Reports the Post-Gazette:
“The NCAA Division II men’s and women’s college basketball championships are coming to Pittsburgh in March, bringing some excitement — and money — to what is typically a quiet stretch of the region’s sports calendar.”
It notes that SportsPittsburgh, part of the city’s VisitPittsburgh tourism agency, will host the games with PennWest Clarion University at the UPMC Cooper Fieldhouse at Duquesne University.
“Officials do not currently have an estimate of how much the tournaments will generate in direct economic impact, but SportsPittsburgh Vice President Jim Britt said that the women’s tournament at UPMC Cooper Fieldhouse last year generated $1.5 million by itself, averaging over 500 fans per game,” the P-G reports. “With 16 teams sharing the facility this year, SportsPittsburgh is expecting ‘twice that impact,’ Mr. Britt said.”
Would that it were, we are wont to note with a bolus of skepticism.
For as The Sport Journal has reported: “(T)here exists a great deal of debate about the validity of economic impact studies of sporting events. Economists widely believe that studies sponsored by leagues and events exaggerate the economic impact that professional franchises and large sporting events make on local communities.”
Analysts note that these overstatements result from several factors. Again, from The Sport Journal and researcher Victor A. Matheson:
“First, the studies often ignore the substitution effect. To the extent that attendees at a sporting event spend their money on that event instead of on other activities in the local economy, the sporting event simply results in reallocation of expenditures in the economy, rather than in real net increases in economic activity.”
Additionally, “the studies usually ignore the crowd-out effect. Many large sporting events are staged in communities that are already popular destinations for tourists. If hotels and restaurants in a host city normally tend to be at or near capacity during the period in which a competition takes place, that contest may simply supplant, not supplement, the regular tourist economy,” The Journal says.
We are forced to note, wryly, that the above point of order likely does not apply to Pittsburgh. Ahem.
“Third, the studies may fail to address whether money spent at a sporting event stays within the local economy. Much of the money spent by out-of-town visitors pays for hotel rooms, rental cars and restaurants. To the extent that hotels, car rental agencies and restaurants are national chains, their profits associated with a sporting event do not further the welfare of the local citizens but rather accrue to stockholders around the country.
“Similarly, revenue from ticket sales is often paid to a league or to a sport’s ruling body instead of local organizers.”
The Sport Journal adds that “sporting events’ non-economic costs—traffic congestion, vandalism, environmental degradation, disruption of residents’ lifestyle and so on—are rarely reported.”
“Finally, since economic impact studies are often used by sports boosters to justify public expenditures on sports infrastructure, the ultimate question for anyone reading such studies is whether analysis conducted by agents with a vested interest in the research outcome can ever be considered an objective examination of events’ true economic impacts.”
Bingo.
Of course, a funny thing typically happens after these sporting events (and others) pick up and leave respective communities: The public never hears if all the grand projections of economic gain materialized.
“It is one thing to point out bias that could potentially be introduced in impact studies. It is another thing altogether to examine whether actual economic impact studies are, in practice, truly flawed,” The Sport Journal notes.
“One tool that can be used to determine the accuracy of economic impact studies is ex post comparisons of predicted economic gains to actual economic performance of cities hosting sporting events,” it concluded.
In fact, we would recommend that ex post comparisons be made mandatory, especially for any event, sporting or otherwise, that seeks, and receives, taxpayer dollars for their gatherings.
And, first, as The Sport Journal notes, cities “should view with extreme caution any economic impact estimates provided by sports franchises, sponsoring leagues or event-organizing committees.”
So, how about it, SportsPittsburgh, once you do have a projection/estimate of how much next month’s NCAA Division II men’s and women’s college basketball championships might generate in direct economic impact, share it with the public as you’ll likely do – but also with a promise to revisit those numbers with what really happened.
The least you can do is prove, if you can, that the sizzle you advertise on the menu is the steak you serve to the table.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
