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Time once again to talk about the Super Bowl and its economic impact

We’re less than 100 days out from Super Bowl LI here in Houston. I don’t know how much people who are not directly involved in the planning and execution of it are thinking about that.

The economic benefits of hosting a Super Bowl and other major events have long been a matter of debate, however. Houston’s host committee has yet to release its impact analysis, but these reports typically estimate that Super Bowls generate economic activity in the hundreds of millions of dollars. Academics who study such events generally find the added activity, with all the costs taken into account, is much smaller.

“I can’t tell you whether there will be a zero net impact or a modest positive one,” says Andrew Zimbalist, an economist at Smith College who has long studied the sports industry, “but it’s not going to be large.”

Houston, though, may be better prepared to benefit from the Super Bowl than other cities, for several reasons. First, there isn’t much winter tourism in Houston to displace, as in other Super Bowl cities such as New Orleans and Miami, so the net gain here is much greater. Second, Houston’s hospitality industry needs the business, with new hotels built during the shale boom struggling with lower-than-expected occupancy rates as business travel declined.

Third – and perhaps most important – the city really could use a period of prolonged exposure to show business leaders and the millions watching at home that it’s not just a stodgy oil town like it was in the early 2000s.

[…]

The accounting firm PwC has estimated the economic impact of the Super Bowl since 2003, pegging the game’s value to Houston in 2004 at about $130 million in direct spending. It estimated that the last Super Bowl, number 50, was worth $220 million to the San Francisco Bay Area.

Cities have gotten better at making the most of Super Bowl week, said Adam Jones, a PwC analyst. By planning events within a relatively small radius so visitors spend more time on experiences than getting to them, cities can capture greater returns.

Houston has done that, with NFL Live at Discovery Green — a 10-day music and food-filled festival open to the public — only a few minutes from NRG Stadium via light rail or taxi. Additional bus and shuttle lines will be available should guests want to venture to the Galleria as well.

“What we’ve seen within the past five years is communities going out, learning what has worked, what hasn’t worked in cities that preceded them,” Jones said. “We continue to see year over year improvement in the model.”

University of Houston economist Bill Gilmer looked at additional tax revenues generated during the 2004 Super Bowl, about $5 million, and estimated the 2017 edition would bring in an extra $6.6 million in sales taxes for the city plus another $2.2 million in hotel occupancy taxes and $6.8 million for Metro.

Longer-term benefits are harder to measure. The city’s tourism promotion arm, HoustonFirst, said it was able to go after bigger conventions when the Hilton Americas was completed in 2004. That added 1,200 rooms directly connected to the convention center, and the Marriott Marquis will have a similar effect. The city booked a record number of room nights for future conventions in 2015 and expects to break the record again this year, according to HoustonFirst.

We’ve discussed this a few times before. I’m sure that the economic benefit of hosting a Super Bowl is generally overstated, but I do think there is a benefit, and I do think it’s possible that cities have learned from past experiences and academic study to maximize the benefit that is available to them. As the story notes, Houston doesn’t have much tourism trade to displace, but we do have an extensive food-and-drink sector of our economy that will surely enjoy having all these out-of-towners around. The spending that has been done on infrastructure is spending that needed to be done, and which will be a public good long after the Super Bowl people have gone home. In the end, someone will put out a number, and we can make of that what we will. Whatever that number is, I expect the city of Houston will look back on this experience and decide that it was worth it.

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