Houston’s Super Bowl Cost

Super Bowl 50 might or might not have been a financial success for San Francisco. It all depends who you ask. The SF Controller’s Office? Close to breakeven.  The Super Bowl host committee? A $240 million bonanza.

Where are we going? To the cost of the Super Bowl.

San Francisco and Super Bowl 50

The impact of Super Bowl 50 on San Francisco is debatable.

The Mayor’s office, its opponents and the Super Bowl committee each told us something different. The Mayor’s office reports that while city services cost double what had been projected, the city got an extra $2 million in revenue. Meanwhile, the event’s opponents cite a list of uncounted expenses. They remind us that someone paid for accelerated construction, outdoor Wi-Fi service and volunteer hours. In addition, downtown congestion diminished business traffic and shifted city services. Then finally, we have the event’s planners focusing on the 1.9 million people who gave the area that $240 million boost.

However, if you ask a sports economist, the answer would be “negligible.” Yes, there is a surge in demand for hotel rooms, restaurant meals, souvenirs and buffalo wings. Servicing the teams’ uniforms, even the local dry cleaners experience more demand.

But in his “reality check” paper on mega sports event spending, economist Victor Matheson concludes that cities hosting World Series games had little or no expenditure increases from 1972-2000. The reason is shifting and departing dollars. The shifts relate to the normal spending that is replaced by World Series or Super Bowl money. The revenue from local citizens avoiding congested areas was replaced by tourists. In San Francisco’s hotels, Super Bowl visitors just replaced the city’s normal tourist traffic. And the dollars spent at a national chain traveled to their home office.

Houston and Super Bowl LI

At this point, we can say that Houston might be different. Not a major tourist destination, Houston could have more visitors because of Super Bowl LI.

You can see below some of this year’s projections:

From: WalletHub

Our Bottom Line: Opportunity cost

Defined as the most desirable alternative, the opportunity cost of a decision is what we sacrifice. In Houston, we have a dollar sacrifice because Super Bowl money could have been spent elsewhere. Also, there are the intangible sacrifices people make to attend a live game. Below, Wallet Hub displays some of those opportunity costs:

From: WalletHub

Is the opportunity cost worth it?  It probably depends on your bias…unless you are an economist.

My sources and more: For Super Bowl cost, you can always cherry pick your stats to support your bias. On one side we had the SF Examiner  article while the host committee had the opposition. In addition, you could look at  WalletHub, Walter Matheson’s paper and a past econlife post.

Please note that several sentences in this post were previous published in an econlife entry.