to the economic benefit, you have to decide: well, what's going to happen when the Super Bowl is here versus what would actually happen during a normal day or a normal weekend in Miami? And since Miami is such a good tourist destination in early February anyway, your hotels were likely to be pretty full of tourists with full wallets willing to spend money here. And therefore, the Super Bowl actually displaces a lot of activity that would have occurred anyway. 

In Minneapolis, where it's not exactly a tourist wonderland in early February, those hotels are not quite as full. And therefore, it's actually better for the city to have a Super Bowl than in Minneapolis than in Florida. Minneapolis wouldn't have been full and wouldn't have been at capacity already. And the data actually shows that. So when we look at, for example, the number of additional hotel rooms purchased in Minneapolis, that was about 60,000 additional hotel room nights due to their Super Bowl a couple of years ago. When it came to Phoenix the year before that, the number of additional hotel rooms is only about 30,000 because those Phoenix hotel rooms are pretty full in February. The Minneapolis hotel rooms aren't.

We haven't hosted a Super Bowl in Miami in a decade. The last time we did, there was no such thing as Uber or Lyft or Airbnb. With Airbnb we've seen massive price gouging on the site for rooms going for hundreds, if not thousands of dollars. But I wondered what's changed and if there's a benefit here for residents because of the Super Bowl, if they have the opportunity to say, now that all the guests aren't going to the hotels, they might be going to people's homes. 

Yes. So that's actually a good example of a way to maybe keep more of the money in Miami rather than having it leak out through corporate, you know, through corporate headquarters. But the Uber example is actually a good one and an interesting one. I was in Houston for the Super Bowl a couple of years ago, and I had Uber drivers the entire time I was there. About half of my Uber drivers were not actually from Houston. They had come down from Dallas or come down from San Antonio knowing that there was going to be a lot of business. So here's an example. Another example, again, of an economic leakage where there was money spent. I certainly spent a lot of money on on Uber rides while I was there. But that didn't stick in the pockets of local Houston drivers because, again, a lot of drivers came in from around the state and around the country to try to capitalize on that. And again, that's money that's not sticking in the host city, but leaving with those drivers when they went back home. 

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