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Front Page » Opinion » Would Miami Super Bowl Be A Bonanza Or A Gucci Bag

Would Miami Super Bowl Be A Bonanza Or A Gucci Bag

Written by on March 14, 2013

By Michael Lewis
We might soon vote on using taxes to expand Sun Life Stadium. Action is speeding up like a two-minute drill.

If the state lets the Dolphins keep most taxes collected at the stadium and OKs an extra 1% at mainland hotels, we might vote on the hotel tax Ð a 3% sales tax rebate on top of the stadiumÕs current 2% is the stateÕs call.

Other steps intervene Ð avoiding Gov. ScottÕs veto, a county-team deal and a commission vote Ð but still we should strip away hyperbole and emotion and prepare for a May vote.

Some oppose any cash for a super-rich owner. Die-hard fans would fund the stadium at any cost to woo super bowls and college championships.

We understand both views Ð but they donÕt help the rest of us pick whatÕs best. We need a yardstick.

Enter economists bearing studies. The one always used to support sports teams is economic impact Ð the higher, the better.

The Greater Miami Chamber of Commerce heard a list of sports impacts last week. Florida International University: $50 million a year. Florida Panthers: $100 million-plus. Homestead Speedway: $250 million-plus. $1.4 billion each for the Miami Heat and the Dolphins.

"We need to celebrate what Miami has,Ó said Jeff Bartel, who chairs the chamber Sports Committee.

ThereÕs plenty to celebrate. But how can we relate economic impact totals to decisions like handing $200 million to the Dolphins?

How much higher could the teamÕs $1.4 billion impact go with a partial roof, better lights and more seats? Would it be worth tax aid? Is it the best public use of money that is not free, as commissioners and the Dolphins erroneously claim, and could help us elsewhere instead?

After all, every activity has economic impact, explains University of Michigan professor of sports management Mark Rosentraub. As he tells classes, if you toss a brick through a windshield thereÕs lots of economic activity, including labor, glass sales, insurance payments, police time and more. An impact analysis measures it all.

An epidemic of vandalism, with lots of bricks through windows, would be an impact boom, giving new meaning to impact windows.

Indeed, the biggest economic impact in Miami-Dade history came when Hurricane Andrew uprooted lives and property but did trigger big spending and jobs. Some called it St. Andrew.

Lots of economic impact? Be careful what you wish for Ð and look for the costs of the impact to go along with the benefits.

Take Marlins Park. We spent $3 billion, including interest, to build it, a fact that now makes former backers cringe. Still, says Mr. Bartel, the team had a $600 million impact last year. Over the life of the stadium bonds that would yield $18 billion impact for a $3 billion cost Ð which all now agree is a bad deal.

ThatÕs because economic impact is only impact, not gain. It doesnÕt include costs to achieve the impact or offer a yardstick for tradeoffs for use of money or tell us if an $18 billion impact for $3 billion spending leaves us better off or not.

"We have to be careful about using the word impact,Ó explains MichiganÕs Professor Rosentraub, because people erroneously think it means increment.

"There is a fundamental difference between what is generally called an economic impact study of a sports event and a cost-benefit analysis,Ó Stefan L.J. Késanne wrote in European Sport Management Quarterly in 2005. "The difference is important because an economic impact study does not yield any argument for the government to subsidize the event. Only a cost-benefit analysis can provide the necessary information.Ó

We have no such cost-benefit analysis for Sun Life Stadium.

In 2011, Mr. Késanne put his hypothesis to the test, probing the economic impact of the 2005 Pan-American Junior Athletic Championships in Windsor, Ontario.

Before the event, the local convention bureau estimated economic impact at $2 million to $4 million. Mr. Késanne found true impact was even higher, $5.6 million. Unfortunately, when costs were considered too, a cost-benefit study showed a net loss of $2.4 million.

Try using the $199 million the Dolphins want in taxes to instead open fast-food shops everywhere. A study might show an even greater impact from those $3 burger sales Ð including construction, leases, jobs, costs of gasoline driving in and out, the food itself, franchise fees and more Ð than from the stadium.

