Sports Economics: Current Research

By John Fizel; Elizabeth Gustafson et al. | Go to book overview

not appear to decline. But impacts from other spending (restaurants, shopping, etc.) would decline. The net effect could be negative!


CONCLUSION

Super Bowls and other mega-sporting events have received plenty of attention from sponsors and the media. Reports of huge impacts from such events are used as justification for municipal expenditures to keep or lure a team to an area, to build stadiums, or to make bids for future Olympic or NCAA games. One result is citizen complaints about inconveniences suffered when the event takes place. This study has taken a critical look at real-time impact analysis through the looking glass of historical, realized sales. These sales are found to be greatly overstated at best, and total fabrications at worst.

Investigator bias, data measurement error, changing production relationships, diminishing returns to both scale and variable inputs, and capacity constraints anywhere along the chain of sales relations lead to lower multipliers. Crowding out and price increases by input suppliers in response to higher levels of demand, and the tendency of suppliers to lower prices to stimulate sales when demand is weak lead to overestimates of net new sales due to the event. These characteristics alone would suggest that the estimated impact of a mega-sporting event will be lower than impact analysis predicts. When there are perfect complements to the event (like hotel rooms for visitors) with capacity constraints and/or suppliers who raise prices in the face of increased demand, impacts are reduced to zero. Today's Super Bowl visitor (the fox) drove away yesterday's and tomorrow's visitor (the hen), not with threats, but with a greater willingness to pay for space.


NOTES
1.
See Noll and Zimbalist ( 1977), p. 1.
2.
Ideally, input and output numbers are real measures. However, aggregating industry values necessitates using a common metric like dollars of value. As we will see later, this is one source of bias in impact analysis.
3.
The inclusion of a household sector, which, in effect, produces labor, creates an additional indirect effect, commonly called an induced effect, because new labor income increases the demand for output.
4.
Detailed discussion of the technical errors (other than bias and mistake) can be found in Carter and Brody ( 1970a, 1970b) and in Miller and Blair ( 1985) and in Mills ( 1993).
5.
One interviewer for a study of a college Spring break beach party conducted fifty interviews, all of them of women.
6.
In events sponsored by local governments, budget constraints imply that spending for the event must necessarily reduce spending for other government activities or increase taxes and reduce spending by resident taxpayers. Interestingly (perhaps tellingly), impact practitioners seldom apply (or at best, are not asked to apply) multipliers to tax increases.
7.
See "Economic Impact Analysis of Super Bowl XXV on the Tampa Bay Area,"Appendix D, where the authors write, "Super Bowl XXV could not have occurred at a worse economic time, with an economic contraction led by a downturn in consumer spending during the month of the Super Bowl, total seasonally adjusted general sales fell by 4.1%." The impact projection rather than the reality was widely touted in 1996 when the NFL promised Tampa another Super Bowl if they used taxpayer money to build a new $200 million stadium.

-72-

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