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Three reasons a Super Bowl might not be worth as much as you think

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Super Bowl XXVI
The Bufflo Bills got taken down by the Washington Red Skins when the Super Bowl came to Minneapolis in 1992. (Getty Images/Mike Powell)

Gov. Mark Dayton said yesterday that the 2018 Super Bowl could have a $500 million economic impact on the state if the NFL picks the new Vikings stadium to host the game.

But as the Twin Cities learned with the Republican National Convention in 2008, that financial impact can be hard to find on the ground. Experts claimed the convention had a $170 million economic impact  six years ago. But the gathering brought downtown St. Paul to a virtual standstill and bypassed many local businesses.

Victor Matheson
College of the Holy Cross professor Victor Matheson

Experts say potential hosts should be skeptical about the Super Bowl, as well. The New York Times has a piece on this very same subject, with a word of caution from New Jersey businesses, today

Victor Matheson is a professor at the College of the Holy Cross in Worcester, Mass. and estimates that the real impact of the Big Game is at best far short of the claims, made as recently as 2012 in Indianapolis. Rockport Analytics pegged the number there at $324 million.

"Economists not associated with the NFL do find a bump," Matheson says. "Unfortunately, the bump is somewhere between $30 million and $120 million -- not money that Minneapolis should turn down, but also a fraction of the numbers being tossed around by the NFL."

So what's the difference?

"There's at least three things that we think there are big issues that are counted poorly," Matheson says. "We actually do think the NFL does a pretty good job of counting everything up, and counting the economic activity that does occur because of the Super Bowl. We just don't do a very good job of counting the things that don't occur."

For example, Matheson says:

  1. Hotel rooms may be full of NFL fans, but they crowd out any other economic activity that might happen anyway.

  2. The hospitality industry can charge a premium for accommodations, meals and other services during the Super Bowl. But that extra money doesn't generally get passed along to desk clerks and room cleaners. It more typically goes to corporate profits -- often to out-of-state corporations that own and operate hotels and restaurants.

  3. Money spent by locals during the event is typically just shifted from other economic activity. A great weekend for sports bars might be a very bad weekend for the Guthrie or the AMC Theaters at Rosedale.

Sports generally crowds out and substitutes out for other things that go on in your economy, Matheson says.

And the Super Bowl?

Matheson says you can look to the Republican National Convention as an example: "You did have a lot of economic activity, with all those delegates in downtown St. Paul. But they crowded out all other economic activity. No one in their right mind came anywhere close to St. Paul during the Republican National Convention, because there was too much security, too many protests. Too many other things going on. If you were any kind of business that didn't cater to out-of-towners, that was a terrible week for you."

Here's Matheson's 2009 analysis of Super Bowl economics: