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Effects of Super Bowl on the Host City

Super Bowl, the yearly highly anticipated football game is estimated by Civic boosters to have an economic impact of $300 to over $400 million on the host cities.  This economic impact is a result of increased taxable sales from business both permanent and seasonal, an increase in tourism as people from other cities and countries flock the host in order to watch the games, this increases demand for hotels and food. Also local radio and television stations benefit from high revenues generated through commercial advertisements. As such, this economic benefit has always been used by the National Football League (NFL) to convince skeptical cities to invest in new sporting infrastructures like stadiums or their teams and in return earn the right to host the event. Reasons for skepticism are valid as one may need to look beyond the NFL’s motivational estimates as a source of conviction into such investments.
Studies conducted by the NFL and the Sport Management Research Institute (SMRI) have estimated that in 2016 Super Bowl XLVII had a net economic impact of $480 million on the New Orleans metro area economy. This net economic impact consisted of $262.8 million direct spending and $217.2 million on secondary spending. It led to the creation of 5,672 full and part time jobs in New Orleans economy which generated additional earnings of $154 million for the New Orleans residents. The same Economic impact was witnessed in Phoenix 2008 Super bowl XLI, a total boost of $500.6 million to the economy was witnessed. As such, the purpose of this study is to evaluate the estimates of economic effects of Super Bowl on the host city from 1970 to 2001.
Literature Review
The estimate of economic gains that can be accrued from Super Bowl varies from one researcher to the other. However, the NFL offers the most optimistic study findings attributing a $670 million taxable sale increase in South Florida with $396 million increase in economic activity in the 1999 event. These values were envisioned from the estimated horde of affluence and spendthrift nature of the residents of the three-county area.
In this essence, it was reported by the NFL team that the Super Bowl attendees’ average income is more than twice that of the visitors in the peak tourists’ months of January and February (Robert and Victor 56). These conditions are caused by several factors including: the substantial spending by NFL and NFL Properties; the ideal fit of the Super Bowl into the convention calendar; and the number of visitors from outside the community who attend the game and related events.
However, many academia disagree with the numerous economic effects of Super Bowl on the host cities. In the assessment of Super Bowl XXVIII on the city of Atlanta and the state of Georgia, it is estimated 2,736 jobs were created with an impact of $266 million on the economy of Georgia. Out of this impact, $76 and $90 million counted for direct and indirect economic impact respectively.
Graph 1
The graph above shows cities from 1988 to 2016 and the economic impact that the super bowl had. There seems to be no correlation whatsoever in the Economic impact in dollars and this may be due to the random procedure in selecting the cities and the general differences in dynamics by the cities. These involve their population, type of ports complexes, e.t.c.
Stake holders in cities of whom include sponsors, partners, citizens, businesses, & government authorities ask whether it is worth the investment” The question basically compares the initial investment as to the economic return during and after the super bowl is held.
Questions to be addressed are;

How much are total hosting costs?
The method to be used in funds raising? Private or public?
In what ways will the local businesses, citizens, and governments benefit?
Are the benefits once off or they are continuous even after the super bowl is held?

Meanwhile, past estimates have been criticized as extremely overinflated, inaccurate, and even deliberately misrepresented, numerous economical benefits are included to create a rather glossy picture of the benefits.
These include;

Gross spending is interchanged with the economic impact
Resident spending, game ticket sales, air transportation are included in calculations
Displaced regular tourism spending is not subtracted
NFL and other organizations exemptions are not subtracted
Inappropriate and inflated “multipliers” are used to translate spending into jobs, paid wages, tax receipts, and contributions to local GDP

The Economic Model
To be able to project the economic benefits or downfalls of a city hosting the Super bowl the ex ante model is to be used. The model will allow us to use estimations based on passed effects to inform such a decision before hosting the super bowl.  An ex ante model is going to be useful in the provision of a filter by which the effects on winning and losing cities economies can be strained. In this regard, its purpose is to give a measure of the net benefits the Super Bowl event is likely to yield. No prospective model has the capacity like the ex-ante to measure the net benefit relative to the next best alternative use of funds of an event. The growth path for a host city can only be construed as optimal if assumptions are made on the best use of funds always occur prior to a mega-event.
If the optimal positive effects identified by the city’s secular growth trend declines after Super Bowl, then the hypothesis that the winning city economy is positively affected by winning the Super Bowl is not supported by the evidence (Dennis and Craig 56). This model will help in predicting changes in income caused by Super Bowl in host cities of 2001 and 2016. The choice of other seventy-three will be largely arbitrary including all metropolitan areas that have hosted the Super Bowl. They will act as control experiments for the research.
The analysis will involve the use of fixed effect model with a dummy variable included in the sporting event and an individual dummy variable representing each city in the model accounting for economic regional growth differences. Equation is a representation of the model predicting income changes for winning cities.

The model to be used is

?= ?0+?1?+?2?2+?3?+?4?+?5??

Table 1: Testable Alternative Hypothesis

Econometric Model:
?= ?0+?1?+?2?2+?3?+?4?+?5? +?




Dependent Variables:
Host Per Capita  (w)

Key Independent  Variables:
?1+2?2?̅>0 ?1>0
?2<0   n.a.    Economic Impact ?3>0 ?3+?6?>0
?6<0   Other Control Variables TV Rating ?4>0

Attend the Game
?5<0   n.a.   ?6<0     The table above is a summary of the econometric model and predicted coefficient estimates for key independent and some control variables. Table 2: Sample Statistics Mean Standard Deviation Minimum 25th Percentile Median 75th Percentile Maximum Host Per Capita 48878.285 8061.0846 38935 42666 472744 56943 64105 Host Population 1557758.13 2078946.572 343890 378715 629841 1.263 Million 6.731 million Economic Impact $million 163.1538 29.2456439 113 150 158 193 202 Table 3 Incomepercapita Coef -525.077 Year {-480.6523} Population 0.0000457 {-0.0001743} State_id CA 47873.15 {9287.35} FL -6543.644 {8502.303} IN -1413.393 {10817.7} LA -2610.124 {9352.937} MI -4359.254 {10609.8} TX -6545.161 {9269.106} R-squared 0.938 Works Cited Dennis, C. and D., Craig. “Mega-Events:Is the Texas-Baylor game to Waco what the Super Boel is to Houston?”. Houston City: International Association of Sports Economicsts, WorkingPaper no.06-06 (2006), 2006. Robert, B. and M., Victor. “Padding Required: Assessing the Economic Impact of the Super Bowl,”. New York: European Sports Management Quartely,6,no.4 (2006), 2006. Victor, A.,. Mega-Events: The effect of the world’s biggest sporting events on local, regional, and national economies. Washington: College of the Holy Cross, 2006

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