Posts Tagged ‘Super Bowl’

h1

do big sporting events really help local economies?

Thursday 8 May, 2014

I checked out this event sponsored by NYU’s Sports & Society’s department @ the School for Continuing & Professional Studies “The Lasting Impact of Sports Greatest Events.” The panel contained a veritable who’s who: Lisa Baird, CMO of the US Olympic Committee; Greg Ballard, mayor of Indianapolis-“amateur capital of the US; Greg Carey, sports finance specialist @ Goldman Sachs; Richard Florida, author of “Who’s your City?”; Kevin Hallinan, SVP of security of Major League Baseball, Constantine Kontokosta, of the NYU Center for Urban Science & Progress; Mary Pilon, New York Times sports reporter; David Rousseau, who sits on the Salt River Project board in Arizona.  The panel was moderated by Arthur Miller, Chair of the Sports & Sociey department @ NYU.

Indianapolis used sports to build the city into the capital of amateur sports in America, in which the citizens have a great sense of pride.  Rockpoint analysis determined the General Fund Effect was $40M.  Phoenix feels it’s getting an amazing reward from similar investments. These things bring prestige, like luring a major symphony orchestra.

The motivations for these things have changed, to achieve global city status.  The 1984 Olympics in LA made it an economic development game, but now the temporary economic impact doesn’t justify the long-term investment any longer.  The question is the impact on infrastructure.  Sports have become an excuse to do what should already be done.  For example, after the Olympics, what are they going to do with the bobsled run in Sochi?  There is little talk of what happens afterwards.

The Olympics are all about the athletes.  Sebastian Coe left a legacy in London, having built up the west side & put the para-Olympics on the map.  He’s created social good, while the economic impact hasn’t been measured yet.

There is a lot of ego involved, & differences between who embraces sports & those who do not.  The downside can be displacement.  These projects have to be about more than the game because stadia (stadiums) now cost a lot more:  San Francisco’s cost $1.3B.  Now security is primary & drives up costs, as Atlanta’s Olympics proves.  Terrorism & gay rights could have been issues in Sochi.  The Dept. of State was assuming safety would prevail.

Goldman Sachs actually invests in sports infrastructure & is bullish about this business, but admits these are not always good investments for cities.  The key is whether the investments are in good or bad infrastructure & whether it’s public or private investment.  Rio is building lots of infrastructure for it’s Olympics, but it’s been disaffecting & the security challenges will be unbelievable.   Public safety & public works are the highest priorities.  Cities must look @ expanding their tax bases & the opportunity costs of making other comparable investments.  Indianapolis did it right.

Baseball’s world series is a nightmare for security because the sites aren’t known until a few days before the series starts.  When Pres. Bush attended a game, an extra umpire was actually a Secret Service man. At the 1st Mets game after 9/11, there was a line almost all the way to Manhattan to get in & all the fans said “Thanks for being safe.”  The Super Bowl in New York attracted lots of prostitution, which reflects the best/worst, good/bad these events bring out.  There is a distinct relationship between the Super Bowl & sex traffic.

The economic benefit of the Super Bowl being held in New York/New Jersey was estimated to be $600M, but is actually complete BS.  The hotels are normally only @ 50% capacity, but were full for that week, but there is also a crowding out effect of others who stay away, called displacement tourism.  Theatre attendance is down 20%.  The merchants on Super Bowl Blvd. were dying.  Super Bowls are better held in warm climates, although Minnesota is getting 1.

There is a developmental economics aspect to all this.  Rio is building infrastructure which is building capacity.  The downside is the IOC requires moral obligations, but the city may be stuck with the bill.  Athens is still paying the debt for their Olympics.  Montreal just paid off their debt for the 1976 Olympics.

Sponsors get involved for different reasons, such as branding, ROI, relationships developed as long-term investments, i.e. Coke has been an Olympics sponsor since 1928.  LA changed the model when it was the 1st Olympics to show a profit in 1984, but even it had very few high-priced sponsors.  To stage sustainable games is a tough task.

Different games have left different legacies.  Barcelona used the Olympics as a tool.  Seoul, Sydney, & Montreal had a plan, but the Athens Olympics may have started the crisis there.  It’s definitely not 1 size fits all.

Arizona had to pay the NFL $30M in obligations to get the Super Bowl, which was paid by local corporations.  They will sell their local competitive advantages; good weather & a positive business climate.  But there are unintended consequences too.  To magnify the legacy:

  • you must know who you are
  • focus on branding (London was the 1st games where every country had at least 1 woman on each team)
  • security partnerships help
  • share lessons learned
  • get away from gigantism