Pittsburgh and the terrible, horrible, no good, very bad sports team impact study

Check it out, the owners of the Pittsburgh Penguins, Steelers, and Pirates, seeking $800,000 a year in county money for a slush fund for improvements to their venues, have teamed up to pay for a study showing how much the teams contribute to the city’s economy, and their hired hands have determined: a hell of a lot! $6 billion over five years’ worth of a lot! Do we dare try to analyze their methodology without actually seeing the report itself, because the teams haven’t released that? I’m game if you are! Let’s begin with this from the Pittsburgh Post-Gazette’s article on the report:

They commissioned accounting firm PricewaterhouseCoopers to produce an economic impact study that measures their value on several fronts, including direct and indirect spending, tax revenue and jobs.

That’s not a good sign: PwC is an accounting firm, not an economic analysis firm, so it’s unlikely they tried to account for the substitution effect whereby if Pittsburgh residents didn’t have pro sports to spend their money on, they wouldn’t just stuff it under their mattresses instead. A serious economic impact study would look at, say, spending during years when there’s a labor stoppage vs. spending during years when all the teams are playing, but we can probably safely assume that didn’t happen here.

[Penguins CEO David] Morehouse said the teams brought nearly 4 million people, counting concerts, to the city in 2017 to eat at restaurants, to stay at hotels, and to partake in other activities.

“Counting concerts”? How are the teams credited with people in Pittsburgh going to concerts? (People even go to concerts in cities with no major-league sports teams! It’s a true fact!) And the total attendance of the three teams in 2017 was only about 3.2 million, so clearly a lot of these people “brought to the city” were already in the city, which makes bringing them there not such an impressive accomplishment.

“You can’t just talk about Pittsburgh’s revitalization and then say these greedy sports bastards over here. I mean, if you’re going to tell the positive story about what’s happening in Pittsburgh, we’re part of it and we shouldn’t be the ones having to say it,” [Morehouse] said.

“But if we’re going to have to say it, we’re going to say it with the largest numbers we can possibly justify! Wait, did I say that last part out loud?”

Frank Coonelly, the Pirates president, doubts Pittsburgh would be one of 20 finalists for Amazon’s second headquarters if it did not have pro sports teams. Only one finalist for the online retailer’s new location — Austin — is without at least one pro sports team in its region.

This is not actually true: Montgomery County, Maryland, isn’t home to any pro sports teams either, nor is northern Virginia, though I suppose one could squint and give them credit for the teams nearby in D.C. But mostly, this is selection bias: Amazon is looking for a major urban area to put its new headquarters in, and there simply aren’t that many major urban areas without major sports teams: There’s Greenville and Grand Rapids, I suppose, but somehow I don’t think they would have made the cut even if they had acquired teams. (Oklahoma City and Buffalo, which are similar sized, didn’t.)

The GumGum analysis found the three teams generate 513.3 million in “combined impressions” a year, whether through TV broadcasts, social media, or print publications.

To get that kind of “postcard” exposure — whether it’s shots of the city skyline, the bridges, or other local landmarks — through paid advertising would cost nearly $41.5 million.

So basically the teams want to be credited for every time they got the name “Pittsburgh” mentioned in the national media, regardless of whether it was in a positive or negative light. I could note that there are other things that got Pittsburgh mentioned nationally lately that you really don’t want to start crediting for ad impressions, but I probably shouldn’t go there.

When the Penguins were fighting for a new arena a dozen years ago, a move to Kansas City made more sense — the deal was better and the city had a larger population, Mr. Morehouse said.

But, but, your own owner said it was a bluff! Get on the same page here, guys!


16 comments on “Pittsburgh and the terrible, horrible, no good, very bad sports team impact study

  1. Part of me feels like this type of speech should actually be illegal. Or perhaps that economics needs a professional “bar” so people malpracticing it can be sued/disbarred.

    For such an important part of decision making the quality standards are incredibly low and the ethical standards are non existent.

  2. F.Y.I. – http://tntribune.com/community/fairground-vendors-will-get-their-day-in-court/

  3. OK, we all know that sports owners exploited innumeracy long before politicians figured out how to do so effectively.

    This is just proof of how bad innumeracy is these days.

    There’s no short-term fix for that.

  4. While PwC’s main businesses are accounting and tax they have many different units that do all kinds of consulting projects (I used to work in one of those units which got spun out in the post-Enron reshuffling of the surviving 4) so to say “PwC is an accounting firm, not an economic analysis firm” isn’t really accurate. Its a professional services firm which offers many services, the largest of which is accounting but its not exclusively that.

    • Here’s the list of all of PwC’s services:

      https://www.pwc.com/us/en/services.html

      If you can find a category that includes anything remotely close to economic impact analysis, let me know.

      • They did not list “Play with numbers” as a professional service (because services do not get any more professional than that)?

      • It would most likely fall under consulting services. PwC acquired Booz & Company (which was non-government part of Booz Allen and Hamilton) a few years ago.

        • There are 12 entries under “consulting,” none of which mention anything like this kind of economic study.

          Not that I’m saying they don’t do economic consulting – clearly they do, as they just did it for the Pittsburgh teams. But just as clearly it’s not something they do so often as to warrant listing it among several dozen services they provide on their website.

          • Aha, good call. From the description it doesn’t sound like they do much more than apply multipliers – unfortunately, there’s no way to check without seeing the full report. (I’m going to ask for it, but good luck to me with that.)

          • Its a firm with over 100K people globally so it does a lot of things outside of traditional accounting is my point. It may also be this unit here: https://www.pwc.com/us/en/services/tax/washington-national-tax/national-economic-statistics/statistical-quantitative.html

          • I was in a different area of the firm back in 01, so take what I say with a grain of salt but it really depends on how much “in-house” intel the firm has on hand, which is the result of how many similar reports have been done. For example I had to do a liquidation analysis for a telecom company. So I had a bit of intel from other older analysis, but it was a bit dated so I did some market analysis. However, the next person who had to do one only a couple of months later (there were a lot of telecom firms filing bankruptcy in 01/02) took what I did and made fewer adjustments. This was repeated a few times over the next several months, until Worldcomm filed so that threw off the market (it was the biggest Chapter 11 filing ever at the time) but I left at that point so I don’t know how they put that one together.

  5. I will grant that Pittsburgh is perceived as a “bigger” city than it actually is partially because of sports teams.

    However, it’s famously good quality of life has a lot more to do with being home to some of the largest companies and richest people in the world for a century and the universities and institutions they supported. Pittsburgh has an amazing civic legacy that can’t be beat by its peer cities. When Carnegie-Mellon gets as much credit as the Pirates, I might believe it.

    • Portland, Oregon had better hope that Carrie Brownstein and Fred Armisen never present the city with a bill for their marketing services.