Super Bowl

Some Hometown Benefits and Costs

Super-Bowl-Lede

Secaucus, New Jersey, welcomed the Super Bowl with ice sculptures, food trucks and a beer garden, 2 miles from the National Football League’s 2014 title game. That put the 5.8-square-mile town of 18,000 in direct competition with Manhattan and its Super Bowl Boulevard packed with concerts, autograph signings and a 180-foot-long toboggan run on Broadway. Communities compete for the privilege of hosting the Super Bowl, the one-game league championship of the most popular U.S. sport. Success pays benefits including increased tourism, media exposure and a weeklong party. Not so obviously, there are costs.

The Situation

The big game came to the $1.6 billion MetLife Stadium in East Rutherford, New Jersey on Feb. 2, with surrounding towns like Secaucus and Newark fighting to raise their profiles and attract some party-goers to the west side of the Hudson River, away from the glittering towers of Manhattan. The Seattle Seahawks clobbered the Denver Broncos 43-8 in the first Super Bowl to be played outdoors in a cold-weather climate. It turned out to be unseasonably warm — 49 degrees Fahrenheit at game time (9 degrees Celsius). With the event spanning multiple cities in the U.S.’s largest metropolitan area, the host committee said it would be the most-expensive Super Bowl ever; organizers expected to spend $70 million on salaries, security, snow removal, insurance and legal fees. To help defray expenses, it lined up sponsors including Goldman Sachs Group Inc., Bank of America Corp. and Anheuser-Busch InBev NV’s Budweiser.

The Background

The experience of previous hosts suggests that the big game comes at a hefty price. The Indiana agency that supervised the 2012 Super Bowl in Indianapolis, for example, says it lost about $1.1 million —  38 percent more than expected — hosting the game. The loss came after organizers spent about $350,000 on insurance, legal fees and snow-removal equipment that they thought would be reimbursed by the NFL and wasn’t. The host committee also dedicated hundreds of hours and millions of dollars to winning an NFL owners’ vote guaranteeing hotel availability and convention space. It spent $12 million to turn a four-lane street into a three-block pedestrian plaza that housed a weeklong Super Bowl Village, including what they said was the nation’s longest temporary zipline. Most significantly, those costs came on top of paying for most of the $720 million home of the Indianapolis Colts, which caused local officials to raise hotel, restaurant and rental-car taxes. In addition to hundreds of millions spent to build stadiums, the New Orleans hosts had a budget of about $30 million in 2013, while Phoenix expects to spend about $23 million in 2015.

The Argument

Defenders say that hosting the game puts cities and towns in front of corporate decision-makers, political leaders and convention planners in a way that can yield benefits for years afterward. Indiana’s state website described a potential economic impact of $286 million. A study from Ball State University in Muncie, Indiana, said the game may have been worth $365 million in economic activity, noting that figure didn’t account for public sector spending. A study by the New Orleans host committee for last year’s Super Bowl found an economic impact of $480 million. Those numbers may be about three to 10 times higher than the game’s actual value, however, based on data such as employment, tax receipts and personal income, according to Victor Matheson and Robert Baade, economists who have studied the impact of large sporting events. “Cities would be wise to view with caution Super Bowl economic impact estimates provided by the NFL,” they wrote in a 2006 paper. “It would appear that padding is an essential element of the game both on and off the field.”

The Reference Shelf

  • An interactive chart from Bloomberg Visual Data shows how holdouts can be rewarded with cheaper ticket prices close to game day.
  • New Jersey towns began fighting for a piece of the NFL’s title game as soon as owners voted to hold it at MetLife Stadium.
  • Bloomberg News calculated that  tax breaks on municipal bonds that encourage states and cities to finance stadiums will cost the federal Treasury $4 billion in revenue over 6 decades.
  • NPR chatted with Allen St. John, author of “The Billion Dollar Game,” and excerpted his history of the Super Bowl.
  • Economists Victor Matheson and Robert Baade found economic studies typically overstate the impact of the game by three to 10 times.
  • Bloomberg ranking of coldest on-field temperatures during Super Bowls.

First Published Dec. 27, 2013

To contact the writer of this QuickTake:

Aaron Kuriloff in New York at akuriloff@bloomberg.net

To contact the editor responsible for this QuickTake:

Jonathan I. Landman at jlandman4@bloomberg.net