Near the deadline, Minnesota has submitted it’s official preliminary bid for consideration to host the 2018 Super Bowl in the new stadium.

Minneapolis is well-suited to host large events and their ability to successfully host the Republican National Convention and dozens of smaller conventions and conferences speaks well to their ability to handle the influx of attention that a city receives as a result of the Super Bowl.

Per the Star Tribune, the bid highlighted the 180 hotels that can offer 19,000 rooms, 48 venue options and practice sites.

The ability to host a Super Bowl (as well as other events of varying impact, including the Final Four) was a significant argument in favor of building a new stadium, and just like stadium construction, has a small controversy in regards to its economic impact.

The University of New Orleans released a study (perhaps under the purview of the New Orleans Super Bowl Committee) that argued that there was a $480 million in net economic impact, broken down into new jobs ($154 million in new part-time and full-time jobs), new state tax revenue ($21 million), local tax revenue ($13.9 million) and new spending ($262.8 million in direct spending and $217.2 million in indirect spending).

The Sports Management Research Institute projected nearly $600 million in new money for New York, and numerous Super Bowl Committees have found studies that agree with the assessment. Many of SMRI’s studies are conducted in concert with the NFL, so there is reason for skepticism.

On the other hand, noted public-funding stadium critics Robert Baade and Victor Matheson have found that the benefits are far overstated. There are a few factors that they point to (the same several factors, actually, that the refer to in their economic analysis of stadiums) to make this claim. The first is that the studies rarely subtract those visitors who would have otherwise come for an event but didn’t in order to avoid the hubbub of the Super Bowl (“crowding out”). The second, which is probably much more significant than the first, is the number of dollars that would have been spent there anyway simply being attributed to the Super Bowl (“substitution”).

That is, people may move their vacation forward or back to meet up in line with the Super Bowl—money that the city was going to get regardless. With that, many studies also do not take into account another substitution effect, which is the amount of local money that is attributed to the event, when it would have been spent anyway. Over the years, I’ve noticed that studies have done a much better job taking this other substitution effect into account (this is a little less important in the “Super Bowl impact” debate than the “stadium economic impact” debate, as the Super Bowl money almost always comes from out-of-state fans of other teams).

Another argument Baade and Matheson marshal in their favor is the concept of “leakage,” where local monies provide profits for off-site executives (CEOs and to some extend stockholders) but not necessarily local workers paid a wage (clerks, housekeeping, etc.).

Honestly, I do think that Baade and Matheson (and many others, including Phil Porter, Brad Humphreys, Dennis Coates, etc.) overstate the effects of these ameliorating influences—crowding out doesn’t happen as often for big events as people seem to predict, and not many people sacrifice a summer vacation for a winter one. Leakages are usually resolved not by wage increases but by new temporary hiring.

That said, a lot of double-counting occurs when assessing the positive economic impact—new jobs and indirect spending tend to coattail while “direct” spending tends to include secondary and tertiary spending without being honest about it (though important to count).

The biggest argument in favor of the mythbusters is the question of opportunity cost, where the cost required to host the event usually can be better spent elsewhere. Nevertheless, opportunity cost tends to be applied against an ideal scenario (new schools, for example) instead of what is politically feasible.

As Sports on Earth points out, these effects change city-by-city, and the infrastructure, tourism culture and general capacity of each of these cities matters quite a bit. A while back (very, very early in my blogging career) I argued in favor of a stadium and in so doing argued that Minneapolis is the kind of city (along with New Orleans and Seattle) that would benefit from a stadium. Many of those reasons are the same reasons they would be a good city to host a Super Bowl.

There are other things that tie into these economic arguments, like the non-priced impact of short-term increases in things that increase quality of life (civic pride, an exciting winter, what have you) and the long-term impact of increasing the visibility of a city (Indianapolis received so much positive press that it could have lost net money and still be worth it) that are difficult to measure but important as well.

From a personal standpoint, I’ll be excited to see a Super Bowl in Minneapolis, especially if the Vikings are the NFC Champions (which could massively impact the economics of the event, but I don’t care). Hopefully, the Vikings bid has is successful despite extremely strong competition from Indianapolis (again, rave reviews) and New Orleans (who will be celebrating their 300th anniversary as a city at the time).

10 COMMENTS

  1. Arif…..how much of a factor is the dollar amount of the “bid” vs all other things considered?

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    • I don’t think one has to pay in order to submit a bid, but the cost of hosting can vary a lot. I remember the Phoenix Super Bowl in 2003 (the first SB after September 11th that had a full year to dedicate to security measures) fell short largely because of the enormous security costs, but there’s not much in additional costs to host a Super Bowl like there are for the World Cup or the Olympics—like CM1 mentions below—because one must prove that one can host a Super Bowl before hosting it, unlike the Olympics or the World Cup, where they expect improvements to be made leading up to the games.

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  2. mn will get another SB. build a new stadium, you get a SB, just a matter of when, and maybe it will attract more big corporate money to the area

    to hell with the cold, hard logic and economics of it. if we only did things on that basis, life would really suck; and we need sports so we don’t kill each other

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  3. I know we went back and forth (not you and me specifically as I recall us being on the same side of the issue, but the DN commentariat as a whole) about this during the stadium debate, but The Substitution Effect is, in many respects, such a canard for the ‘New Stadium/Super Bowl In Your City’ detractors.

    The Substitution Effect assumes that the people who had the disposable income to spend money on Super Bowl related events would simply spend that money on something else instead. While that may be true, it’s money that wouldn’t be spent in Minneapolis, St. Paul, or Minnesota in general. Because let’s face it, those 100,000 people won’t be coming to Minneapolis. In January.

    And although economic impact on an area varies, Minneapolis would benefit more along the lines of an Indianapolis than a diluted effect of say New York. People are going to go to NY year round, and like I mentioned, there’s not 100,000 people in the world you get get to go to Minneapolis in January on a bet.

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    • Well, once the example of hockey expenditures was found for North Stars v. Gopher hockey people ran with it. Forgetting of course that people would not flock to TCF stadium to watch Gopher football as they would for Vikings football and that’s there’s not another game in town.

      Also, economists absolutely LOVE discount rates and effects of delayed spending… except when it comes to sports economics. Money spent sooner is always worth more than money spent later, and the effects of increased savings can be significant (which is a sticky argument when it comes to which tax cuts to give to what income bracket). Even if those people would have all come from Minneapolis, it has been for some reason a compelling example to argued that deferred spending is the same kind of spending.

      I think for the Super Bowl in particular, arguments against a positive economic impact for Minneapolis are specious at best.

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  4. Good article. Absolutely we were strong armed just as we were for baseball to build a stadium. But it is a positive for business and attracting new people/businesses to the community. The Super Bowl is a much better investment than the Olympics. No facilities will go abandoned, we should have the hotel capacity for the event. I also agree with Ted, I’m not sure anyone vacations to Minneapolis in January ..

    But will we win this bid? I don’t think we will. I think they’ll postpone it for us a few years because that’s how you minimize your exposure to destinations that aren’t ideal. Miami, Phoenix, Dallas. They want warmer weather.. Does it matter that the weather is warm? No. But people like to go for the week, and a week in T-shirt is a vacation. A coat with no mountains? Meh

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  5. How can New Orleans be contending to host another super bowl? They just did in 2013 and they could not even keep the lights on.

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  6. What connection does Goodell have with New Orleans ???
    Agree with Norse on this…

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  7. Another example would the Super Bowl that Minneapolis already hosted in 1992, with success. Now, there’s amazing Public Transportation in place along with countless other improvements to the infrastructure of downtown and surrounding areas.

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