Studies on game all over the field
Forecasting the outcome of the Super Bowl is a tricky business, with a lot of variables that are hard to predict. And that’s just for picking the teams that will end up playing for the title.
The economic impact of America’s biggest football game is an even harder thing to pin down. Now, as studies start to emerge projecting how Houston will make out, the answer becomes even more confusing.
Let’s start with the study that the Host Committee commissioned from a large accounting firm in order to apply for funding from the state’s Major Events Reimbursement Program, which is basically an advance on the sales taxes that the events are supposed to generate. It projects that out-of-state visitors will generate $284 million in direct spending in Houston, generating $25.9 million in tax revenue (the number is larger if you look at the entire Houston area, and higher still if you include “induced” and “indirect” spending, such as restaurant supply companies that see more business as a result of more people going out to eat.)
The report uses data provided by the National Football League, which has an incentive to see as large a number as possible.
“Take the number the NFL is putting out there, and move the decimal point over one place,” says Andrew Zimbalist, a professor at Smith College who has studied the impact of large sporting events.
On the basis of that report, the state awarded the Host Committee
$24.5 million to help defray expenses associated with putting on the event. But here’s the question: How many of those dollars would have been spent anyway, if the Super Bowl had not occurred?
The study doesn’t answer that question, and the study’s authors, from a global firm called BDO, did not respond to calls and emails requesting clarification. Considering that Houston has built up a significant convention hosting apparatus, and usually fills its downtown hotels with business travelers, it’s inevitable that many non-Texans who otherwise would have visited Houston will now avoid the city entirely.
If the BDO study did measure that aspect, known as “displacement,” it might come up with something closer to what the Houston-based bank BBVA Compass put out this week: a net impact for Houston that is one-fourth of the BDO estimate. The bank projects that net spending —by all visitors, not just those from out of state — will total $69 million, which is much smaller in the grand scheme of things, considering it’s spread across thousands of individuals and businesses.
That’s not the last word on studies that measure displacement. Another consulting firm, Price Waterhouse Coopers, puts out an annual projection of net economic impact in the days before the Super Bowl. In recent years, it’s been in the range of $200 million, depending on how many events are scheduled, which teams are playing and how the economy is doing more generally.
But even that isn’t comparable to the other studies, because it doesn’t take into account indirect and induced spending, which BBVA’s does. (The bank declined to provide more detail on its calculations). And there are yet more studies to come: The Host Committee has for weeks promised a more general analysis of the Super Bowl’s impact that extends beyond sales tax revenues.
Because all these studies are measuring different things, it’s hard to determine whether they’re actually in agreement. The only real study will come months after the event, when we’re able to assess how much visitors actually spent in Houston and how much of it stayed local.