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New Orleans will gain nothing (economically) from hosting Super Bowl XLVII

Today is Super Bowl Sunday – even in Europe we know that. So even though I strongly believe football is a sport where the player kick the ball rather than using the hands all the time I have to do a post on the topic.

New Orleans will be hosting the match between San Francisco 49’ers and Baltimore Ravens.

Non-economists (mostly politicians and reporters) always get wildly excited about the possible positive economic consequences of hosting such sporting events. Just take this story from Fox Business with the quasi-keynesian title “Super Bowl XLVII Spending Spree”:

“New Orleans is gearing up to host its first Super Bowl since Hurricane Katrina devastated the city 7 ½ years ago. The showdown between the San Francisco 49ers and the Baltimore Ravens is expected to attract more than 150,000 visitors over the weekend — and the big game will give “The Big Easy” a significant financial boost.”

This is basically a version of the broken window fallacy and in the same way it is hard to argue that the hurricane Sandy was good news for the US economy in the same way it is hard to get very excited about the economic impact of Super Bowl XLVII.

However, there is more to it. Lets take a look at the Public Choice perspective. Getting to host the Super Bowl is certainly not for free – it takes a lot of lobbying and probably also a lot of taxpayer money. I think we can learn a bit from what Public Choice theory has to say about the funding of Sports Stadiums. He is from a classic article on the topic – “A PUBLIC CHOICE PERSPECTIVE ON THE SUBSIDIZATION OF PRIVATE INDUSTRY: A Case Study of Three Cities and Three Stadiums”:

This article employs the public choice perspective to explain and evaluate the outcomes of publicly subsidized economic development projects. Despite the questionable impacts of economic development projects that have been assisted with the use of public subsidies (including tax remission, tax credits, and nontax incentives), such subsidies have increasingly become the tools with which states compete for various industries and, more recently, for stadiums. Invoking the public choice framework provides some insights into the interrelationship of the various actors involved in these projects — the investors, the public officials, and the taxpayers. A behavioral model is developed based on assumptions derived from basic economic principles and applied to the political marketplace. The model is then tested using case studies of public subsidization that involved three football stadiums.

But so what? Isn’t the Super Bowl not good for the economy anyway? Not if you believe a 2009 study – “The Economics of Super Bowl” – by Victor A. Matheson. Here is the abstract:

The Super Bowl is America‟s premier sporting event. This paper details basic economic facts about the game as 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.

Anyway, that is my two cents on the Super Bowl. Enjoy the game – I will probably not stay up to watch it and I will certainly not think too much more about the economic impact of the game.

To my American readers. This guy is a football player (and he was even playing in the US at the time when the picture was taken).

New York Cosmos   Pele

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