How much money will the Final Four bring to Indianapolis?
I love the inevitable stories that come out of the local media of any city that's about to host a major sporting event, touting how many millions of dollars the event will mean to the local economy.
The figures are almost always overblown by local chambers of commerce and other boosterish groups. And that's fine -- that's their job. But it's the job of the journalist to put those claims to the test. My former colleague David Von Drehle, now at Time magazine, did a story years ago when he was still at the Miami Herald, challenging the amount of money city fathers said some big event -- maybe a Super Bowl -- would mean to Miami.
The Miami city fathers floated some multimillion figure. But after dogged reporting in which he talked to the hospitality industry and checked history, Von Drehle found the event would bring in significantly less than promised. Ludicrously less, in fact.
So that's why I link to this story from CNBC sports business reporter Darren Rovell, fact-checking the claim by Indianapolis officials that this weekend's Final Four NCAA men's basketball tournament will bring $50 million to the city square in the middle of Indiana. A place, by the way, where $50 million still means something.
Before we go any further, I need to make two disclosures:
a) This story quotes a friend of mine, Brad Humphreys.
b) The West Virginia Mountaineers are one of the Final Four teams. If they win the national championship, I will be the happiest economics blogger on the planet. So I have a bias you need to know about. You may have perceived my bias when watching this video and noting the Flying WV logo affixed to my fancy Economy Watch sign.
Rovell talks to a number of experts, one of whom puts the maximum revenue to Indy at no more than $30 million. And they point out this salient fact: The money a city gets from hosting a big event comes from something called "export tourism," which is the money spent in a host city by fans who have traveled there from another city, in the form of hotel rooms, rental cars, meals and so forth.
Problem: One of the Final Four teams is Butler University. Its campus is seven miles away from Lucas Oil Stadium, where the games will be played. So that eats into your $50 million figure, right there.
Another commentator makes this point: Regardless of how many fans travel to these games, there will be a relatively steady base of money spent by corporations.
“Sure there are fans that come here, but this is for corporate America,” said Larry DeGaris, an associate professor of marketing at the University of Indianapolis. “And whether Butler is playing or not, they’re here. I guarantee you, you can’t find a bag of cocktail shrimp in town.”
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March 29, 2010; 4:42 PM ET
Categories: Corporations , The Ticker | Tags: Butler Bulldogs, CNBC, Darren Rovell, Duke Blue Devils, Final Four, Michigan State Spartans, West Virginia Mountaineers
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