The economic impacts of the 2018 Super Bowl
Discipline: Economics
Type of Paper: Other
Academic Level: High school
Paper Format: APA
Question
Description
Hi,
I would like you to read my colleagues' discussion and write a response. You will find two discussions. Responding to the discussion is either by asking a question, adding information, or giving an opinion.
The first discussion. (Response 100 words)
Brown et al. (2017) define economic impact as the net economic change in a host community resulting from spending attributed to an event or facility.
The Super Bowl and its associated events are generally regarded as an economic boom for the host city.
The 2018 ‘Super Bowl LII’ was hosted at the U.S. Bank Stadium in Minneapolis, Minnesota. Shortly before the event, the Minneapolis Super Bowl Host Committee commissioned an estimate of the economic impact report due to concern over growing hosting costs and expenditure, some of which was being government subsidised.
POSITIVE IMPACTS
Economic Impact: It was estimated that $404 million of value to the local and surrounding economies (Gross domestic product).
Direct impact of $206 million – that is to businesses that directly served the event attendees, visitors, out of town stakeholders and those directly involved with hosting the event
Indirect and induced impact of $198 million – that is to upstream businesses supporting the supply chain of direct event businesses and the associated wages that will be spent in the local area.
Job creation: The report estimates that due to the upstream and downstream spending and support activities associated with the Super Bowl that 5,000 full-time equivalent (FTE) jobs will be created.
At an average wage of $USD 47,000 per year, this equates to new wages of $242 million, assuming this will result in a rise in consumer spending in the local and surrounding areas.
Tax revenue: The event was expected to generate an additional $29 million in state and local tax revnue. Event advocates claim this is additional unexpected monies that can be allocated to public services.
Destination development: An estimated 125,000 non-resident visitors will visit the local and surrounding areas due to the event. A positive experience will encourage return/repeat visitation to the local and surrounding areas.
INQUIRIES/CONCERNS
Resource allocation/Return on investment: On the surface, $340 million in new spending seems like a good investment return. However, you need to consider the main expense incurred by taxpayers of $500 million to build the new U.S. Bank Stadium. With serious poverty and crime issues in the city and surrounding areas, critics that this money would have been better invested in public health, safety and welfare programs and initiatives.
Type of job creation: Of the 5,000 FTE jobs, how many are temporary to support event operations and the influx of visitors/attendees? A more appropriate measure would be how many permanent, sustainable, well-paying jobs are created.
Monetary Leakage: Not all money spent remains in the local economy. For example, many accommodation and restaurant franchises are owned by multi-national or national corporations, which yields some leakage. Local organisations can also spend money with outside entities to secure and operate the event, which reduces the economic impact (Rishe, 2012).
Unrecorded costs: It is generally understood by host cities that there is an expectation of a ‘quid pro quo’ from the National Football League (NFL). That is free marketing and advertising, tax breaks and considerations, public works and local enforcement diverted from normal duties to perform event security and fighting ticket counterfeiting (Moylan, 2018).
Disproportionate benefits: Research shows that the economic benefits are disproportionately skewed towards those businesses and areas geographically located near the Super Bowl stadium. Yet, the expenses and costs are burdened by the entire city/state.
References
Brown, M.T., Rascher, D., Nagel, M. & McEvoy, C.D. (2017). Financial management: In the sport industry (2nd edition). Routledge
Draper, K. (2018). Windfall for Super Bowl Hosts? Economists Say It’s Overstated. The New York Times. https://www.nytimes.com/2018/
McGill, K. (2017). Pre-Event Estimate of the Economic Impact of Super Bowl LII on Minneapolis-St.Paul. Rockport Analytics. https://kstp.com/kstpImages/
Moylan, M. (2018). Super Super Bowl economic impact? Depends who you ask. MPR News. https://www.mprnews.org/story/
Rishe, P. (2012). Why the Economic Impact of Super Bowls is So Controversial. Forbes. https://www.forbes.com/sites/
- The second discussion. (Response 100 words)
In December 2018, Deloitte Sports Business Group published a report on the ‘Economic impact of Wembley Stadium for the 2017/18 event season’. Wembley Stadium is located in north-west London, England, United Kingdom. Wembley National Stadium Limited (WNSL) is a fully owned subsidiary of the FA (Football Association) and owns Wembley Stadium.
This report measures its economic impact on the local community where the stadium resides (Brent Council), the city of London and the entire country. Wembley Stadium is the home for the English national football team and hosts numerous events and concerts throughout the event year. During this year it also hosted English Football team Tottenham Hotspur while their new stadium was being constructed. Events totalled 59 for the year.
Deloitte’s focuses its report on the analyses of the gross expenditure, direct impact and the indirect impact the events have on the 3 host economies.
Deloitte, 2018 states that a large number of spectators (350,000) were from overseas, the majority of whom were travelling to London with the primary reason of attending a match or concert at Wembley Stadium. The Report suggests these incremental visitors stay in London for four to five days for the one event, giving the local businesses a boost. This clearly stats that the visitors are from overseas and demonstrates the report isn’t including local residents when measuring the direct economic impact.
The largest direct economic impact was in accommodation for the entire London economy, this could indicate visitors are time switches and are aligning holidays/visits to London with an event. London also had the highest direct economic impact out of all 3 host economies, whilst the report states that the majority of visitor’s primary reason is to attend a concert or event, this suggests that London is an attraction in itself as a high ratio of expenditure leaves the Brent district.
It’s important to look at the direct impact figures from visitors outside the area as apposed to the gross expenditure. For example, for London the gross expenditure is £700m and direct impact is £424m. The gross expenditure in this report includes things like ticket sales to the event which can’t be included to the economic impact.
The owners of the stadium have employed Deloitte to undertake the report, so I’d assume that the report is going to positive towards the economic impact. The report is conducted during an anomaly of a year with Tottenham Hotspur using the ground as its home ground. This gives the economic impact a brighter outlook as Tottenham account for 39% of the year’s gross expenditure. Tottenham Hotspur is located in North London so it can be argued that the impact they bring already existed in London and merely transferred to Wembley for a short period whilst their new stadium was being constructed. The report does state that Wembley Stadium was able to accommodate higher attendance for Tottenham which leads to a greater economic impact.
Overall the report does indicate that the stadium does have a positive impact on the local and wider economy. I believe the organisation has pressure to show its positive economic impact as it used tax-payer money to fund part of its construction in 2007. It has appeared to time the report inline with its busiest year it has ever had and will be hard to replicate in the future.
Deliotte. (2018) ‘Economic impact of Wembley Stadium for the 2017/2018 event season’, Deloitte Sports Business Group, December 2018, [Online]. Retrieved from: http://democracy.brent.gov.uk/
Brown, M. T., Rascher, D. A., Nagel, M. S., & McEvoy, C. D. (2016). Economic impact analysis. In Financial management in the sport industry (2nd ed., pp. 311–337). Taylor & Francis Group. Retrieved from https://ebookcentral.proquest.
Wembley Stadium. (2021) ‘About Wembley Stadium’, [Online]. Retrieved from: https://www.wembleystadium.
For The third discussion (Response 75 words) I will send you later.