But, you correctly respond, we donÕt need all those fast-food spots. TheyÕd just cannibalize sales from McDonaldÕs, Burger King, WendyÕs and others.

Right Ð itÕs just substitution, not economic expansion. But the massive economic impact figure would still show up.

ThatÕs why impact figures alone canÕt help us decide whether we need to expand a stadium to woo a Super Bowl.

To get the absolutely biggest impact of a 50th anniversary Super Bowl, Dr. Rosentraub explains tongue in cheek, the choice should not be between current contenders California and Miami.

The best place, he says, is in his area, Detroit Ð because in the middle of winter Detroit has absolutely no tourists, so everyone who comes for a game is a net gain.

ThatÕs clearly not our case. In either California or Miami, seasonal non-football visitors would be displaced from hotels to other cities in the state, Dr. Rosentraub noted.

While Detroit could offer a bigger impact than Miami, itÕs clearly not as good a choice for anyone involved but Detroit. Impact alone is misleading.

Then again, the added impact of a Miami-Dade Super Bowl is clearly not the $100 million being claimed as total impact. Dr. Rosentraub suggested that we instead study changes in sales tax and hotel tax receipts if we got a Super Bowl game.

"Focus on that increment,Ó he advises, including the increase over hotel occupancy we would always have in Super Bowl season, which he noted correctly is our busiest time at highest hotel rates.

Dr. Rosentraub worked with Indianapolis to weigh the impact of the 2012 Super Bowl played there, which was enormous. The question he had to answer: "Is it worth it to create government investment to protect teams in Indianapolis?Ó

There, the National Football LeagueÕs fan fest starting the Tuesday before the Sunday game energized downtown and lured proud residents. "WhatÕs that worth to a community?Ó he asked.

But while that was vital in Indianapolis in winter, Dr. Rosentraub notes, it wouldnÕt have nearly as much value in busy Miami, where most people might never be aware of the fan fest and could ignore the game too.

"How do we really calculate those intangibles?Ó he asks.

ThatÕs the problem. We can calculate the spending and displacement of other events, the substitution in using taxes for a stadium instead of for roads or convention centers or thousands of other ways to profitably use taxes, but how about intangibles?

Economists have yet to accurately compute them, Dr. Rosentraub says.

Still, he argues, "intangibles matter to people as much as tangibles. If not, nobody would buy a Gucci bag.Ó

The question for voters is exactly that: Should we spend tax money on the sports equivalent of a Gucci bag, a very expensive Super Bowl game that makes us feel really good? Or are mundane, unbranded needs like roads or convention centers better choices?

All the economic studiesÕ claims cannot answer that for most of us.

When I went to games in the Orange Bowl with the late Harold Wyman, then dean of business at Florida International University, he explained how consultants are named to make such choices.

A businessman, he said, sought an accountant. He gathered four and asked each the same question: "How much is 2 and 2?Ó

Four, said the first. Rejected. Four, said the second. Out. Four, said the third. Nix.

The consultant he heeded was the fourth, who answered "How much is 2 and 2?Ó with a question of his own: "How much do you want it to be?Ó

ThatÕs how many will value expanding Sun Life Stadium and luring big games: "How much do you want it to be?ÓTo read the rest of this Miami Today issue GO TO e-MIAMI TODAY, an exact replica of the printed edition.   Top Front Page About Miami Today Put Your Message in Miami Today Contact Miami Today © Copyright 2013 Miami Today designed and produced by Green Dot Advertising and Marketingvar gaJsHost = ((“https:” == document.location.protocol) ? “https://ssl.” : “http://www.”);document.write(unescape(“%3Cscript src='” + gaJsHost + “’ type=’text/javascript’%3E%3C/script%3E”));var pageTracker = _gat._getTracker(“UA-4990655-1”);pageTracker._initData();pageTracker._trackPageview();