The NFL is a Super Bully. It is incredibly rich which accrues it tremendous power. It is a non-profit that pays no taxes and is a monopoly. Quite literally, it is the only (football) game in town. It can call the shots and is not shy about doing so. It’s also like your miserly grandfather, watching every penny and constantly on the lookout for freebies. Do you think Glendale should host the Super Bowl? Vote in the informal poll to the left of this article.
The NFL has a wonderful scam going. It encourages potential host cities to build or upgrade facilities by dangling the carrot of an economic bonanza with the prospect of a Super Bowl coming to town. The website www.planetizen.com has an article by Boramici from February of 2013. He says, “ ‘Since 1990, taxpayers have been paying more than 60% of the bill for new NFL stadiums and more than 59% for new professional baseball stadiums in the U.S. While professional sports teams are integral to their host cities, the sense of ‘identity and civic pride’ they lend comes ‘at such a high price, one extracted not by these civic-minded fans, mind you, but by a uniquely undemocratic cabal of mayors and monopolists’, writes Harry Moroz.
“This year’s Super Bowl in New Orleans’s rehabbed Superdome comes with a price tag of $471 million to taxpayers with $41 million of those coming from FEMA.
“Several survey-based recent studies show that the value taxpayers place on professional sports team retention in their cities does not match up to the cost of building new stadiums or even renovating existing ones.
“What keeps the cycle of dependence going?
“With a limited supply and a more or less credible threat of leaving a city, sports teams are able to appeal to the risk-averse part of city leaders’ brains: People forget about $100 million lost here or there, but the departure of a sports team will be written in a mayor’s obituary.”
Couple the NFL clarion call to build even bigger and better facilities with its tried and true tactic of funding and issuing an economic study that promises untold financial benefit. There is an excellent piece of research by Victor A. Matheson of the College of the Holy Cross; Department of Economics entitled Economics of the Super Bowl. Here is the link: http://college.holycross.edu/RePEc/hcx/Matheson_SuperBowl09.pdf . He contends, “The Super Bowl is America’s premier sporting event. This paper details basic economic facts about the game as it examines the controversy surrounding the purported economic impact of the game on host communities. While the league and sports boosters claim that the game brings up to a $500 million economic impact to host cities, a review of the literature suggests that the true economic impact is a fraction of this amount.” In his research paper he refers to a W.P. Carey MBA Sports Business Program study commissioned by the NFL on the economic impact to the Phoenix metropolitan region as a result of the 2008 Glendale hosted Super Bowl. That study claimed an economic benefit of $550.6 million dollars to the greater Phoenix area. He states, “There are reasons to be skeptical of such claims, however, since the league has strong financial incentives to publicize studies that report a large financial windfall for host cities. The NFL explicitly uses the lure of the Super Bowl as a carrot to convince otherwise reluctant cities to provide public subsidies for the construction of new playing facilities.” Relying on a study the NFL paid for isn’t the most reliable indicator as, “It appears that most economic impact reports are “padded” at least as well as the players on the field.” That study has become mantra in the Phoenix area and every time there is renewed discussion of hosting yet another Super Bowl it is cited ad nausea. If you repeat something often enough we assume it must be true. Doesn’t this sound all too familiar? The state created the Arizona Sports and Tourism Authority (AZSTA) to collect hotel and rental car taxes within Maricopa County to fund, in part, the construction of the UofP Stadium because the NFL and Bidwills all but promised that it would host a Super Bowl. And we all drank the kool-aid.
An often cited component of every economic impact study focuses on sales tax collection. It is generally accepted that sales tax figures are a reliable indicator. How the sales tax figures are generated offers an opportunity for exaggeration. Matheson says, “…of the 23 new stadiums constructed for NFL franchises between 1992 and 2009, 7 were funded, at least in part, through increases in the local general sales tax rate while another 8 were funded through increased excise taxes, i.e. sales taxes on specific goods and services such as rental cars or hotel rooms (Baade and Matheson 2006b).” Among researchers without a financial dog in the fight the general consensus is that any Super Bowl game generates $100 million dollars – not NFL fueled study numbers of $400 million or $500 million — of economic impact. Many studies have been done on the South Florida area because of the inordinate number of Super Bowls that area has hosted over the years. One researcher offered this rather sardonic comment, “Finally, it is worth noting that taxable sales in the area during January-February 2000, the year after the game, were $1.26 billion higher than in the same months during the Super Bowl year. Strangely, the NFL never publicized a story announcing, ‘Thanks to the lack of a Super Bowl, there was a $1.26 billion increase in taxable sales in South Florida compared to the equivalent January- February period in 1999.’”
If all else fails and one’s critics will not accept sales tax figures one can always fall back on the intangibles.”… in assessing the impact Super Bowl XLII in Glendale, Arizona, Michael Mokwa, chairman of the marketing department at the W. P Carey School of Business stated, ‘The money is just the tip of the iceberg. Thousands and thousands of people who came here for the Super Bowl, of whom many had never been to the Valley before, took away powerful memories and a good feeling about Arizona.’ This translates, he said, into coveted return visits, family and business relocations, and word-of-mouth marketing throughout the country. Priceless, as MasterCard is fond of saying (W.P. Carey School of Business, 2008).”
The problem with intangibles is they are intangible. They are extremely difficult to quantify and substantiate. Have we ever heard a CEO of a company state that he moved the company to Arizona because he had powerful memories and fell in love with it while attending the Super Bowl in Glendale? It is the stuff of urban legend that was used frequently by Julie Frisoni (Glendale’s Director of Communications and Marketing) in 2008 while making a case for Glendale’s first hosting of the Super Bowl. She continually cited the exposure Glendale would receive in hosting the Super Bowl but to my knowledge, there is no company that relocated to Glendale as a direct result of having attended the 2008 Super Bowl.
Government revenues, another intangible, are also non-existent because of the NFL’s stipulation that it pay no taxes. While there is an increase in employment and as a result, personal income, it does not have a lasting effect beyond the event. It is an event that provides an increase in jobs for perhaps a month and then, poof…they are gone. Matheson goes on to say,“Ex post economic analyses of the Super Bowl by scholars not financially connected with the game have typically found that the observed effects of the game on real economic variables such as employment, government revenues, taxable sales, GDP, and personal income, while generally positive, are a fraction of those claimed by the league and sports boosters. When considering optimal public policy with respect to sports infrastructure, it would be wise to take any claims of super benefits from the Super Bowl with a grain of salt.”
The NFL waves the magic wand of promise of a “Super Bowl To Come” to bring pressure to upgrade or construct a facility worthy of such an event. Then for good measure it issues an NFL funded economic impact study that can prove the region will realize a financial windfall. What’s not to like? It is powerful and enticing and appeals to many regions of the country struggling with the aftermath of the Great Recession. The crushing debt it causes taxpayers will be the catalyst causing us to take a second look and ask the question, is it really worth it?
The very last thing the NFL will tolerate is insubordination in its ranks of host cities. A hole in the dike is to be stopped at all cost to keep a flood of skepticism from washing over its always reliable revenue streams. The sentinel that alerts it to impending trouble is the Host Committee. In the next blog, we’ll look at the Arizona Host Committee and Glendale’s role as a host city.
©Joyce Clark, 2013
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