All due props to the Tribune-Review for adding some much-needed perspective to the trope that this week’s U.S. Open at Oakmont Country Club will have a massive economic impact for the region.
The Trib’s Tom Davidson, quoting economic experts far and wide, threw the necessary cold water on the United States Golf Association’s (USGA) claim that the tournament will generate more than $200 million for Pittsburgh’s economy.
“(E)conomists handicap the impact of an event like the U.S. Open differently.
“’Rule of thumb: Never believe a sports sponsor,’ said Victor Matheson, an economics professor at College of the Holy Cross in Worcester, Mass.
“Matheson is a former editor of the trade publication Journal of Sports Economics, treasurer and former president of the North American Association of Sports Economists, and co-author of the sports economics textbook ‘The Economics of Sports.’
“’It’s very hard to get to that big of a number,’ Matheson said of the USGA’s figures.”
And as the Allegheny Institute’s Jake Haulk recently noted in vetting similar claims regarding next April’s NFL Draft in Pittsburgh, economists noted for the Trib that one particular metric typically bandied about – sold-out hotel rooms – is a misleading indicator of economic impact.
“The reason this logic isn’t sound: Not all of the people renting hotel rooms are attending the tournament, Matheson and two other sports economists told TribLive.”
The bottom line is that, yes, the U.S. Open this week, and next year’s NFL Draft in Pittsburgh, will have an economic impact. It’s just not the inflated (sometimes wildly) impact the event sponsors and local cheerleaders claim.
Further from Tom Davidson’s Trib story:
“Stefan Szymanski is a sports management professor at the University of Michigan, and Michael Leeds is a professor of economics at Temple University in Philadelphia. Each said the economic impact of sporting events is exaggerated and that, in some cases, hosting a large event can be more of a burden than a boon.
Think of the strain on public services, for one.
“Even if the $200 million figure touted by the USGA were exceeded, it would be a trickle — about 0.1% — of the region’s annual economy. Pittsburgh’s gross domestic product — that is, the total market value of the goods produced and services provided here — was $194.2 billion in 2023, according to the Federal Reserve Bank of St. Louis,” the Trib notes.
“’Numbers can seem big,’ Leeds said. ‘We’re not talking about a huge gain.’
Continues the Trib’s Davidson:
“Although about 200,000 people are expected for the tournament, that number includes residents who live nearby. For those people, the money they spend this week is money they would have possibly spent elsewhere, Szymanski said.
“’All that these things are doing is reallocating consumer leisure spending,’ he said. ‘There’s no local impact from that. It’s a drop in the economy.’”
The Allegheny Institute has been noting such things for years. And it’s quite refreshing to see the media – well, at least the Trib – present the same case in expert fashion.
Or as Haulk, a Ph.D. economist and the institute’s president-emeritus, put it:
“At least the press is catching on to the overblown rhetoric about economic benefits of one-off events.”
Hear! Hear!
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
