Are the touted economic benefits of Super Bowl all talk?

Super Bowl economic bonanza? Depends who’s talking

Buried costs, giveaways accompany revenue boost

The annual debate about a Super Bowl’s economic impact is almost as much of a ritual as the coin toss before the game.

No one questions that a lot of money is flowing into Atlanta: Tens of thousands of people are pouring into the city, staying at local hotels, eating at restaurants and attending more than a week’s worth of concerts, celebrity events and fan-tainment amidst a carnival of marketing, merchandising and promotions that will climax with a globally televised football game Sunday night.

But is it worth it?

Pinning down the economic benefit is tough. Estimates range from the Metro Atlanta Chamber’s $400 million, to the Host Committee’s $196 million, to skeptical economists with less skin in the NFL’s championship game estimating anywhere from $100 million right down to zero.

Outside experts who have looked at previous Super Bowls generally see a positive bump in the local economy, but it’s a fraction of what boosters and officials promise. “It’s a 10 percent rule. The actual impact is about 10 percent of what they project,” said economist J.C. Bradbury of Kennesaw State University.

And when calculating that impact, no one bothers to include taxpayers’ contribution to building Mercedes-Benz Stadium: about $700 million.

That commitment let Atlanta bid for the Super Bowl – and a bid it was, with a commitment to spend about $46 million putting on the event, according to the Host Committee. That includes $10 million from a sales tax exemption on Super Bowl tickets and everything from the NFL’s use of the Fox Theater to three area golf courses to thousands of parking spaces.

Additional law enforcement, including overtime shifts for police, setting up security perimeters and diverting traffic? Atlanta picks up the tab. Oh, and if it had snowed, officials had promised to pay for removal of snow and ice from any NFL facilities.

Officials in Minneapolis, which hosted last year’s Super Bowl, claimed a huge economic success, putting the impact at $370 million.

Boosters included an increase of 230,000 “room nights” around the marquee game, producing revenue of about $66 million. But when Lauren Heller and Frank Stephenson, economists at Berry College in Rome, crunched the numbers, they found additional room use to be smaller, estimating $42.6 million in additional revenue. If that’s indicative of “a wider pattern of over-inflation of economic impact, then it is likely that these estimates are off by a much larger margin, on the order of hundreds of millions of dollars,” said Heller.

An analysis of the 2017 Super Bowl in Houston prompted a similar conclusion. Officials counted additional hotel revenue of $88.3 million, but Heller and Stephenson estimated $50.3 million.

Smokehouse supervisor Craig Hoelzer takes a batch of brisket out of a smoker at Fox Bros Bar-B-Q near Atlanta’s Little Five Points community, Friday, January 25, 2019. (ALYSSA POINTER/ALYSSA.POINTER@AJC.COM)
Photo: The Atlanta Journal-Constitution

To be sure, there are many winners in Atlanta, and hotels are not the only ones.

Some businesses profit directly by working for the Super Bowl, some benefit from the ways that visitors and fans spread money around the city. Money will be spent on taxis, Uber and Lyft, on merchandise, bars and restaurants.

Wing Zone is expecting to bulk up its staff to do five times its normal business on Sunday, said Matt Friedman, chief executive and co-founder of the Atlanta-based, 90-restaurant chain.

The company has three sites in the metro area, including one in Midtown, and specializes in takeout and delivery. “This Sunday will be the busiest day of the year for us,” he said.

But Super Bowl Sunday is always the chain’s busiest day, no matter where the game is played. The bonus from having the game played here is that there are thousands of visitors in town. “Friday and Saturday, we expect to do two or three times as much as our normal volume,” Friedman said. “It is going to be pretty hectic.”

More direct is the impact on companies that have contracts to do work on Super Bowl-related events. Between 50 and 100 local firms fall into that category, said B.J. Waymer, who heads Business Connect, the NFL-linked program that vets interested companies. Typically, those contracts add up to about $5 million for services like staffing, catering and building, she added.

One of the largest pacts this year is going to Atlanta-based Jon Smith Group for construction services including building broadcast booths, setting up tents, putting up walls in various compounds and – after the game – taking it all down.

“This isn’t our biggest project, but it is the fastest-paced,” said Jonathan Ford, managing member. “We’re going seven days a week, with guys going 10 hours a day.”

To get the job done, the company added more than 60 temporary workers to its 30 employees. “Without the contract, we would not have had enough work for that many guys,” Ford said.

And many residents are making a quick buck by renting their homes or condos. About 5,700 homeowners in Atlanta are renting their places through Airbnb and pocketing a median payment of $690, according to the online booking service. Another service, Vacation Rentals By Owner, says it is averaging $530 a night for about 1,300 short-term rentals in Atlanta Super Bowl week.

VRBO’s priciest rental is a 12,000-square foot, 10-bedroom house in Ellenwood with granite countertops, “plush” theater room, bar and billiard room, master suite with fireplace, steam room and sauna, enclosed veranda “and many other features.” Someone is paying $5,775 a night for the home.

