Can a city make any real dough by hosting a political convention?
In Boston, where Democrats met four years ago, a think tank projected $23.8 million in lost productivity. The Beacon Hill Institute at Suffolk University figured transportation delays would result in a net loss to the city of $12.8 million.
A rosier prediction prepared for Boston’s mayor predicted a $154 million boost to the economy there.
How did it turn out? There was a $7.5 million decline in commuter spending and a $19.9 million decline in expected tourist spending. Boston claimed a net $163 million increase in its economy, the Suffolk University’s final tally showed a mere $14.8 million gain. And out of 100 businesses surveyed, only 11 showed an increase in business (See report here).
In Denver, where the Democratic convention will be held this year, officials decided not to do an economic analysis of the convention, preferring instead to use Boston’s data. Officials say “The Big Dig” was a major reason for the disappointing results there.
The Beacon Hill Institute also studied the impact of the Republican National Convention in New York the same year. It projected a $163 million impact, far less than the the $260 million boost predicted by Mayor Bloomberg. By the way, its analysis showed that the non-delegate (i.e. media) spends more money during the convention than the delegate.
As for Minnesota, officials estimate the event will generate $149 million in spending and boost the Minnesota economy by $163 million. Finance and Commerce reported last week that because of the federal government’s subsidy of security costs, and a new way of calculating the economics of the convention, it will likely still be the most lucrative convention in the history of the Twin Cities.
“Most economists think these numbers are wildly inflated, ” says Victor Matheson, a professor in the economics department at Holy Cross, who studies the economic impact of ‘mega-events’ on cities. “What typically happens in these economic impact studies is that the studies do a good job at measuring the activity that does take place at the convention, but they don’t do a good job at measuring the activity that doesn’t take place. So, for example, St. Paul is going to be overrun with delegates, overrun with news folks. It’s going to be chasing out, anyone who normally would be spending time in downtown St. Paul.”
What will we be saying about the Republican National Convention after it leaves town?
“What you’ll probably see is this: The hotels will have done well; they’ll be full for a week and full for a week, perhaps, at a time that is not normally a peak season for them,” according to Matheson. You will see that some people did quite well. Catering services in the local area will probably have done quite well. Other places will find probably that they did not do so well. Probably a lot of watering holes did not get too many folks. You had delegates going to specialized parties rather than the usuals who go into bars and restaurants.”
There is, Matheson acknowledges, an opportunity “to put St. Paul on the map,” but he says a poor showing would strip the region from any net benefits of the convention.
“St. Paul is probably in for a worse situation than Denver is because you’ve got an unpopular president in town and that’s the sort of thing that’s likely to attract demonstrators.”