Do Major Sporting Events Provide Host Cities With Economic Booms or “Whispers”?

Do Major Sporting Events Provide Host Cities With Economic Booms or “Whispers”? Every year major sporting events that draw crowds numbering in the hundreds of thousands take place in cities all across the United States. From the Super Bowl to the NCAA Men’s Basketball Final Four, cities commit taxpayer money to help fund the building and renovation of stadiums, sometimes worth over $1 billion, because the cities’ respective governments believe that by doing so they will increase their chance to host these events. Their rationale is that hosting major events will boost the local economy more than enough to compensate for the money already invested by the city and will also stimulate growth in the local economy. The reality is that despite increasing tourism and providing publicity, the increase in economic activity attributed to hosting major sports events is only a fraction of the increase forecasted prior to the event. Even if these events were to stimulate the forecasted increase in economic activity, this growth would not be statistically significant in terms of the total economic activity of the host city. The economy of New Orleans was projected to increase by $434 million in 2013 due to the Super Bowl but that growth constitutes only about .5% of the $80.3 billion economy of the New Orleans metropolitan area. The reason for the misconception that major events significantly boost local economies when in fact, they have very little effect, is that the forecasting methods used to produce the projected economic activity are imperfect and don’t take into account several factors. Several studies have been done concerning the impact this type of event has on local economies including on done by economists Robert Baade and Victor Matheson in which they analyzed the impact of the 25 Super Bowls that took place between 1973 and 1997. A detailed regression analysis of this data revealed that on average the Super Bowl created $92 million in income gains for host