The Super Bowl Doesn’t Always Produce Super-Sized Revenues

Taxes

On Sunday, February 12, 2023, nearly 73,000 fans will fill seats in Glendale, Arizona, to watch the Super Bowl match-up between the Kansas City Chiefs and the Philadelphia Eagles.

Arizona got the nod in 2018 to host Super Bowl LVII. One reason? State Farm Stadium officially seats 63,400 fans with the ability to expand to 73,000 for mega-events like the Super Bowl. The stadium has hosted two previous Super Bowls, including the New England Patriots versus Seattle Seahawks match-up in 2015 and the New York Giants versus New England Patriots game in 2008.

Economic Impact

According to the script, fan numbers should add up to dollar signs in Phoenix. As spectators, teams, and the news media fill up hotel rooms and restaurants, the Super Bowl should be a big win for the area—but that’s not always the case.

The 2015 Super Bowl made an estimated gross economic impact of $719.4 million on the Phoenix area, according to Anthony Evans, a senior research fellow for the consultancy arm of the W.P. Carey School of Business at Arizona State University. According to Evans, state and local governments pulled in over $26 million in additional taxes from hotel stays, car rentals and the like related to Super Bowl XLIX. There were also short-term staffing upticks at hotels and bars, he says, as well as the “ripple effects”—long-term employment and financial growth tied to businesses that might be lured to the area.

Those kinds of revenue dollars are touted as the goal. And that’s the selling point made to taxpayers in host cities who find themselves shouldering the extra expense needed to put on these kinds of events. Costs that taxpayers may be asked to pay can include new construction—like building a stadium large enough to host the Super Bowl—but there are related expenses even in places like Arizona, which already had an NFL-ready stadium. Those include extra policing, emergency services, and infrastructure items like sanitation and transportation.

Not As Advertised

In 2019, economist Victor Matheson went public with claims that the Super Bowl brings in between $30 and $130 million—much less than $300 to $500 million that the NFL and host committees claim.

What eats up the money? Stadiums, for one. While Phoenix notes already had a suitable venue, Matheson found that seven NFL stadiums were constructed from 2006 to 2017: State Farm Stadium (2006), Arizona Cardinals; Lucas Oil Stadium (2008), Indianapolis Colts; AT&T Stadium (2009), Dallas Cowboys; MetLife Stadium (2010), New York Giants/New York Jets; Levi’s Stadium (2014), San Francisco 49ers; US Bank Stadium (2016), Minnesota Vikings; and Mercedes-Benz Stadium (2017), Atlanta Falcons. The cost to build all seven? Nearly $8 billion. By 2019, each had hosted a Super Bowl. On average, taxpayers in these locales contribute $250 million for stadium construction.

Host City Requirements

Outside of stadium costs, there are additional expenses paid by the host city—without offset from the league. The NFL does not pay to use the stadium for the Super Bowl. And per their bid book which was obtained by the StarTribune, “The NFL will control and receive 100% of the revenues from all ticket sales, including ticket sales in all suites. In addition, the NFL must have exclusive access to all club seats.” That means revenue will be shared between the league teams, and not simply directed to the host city.

Additional costs include hotel rooms, transportation, and security for the NFL and associated parties. The bid book also cites an NFL requirement that host cities seek tax exemptions for game ticket revenue and related events, as well as sales, amusement, or entertainment taxes. If the host can’t obtain those exemptions, they agree to reimburse the NFL for those taxes.

It’s worth noting that this version of the bid book was released in 2014, and the NFL voluntarily gave up its federal tax-exempt status in 2015. Tax-exempt status for federal purposes does not generally carry over to state and local tax, and even when it does, the exemptions typically apply to income taxes and not sales or excise taxes (you can, however, seek separate exemptions for those).

Still, these demands—including tax exemptions—are not out of the ordinary for these kinds of events. FIFA, for example, seeks similar concessions for the World Cup.

Even with these kinds of concessions, hosting an event on the scale of the Super Bowl should still result in a win—at least that’s what taxpayers are led to believe.

After Arizona hosted Super Bowl XLII, Glendale’s mayor, Jerry Weiers, told ESPN that the city lost more than $1 million. The city reported that it spent $3.4 million for the 2008 game, and earned only $1.2 million in taxes from direct spending. Locals also pushed back on claims that there was a net gain, suggesting that some existing tourism dollars were just replaced by Super Bowl dollars.

As for those claims that the Super Bowl would bring new businesses to the area? One former councilwoman, Joyce Clark, voted against hosting the 2015 game after watching the impact from 2008, saying, “There has not been any corporation that moved to Glendale because the CEO came to the Super Bowl.”

Arizona still pushed forward with plans to host in 2015 even though Weiers said, “I totally believe we will lose money on this.” And three years later, they did it again, placing a successful bid to land Super Bowl LVII.

Super Bowl Events

What about the economic impact in other cities? You don’t have to host a Super Bowl to have super-sized costs.

According to Axios, the Philadelphia Eagles’ Super Bowl victory in 2018 brought the city an additional $3.3 million during the team’s playoff run and victory parade.

That sounds like great news, right? But Philadelphia spent $2.27 million on the parade alone. The majority of that total—$2 million—went towards overtime for city employees, including $1.5 million for police. An additional $273,000 covered property and equipment damages, though the Eagles reimbursed those costs and chipped in to help pay for the festivities for the nearly one million people who showed up to watch Nick Foles have his moment.

Despite those costs, Philadelphia Mayor Jim Kenney has already suggested that he’d be open to spending city money on a victory parade in 2023, saying, “I’m on my way out, I’ll spend whatever they want.

And it’s not just city taxpayers who pay up. In 2018, the state of Pennsylvania also paid $500,000 to offset security costs for the parade.

What about those increased revenues? Temple University economist Michael Leeds told Axios that those dollars figures are “chicken feed” compared with the city’s economy. And, he adds, fans generally have limited entertainment budgets, so money spent at games is simply taken away from spending at other local businesses. That notion of shifting or displaced revenue—as opposed to a simple increase—is a sentiment shared by Matheson and other economists.

Why Spend The Money?

So why do it at all? Why spend the money on games and parades?

I think it’s the love of the game and how it makes you feel, not what it does to your wallet. It would be hypocritical for me to suggest that—as an intangible factor—doesn’t count for something. I remember dancing in my living room after my Philadelphia Eagles won the Super Bowl. And the photo of my daughter surrounded in confetti at the Philadelphia Phillies World Series parade remains one of my favorites.

And yes, my family and I crowded around my son’s cell phone while waiting to be seated at a restaurant in Puerto Rico to hear FIFA announce the locations in Mexico, Canada, and the United States that would host the 2026 World Cup. When we heard the news that Philadelphia would be a host city, we cheered loudly.

I did all of these things even though I know that the money doesn’t always work out as advertised—I have written about the financial impact of these kinds of events for years.

That’s what fascinates me. We pretend it’s about the money when we cheer for our teams or get excited to host events, but deep down, we know it’s not really—at least not for the fans. It’s about putting on your game-day jerseys and being a part of something bigger than you for the next couple of hours. When we talk about the impact of the game—whether it’s a Super Bowl or the World Cup—that should be the selling point.

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