Trends

How Local Economies Benefit From Big Sporting Events

(DaveyNin)

Local economies are historically the biggest victims of recessions. When the market takes a turn for the worst, it is local shopkeepers, restaurant owners, hotels and other merchants who feel the squeeze most personally. Accordingly, most cities are eager for any economic stimulus they can get. Over the years, one of the great economic boons to any major town or city has been major sporting events. No matter how bad the economy has been, there is nothing like a World Series, Super Bowl, or World Cup game to infuse some much-needed vitality into local markets. Many fans believe the locations of these events are an afterthought, but economically speaking, nothing could be further from the truth. During the 2009 World Series, for instance, ABC estimated that the event was “…expected to funnel some $25 million into the local economy” of Philadelphia, including “…$3 million or more directly to the city in taxes.” Given the amount of money at stake, and especially the current economic climate, a deeper examination of how local economies benefit from major sporting events seems timely.

Hotel Reservations

Among the most obvious ways a city benefits from hosting a premier sporting event is a surge in hotel reservations. Naturally, the many fans, onlookers, journalists, and friends and family of the athletes need places to stay for the duration of the event. This is true even for events like the Super Bowl, which only last one day but are purposely held in tourist-friendly areas to encourage extended stays. (This year’s Super Bowl XLIV, for example, is slated to be played in sunny Miami, Florida.) Indeed, a spike in hotel reservations is a driving force behind the intense competition that occurs between cities to host the Super Bowl. A January 2009 article from Bradenton.com predicted the economic impact of last year’s Super Bowl between the Pittsburgh Steelers and Arizona Cardinals by interviewing hotel owners in Tampa. Patti Davis, owner of Harrington House Bed & Breakfast on Anna Maria Island, confirmed that, “…it does add quite a bit to our business.” USA Today likewise predicts that fans will fill, “…an estimated 110,000 hotel rooms during the 10-day buildup” to Super Bowl XLIV, in addition to the NFL having reserved, “…the entire 433-room Westin Beach Resort in Fort Lauderdale” as its base during the event.

(Alan Light)

Hotels can benefit even more during events like the World Series, which encompass several games in a given city. Joe Broderick, a doorman for forty years at Center City’s 10,400 room Latham Hotel, spoke excitedly last fall about the, “…uptick in business only the sport’s biggest spectacle can create.” The NHL’s Stanley Cup Finals are another boon for nearby hotels, given the potential for a full seven game series. Pittsburgh’s Business Journal, for instance, reported in June 2009 that, “…a number of hotels are fully booked, including the Omni William Penn, which hosts the NHL’s management, the Renaissance Pittsburgh, with the caveat that it always sells out Tuesdays and Wednesdays anyway to business travelers, and the Westin Convention Center”, whose general manager, Tom Martini, commented, “…we would’ve been busy, but we wouldn’t have been selling out” after all 616 of his rooms were booked.

The World Cup draws immense crowds of its own. Cape Business News, for instance, cites an expected, “… influx of 3 million additional visitors to the country” who are projected to pump, “…an estimated $21.3 billion into the South African economy”, no small portion of which will go to lodgings. Naturally, hotel owners have found that they can raise rates in anticipation of these events, knowing that (within reason) fans who are dedicated enough to travel for the event will pay whatever it takes.

Restaurants & Bars

As noted earlier, most major sporting events are hosted in tourist-friendly metropolitan areas. Such areas are well-equipped to entertain the throngs of people who travel for the events before and after it takes place. One major facet of this is food and entertainment. Take a typical example of a family or a group of buddies who visits a city for two World Series games. At minimum, these people can be expected to buy four to six meals at area restaurants. And it’s not just the eating that takes place before the game that fattens a local economy’s bottom line. Arizone State University points out the, “…tabs and tips at local restaurants and taverns, and food and drink for countless house parties and block parties” that take place during the event itself (such as the Super Bowl.) The Detroit Free Press reported in 2007 that Tigers fans “spend enough money outside the stadium to make the Tigers’ pennant chase lucrative” during that year’s World Series, which led nearby franchises like Little Caesars to participate with World Series-themed sales, according to Franchising.com. RealEstateChannel.com likewise cites the boost Orlando’s local restaurants received from the Magic’s NBA Finals run in 2009. Citrus Restaurant general manager Joe O’Grady was specifically quoted as saying, “…Citrus has seen a huge increase in business for the playoff games.”

(LoveJanine)

Sports bars get an even bigger boost from their city hosting a major sporting event. Fans who can’t afford to attend often opt for the next best thing: watching on huge, flat-screen TVs with crowds of rowdy, inebriated fans. The World Series provided an apt example last year. With playoff profits “…six times bigger than usual” (according to ABC) Philly’s Cavanaugh’s Rittenhouse sports bar was hardly the only establishment pulling for the best-of-seven series to go the distance. NJ.com quoted Jack Monsousos, owner of Hamilton, New Jersey’s Publick House, as expecting, “…between 50 and 75 extra patrons during series games, which could bring a $1,000 bump in sales.” Chicago-based research firm Morningstar even opined that the Yankees’ World Series appearance “…could be better for business than the Giants’ Super Bowl run during the 2007 season.” The story is the same for World Cup soccer. The UK’s Times Online reported in December 2009 that ,”…among the biggest winners” of the projected £1.5 billion- £2 billion in expected revenue this summer “…will be pubs and clubs showing matches on big screens and off-license catering for those watching at home.” In total, “…the industry could earn more than £150 million extra for every week that England survives in the competition.”

Gentleman’s Clubs

One local beneficiary of major sporting events that seldom gets much press attention are gentleman’s clubs. Bradenton.com interviewed University of South Florida economics professor Philip Porter, who contends that ,”…the only true beneficiaries are businesses like gentleman’s clubs that cater to the predominant 18-60 year old male crowd” in his scholarly study of the economic impacts of Super Bowls. It’s not the most heartwarming of stories, but AZCentral.com concurs, citing the 43 strip clubs in Tampa’s metropolitan area and the fact that, “…the week of Super Bowl XLIII is to Tampa’s naughty nightlife what Black Friday is to America’s shopping malls.” In fact, the expected surge in adult entertainment spending even prompts local clubs to, “…audition more dancers and upgrade their interiors”, with some establishments staying open 24 hours. A dancer named Claudia, who has worked four Super Bowls and was interviewed by AZCentral, admits to making, “…as much as $2,000 a day” at previous Super Bowls – not bad for a 25 year old! The Tampa Tribune did its part to assist in 2009 by helpfully, “…adding a feature to its Web site listing the 43 strip clubs and allowing Super Bowl visitor to search for such information as the cover charge and dress code.”

(Alex Castella)

Again – with all the feel-good stories making the rounds during the Olympics, Super Bowl, World Series or World Cup, you aren’t likely to hear very much about the surge in local strip club business. But it is nevertheless a huge beneficiary of the event for as long as its participants are in the area.

Bottom Line

As we have seen, major sporting events bring more to a city than fan excitement. In addition to the thrills of game action, these events routinely funnel tens of millions of dollars – and sometimes hundreds of millions – into the surrounding area in the form of hotel reservations, bar and restaurant sales, snack and party supplies, and “adult entertainment.” Far from being incidental, the location of a major sporting event can be instrumental, which explains why cities compete intensely for the right to host one.