A Twin Cities Super Bowl windfall? Don’t spend it yet

Although there’s still been no official release of the actual agreement detailing what the region is giving away in exchange for hosting the 2018 Super Bowl (the Star Tribune got a copy, however, in 2014), the Minnesota Super Bowl Host Committee today released a report detailing the “windfall” the game will bring to the area.

The report, from Rockport Analytics, estimated $338 million in new spending would be generated after deducting $68 million in tourist spending that would be displaced by those shut out of the area because of the big money coming in for the game. The Star Tribune reports state and local governments would reap $29 million in taxes.

The $338 million figure is only slightly less than what the same firm said San Francisco would reap from last January’s game, when it projected a $350 million thrill. A separate Price Waterhouse study pegged it at closer to $220 million.

The actual impact is probably far less than any of the figures, according to Victor Matheson, an economics professor at the College of the Holy Cross, who has studied these sorts of projections and found them lacking.

You can probably calculate the effect of the game on the Twin Cities yourself. Matheson’s Williams College study in 2003 provided the formula.

If you want to avoid the trouble, here’s his conclusion:

The National Football League and other sports leagues have used the promise of an all star game or league championship as an incentive for host cities to construct new stadiums or arenas, and with few exceptions, at considerable public expense.

Recent NFL studies have estimated that Super Bowls increase economic activity by hundreds of millions of dollars in host cities. Our analysis fails to support NFL claims. Our detailed regression analysis revealed that over the period 1970 to 2001, on average Super Bowls created $92 million in income gains for host cities, a figure roughly one-quarter that of recent NFL claims.

While this figure, like any econometric estimate, is subject to some degree of uncertainty, statistical analysis reveals that, on average the Super Bowl could not have contributed, by a reasonable standard of statistical significance, more than $300 million to host economies.

Cities would be wise to view with caution Super Bowl economic impact estimates provided by the NFL. It would appear that padding is an essential element of the game both on
and off the field.

The key to all of this is what Minneapolis is on the hook for.

Not knowing the full answer is what made it difficult for San Francisco’s Super Bowl critics.

Andrew Zimbalist, the Smith College economics professor, says there was no formal agreement between the NFL and San Francisco for reimbursement of services provided. That was $5 million worth of services, Mother Jones reported.

As Zimbalist notes, $4.8 million is a small number when you consider San Francisco’s $8.96 billion budget. Still, he says, “it’s $5 million not being spent on road repairs and schools.” Or on the city’s roughly 3,500 homeless, some of whom recently relocated from the Super Bowl City area to a growing tent encampment under a highway overpass in the Mission District.

San Francisco magazine counted 100 tents in the area, though homeless advocates and officials say the encampment has grown over the course of a few months, even years. A host committee official told Bloomberg News in January that the group would invest $13 million of the $50 million it had already raised in charities addressing homelessness and poverty.

Meanwhile, as part of the Super Bowl bid, San Francisco’s police, fire, and emergency management departments “signed letters of assurance to not seek reimbursement from the NFL” for providing more services during the Super Bowl—an arrangement that Matheson said isn’t unusual. (Last year’s Super Bowl likely cost the city of Glendale at least $579,000 and as much as $1.25 million in security and transportation cost overruns.)

Only two departments will earn money back from the host committee—the fire department (a 6.7 percent reimbursement) and parks and recreation (100 percent). Jane Kim, who sits on San Francisco’s board of supervisors and has called the city’s non-agreement “the worst deal ever,” pushed for a last-minute bill to make the city renegotiate with the NFL, less than a week before the events at Super Bowl City were set to start.

So how much did San Francisco make off the Super Bowl? Nobody knows. The results of such a study aren’t in yet. But two weeks ago, the city started reimbursing displaced vendors for the cost of their inability to do any business during the week.

In its press release before the big game in San Francisco, Rockport Analytics acknowledged the debate over whether the game brings in the cash it annually projects to. The firm responded by pointing out that local officials think it does.