Economic Development

The Economic Mixed Bag That is the Super Bowl

A $720 million football stadium — worth it? Carl Van Rooy

Last night’s Super Bowl was played in a four-years-young stadium. The stadium, located in Indianapolis’ downtown, opened in 2008, the same year Indianapolis won the bid to host the Super Bowl. This past week, the NPR program Planet Money produced a terrific podcast about the “economic mixed bag that is Super Bowl XLVI” and “how much cities are willing to pay for football stadiums.” The podcast essentially presents a profit and loss sheet for Indianapolis’s stadium and other investments in hosting the Super Bowl. Spoiler alert: according to Planet Money, the stadium and the Super Bowl weren’t good investments in the end.

The stadium cost over $700 million, and according to Planet Money, the state of Indiana will pay almost 90 percent of that cost. While the NFL claims that hosting the Super Bowl brings in $300 to $500 million to its host city, Indianapolis only expects to bring in about $150 million.

But Planet Money thinks the NFL’s math is actually too optimistic because it’s so simplistic. The NFL takes the number of people who will attend the event and creates some kind of multiplier effect (which seems to be about $1,000 per person). But that money — which takes into account the money spent at hotels and restaurants — is just the aggregate sum spent in the city. Much of that money will be spent in chain hotels and restaurants, whose profits will go back to corporate headquarters far from the Super Bowl host city. So, for example, a hotel room costs four times its average rate during Super Bowl weekend; this is a boon for the hotel chain, but has no effect on hotel employees who are still making their regular salary.

Planet Money also makes the astute observation that the Super Bowl displaces other activities, like trips to the museum or theater or other cultural activities. Locals are spending money on Super Bowl Sunday, but they’d probably spend their money anyway. (Not sure I agree that people would spend so much money in downtown Indianapolis on any regular Sunday, but it is clear that millions of dollars exchange hands every day and that figure should be deducted from any estimate of what the Super Bowl brings to its host city.)

What Planet Money doesn’t mention is that the stadium probably did create some short- and long-term jobs that wouldn’t have just beed created elsewhere. That Indianapolis hosts the Indy 500 and is already geared toward sports tourism, suggesting that retailers and commercial entities might be better suited to this influx of people and ready to capitalize on it. That for a city that rarely registers on the news, this is great marketing. That the stadium, as an investment in downtown, might be crucial to the redevelopment of downtown Indianapolis in general and probably catalyzed economic development in the rest of downtown. Finally, and only somewhat relevantly, it just needs to be said that the stadium is right across the street from an Amtrak station — how many cities can boast that kind of smart, transit-oriented planning?

But I agree, the stadium is not great for the local economy and given the total cost it doesn’t make financial sense. That said, it doesn’t mean that big projects, or even big stadium projects, can never make sense for a city. They just have to be done in coordination with an overall plan for a city’s downtown. And as far as bloated stadium projects go, this seems like one of the more integrated stadiums that I’ve seen in a while. The problem, therefore, is the profit and loss sheet. Taxpayers paid for this project and aren’t getting the money back. Meanwhile the private sector, particularly the multinational private sector, is getting a free ride.

This stadium was built largely off of taxpayer money. And most taxpayers didn’t get a say in that decision. Rather than just build a stadium, that money should have been spent more broadly on other projects in the downtown. The Super Bowl proves the idea that “if you build it, they will come.” But there are other things, beyond stadiums, that could be built to attract people and investment to the downtown. Imagine if the state had invested $1 million in 720 different projects in the downtown. That would have been pretty, well, super.

Tags: economy, midwest, indianapolis, super bowl, tax subsidies, npr, indiana