WHY HOSTING "THE BIG GAME" ISN'T WORTH IT
Updated: Jun 27, 2020
This article was originally published on February 6th, 2019.
One of the biggest myths in sports is that "the Big Game" is the most-watched sporting event in the world.
The NFL championship game's viewership is often greatly outpaced globally by European Soccer, Rugby, and even cricket.
"The Big Game" though remains the most-watched sporting event in the U.S. Each year 100 million people tune in to see the best of what the NFL has to offer. This has made "the Big Game" take 9 out of the top 10 most-watched American TV programs of all time.
The Host City Myth
Hosting the championship game has also become something for cities to fight for. The NFL offers the promise to cities if they invest hundreds of millions of public dollars into a stadium, "the Big Game" will come.
This has lead to 7 NFL stadiums being built between 2006 to 2017. By 2020 each one of these new stadiums will have hosted the big game. The new stadiums set to open in Los Angeles and Las Vegas in the near future will also host the Lombardi Trophy presentation.
Most of "the Big Game" host committees believe that hosting such a popular event, will automatically mean large profits for the host city.
Mayors and NFL executives love to talk about the economic boom of "the Big Game".
Claiming that their championship game can bring in 80,000 people for the game while creating 10,000 temporary jobs in the city. All of which could generate up to $600 million for the host city.
A commissioned study by the city of Phoenix declared “The largest economic impact ever held in the state of Arizona.” Suggesting the 2015 edition of "the Big Game" had brought in $719 million to the local economy.
When Minneapolis hosted the 52n edition of "the Big Game" in 2018, the host committee reported the event brought in $450 million.
However, economists were skeptical.
"If someone claims, 'Look, this event is three, four, five hundred million dollars,' what an economist would say is: 'Prove it.'" said Victor Matheson, Economics and Accounting professor at College of the Holy Cross, who has spent years studying the real impact of big sporting events on their cities.
When Matheson reviewed the figures, he found he found that "the Big Game" only brings in between $30 and $130 million, a fraction of what the host committees and the NFL claim.
These figures are not terrible, making $30 million off of one football game is a good thing; it’s just not $719m.
The True Cost
The main reason "the Big Game" isn't as valuable to host cities is due to the costs.
Hosting the largest party in the US costs a lot of money. Starting with the building of a new NFL stadium. On average, taxpayers have contributed $250 million for stadium construction.
During the event, host cities have to cover the costs associated with public transport and paying for police overtime. A good example of this can be seen after the 48th edition, in New Jersey. Local transport operators NJ Transit ended up with $5.6 million of losses transporting fans to and from the Super Bowl.
Along with the transport expenses and tax brakes, the NFL requires a number of specifications from the host city. Minneapolis's Star Tribune published the NFL's 153-page bid book that it obtained in 2014.
The NFL insists cities would have to waive all state, local and city taxes; pay for 20 billboards promoting the game; pay all travel expenses for 180 league officials to check out the area before the game; provide two golf courses in the warm months before the game and two bowling alleys during Championship Game week; provide 35,000 free parking spaces and give free police escorts for all of the NFL’s team owners.
Finally, the NFL would receive the stadium rent-free for a month around the game.
During the game in New Jersey, local officials would give the NFL a tax break of $8 million.
"That obviously means that a lot less money is sticking in the city. That's all going back to NFL's headquarters, and, at that point, the money does get shared. But again, it doesn't get shared with local governments. It gets shared with the other 32 team owners," states Matheson.
“I’m not even blaming the NFL, because over the years these cities are bidding against each other,” said Craig Depken, a sports economics professor at the University of North Carolina Charlotte. “The NFL didn’t just come up with 154 pages of demands; someone has probably offered these things over the years and the NFL just went: ‘Hmm.’”
The document that surfaced, does explain one thing that the city of Green Bay will never host "the Big Game." The NFL's document highlights that there must be 30,000 hotel rooms within an hour's drive of the stadium, while at most Green Bay could potentially muster is around 8,000.
The host city understands the high demands going into the event, although the assumption is that they will make their money back. But just how much of a profit are these cities actually making?
Matheson identified three economic factors that suggest that cities are not making the money they where promised.
The first is the substitution effect, which is when consumers spend money on a sporting event, that they would have spent anyway. So it doesn't increase the amount of money being spent. It rearranges the spending pattern.
The second is crowding out effect, which is when crowds associated with a sporting event displace regular spending. So if "the Big Game" fills every hotel that would normally be 80% occupied, the NFL is only accounting for the 20% increase.
Looking at the $719m figure suggested by the Phoenix report, may not be wrong. However, it is not completely correct either. The local area may have taken in $719m from "the Big Game"-related events that week. What is often forgotten is the money lost from local businesses who chose not to hold meetings or conferences on a week when "the Big Game" had taken over downtown.
And the final reason is leakage, which accounts for where the money ultimately ends up. Hotels usually increase prices by three or four times during "the Big Game," but corporations and shareholders reap the benefits of the price increases, not the local workers. Restaurant workers and shop employees might work a few more hours but their salaries aren’t being raised because "the Big Game" is in town. The trickle-down is small.
"So, what you're trying to do is, you're trying to pay for tens of millions of dollars of expenditures on really not much in the way of additional economic activity, so, you can definitely not come out ahead, at least as a state or local government," states Matheson.
In 2016, San Francisco hosted a week of events leading up to 50th edition, which was being held in Santa Clara, and San Francisco ended up with a $4.8 million public services bill.
"We do have some evidence that big events, like the Super Bowl or the Olympics, at least temporarily cause a surge in happiness. But, we need to be careful about that. So, if you wanna say, hey, bring in the Super Bowl because it makes people happy, that's great. Just don't tell us it makes us rich." Championship Game cities aren’t buying themselves an economic boost. They aren’t jumpstarting their economies. Simply put they are purchasing the kind of civic pride that makes politicians’ hearts thump with joy. However, civic pride doesn’t necessarily translate into real dollars.