The Wilson booth displays replica footballs from an array of past Super Bowl games during the Super Bowl LIII Fan experience at the Georgia World Congress Center in Atlanta, Monday, January 28, 2019. (ALYSSA POINTER/ALYSSA.POINTER@AJC.COM)
Photo: The Atlanta Journal-Constitution

Still, a handful of winners does not mean a windfall for the region. Economists say Pollyanna projections are wrong for a number of reasons:

— What they don’t count. Taxpayers are roughly on the hook for half of the $1.5 billion cost of Mercedes-Benz Stadium. In Minneapolis, taxpayers also picked up about half the tab – although it was “just” $498 million.

None of the boosters’ projections figure the stadium cost into their calculations. Even the rosiest projections for the Super Bowl do not come close to that figure.

Maybe a series of events over the years might bring in enough to equal the initial expense, said KSU’s Bradbury. “But even if you had an impact that would let you break even, is it better than what else you could have done with $700 million? Like invest in transportation?”

— What isn’t getting spent. Hotels are the single largest piece of visitor spending, said Berry College’s Heller, and the optimistic predictions often assume that money paid for rooms the week of the Super Bowl is money the Atlanta economy wouldn’t have had otherwise.

But some of that spending has chased away spending that would have been here otherwise – what economists call “displacement.”

For example, if a group of Seattle techies had thought about holding a meeting this week in Atlanta but found out the Super Bowl had jacked up prices, they might go to Orlando instead. The Atlanta rooms would be filled, but the techies would spend their money elsewhere.

— What’s spent on this and not that. It’s called “substitution.” And it’s misleading to say that all the spending at Super Bowl events is a boost to the economy.

A lot of the spending around big events like the Super Bowl is by local residents who were going to spend that money in the area anyhow – just on different restaurants or bars or merchandise. About 85 percent of the 1 million visitors downtown over several days will be from Georgia, according to the Host Committee.

— What gets spent in Atlanta, doesn’t stay in Atlanta. Hotels in Atlanta dramatically juiced up room rates for the Super Bowl period – just like hotels in other years and other Super Bowl cities.

But that money streams to corporate headquarters and shareholders. Most of the rooms for tourists in Atlanta are chain hotels based elsewhere, including Best Western, Marriott Marquis, Courtyard and Four Seasons.

“Hotel rooms are going to be selling for three or four times as much as their normal room rate, but they are not going to increase the pay for waiters and hotel desk clerks by three or four times,” said Victor Matheson, a sports economist at the College of the Holy Cross in Massachusetts.

And there are some potential benefits that are very hard to count.

The argument for hosting any big event – from the Olympics to a political convention – is only partly about the money. Advocates say the Super Bowl boosts Atlanta’s image, promoting the region as a good place to do business or live or visit.

Economist Andrew Zimbalist of Smith College in Massachussetts scoffs at the idea. “There is no evidence of people saying, ‘Oh, I didn’t know there was a city named Atlanta in Georgia. I didn’t know Coke was based there,’” he said.

Kennesaw’s Bradbury is less negative, agreeing there are intangibles like positive news about Atlanta and upbeat associations that are a long-term benefit. But he thinks those arguments should not be tossed into the mix with what he calls weak economics. “It’s not a justification to spend hundreds of millions of dollars,” he said. “And if this is the true value, then let’s be honest if that is why we are doing this.”

A well-run event, unblemished by bad luck, incompetence or malfeasance, leaves viewers with a good association. But what if things go wrong? The 1996 Olympics, for example, were marred by a fatal bombing in what is now Centennial Olympic Park. And in 2000, the last time Atlanta hosted a Super Bowl, the city was hit twice that week by ice storms that roiled travel and cancelled practices.

“You typically only remember sporting events’ location if things go spectacularly wrong,” said Matheson of Holy Cross. “Remember that the publicity that you get doesn’t always have to be good.”

Estimated economic benefit of the Super Bowl 

Metro Atlanta Chamber: $400 million

Super Bowl Host Committee: $187.46 million to $197.59 million

Economist Victor Matheson, College of the Holy Cross: $30 million to $100 million

Economist J.C. Bradbury: $40 million

Economist Andrew Zimbalist: $0 to $40 million

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Among top rental prices for homes booked for the Super Bowl

$5,775 per night – 10-bedroom house in in Ellenwood

$5,400 a night – seven-bedroom home off Mt. Paran

$4,685 a night – five-bedroom house in Grant Park

$4,038 a night – two-bedroom luxury apartment downtown, walking distance to stadium.

$3,429 a night – four-bedroom home on Peachtree Battle

Source: VRBO (Vacation Rental By Owner)

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Most spending by visitors, businesses and media by Super Bowl

1. 2014, NY/NJ

2. 2016, Santa Clara

3. 2011, Dallas

4. 2015, Glendale

5. 2013, New Orleans

6. 2017, Houston

7. 2019, Atlanta

8. 2010, South Florida

9. 2018, Minneapolis

10. 2000, Atlanta

Source: PwC

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