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December 29, 2010
K.C. Business Journal parrots debunked NFL economic impact numbers
It's sports playoff season, which means it's time for another round of stories claiming huge economic windfalls from postseason games. Today's contestant is the Kansas City Business Journal's Krista Klaus:
The Kansas City area is poised to reap a significant economic benefit from the coming Chiefs playoff game in January, the first hosted at Arrowhead in six years.
Estimates of how much money might be poured into the local economy range from $6 million to $20 million.
A study commissioned by the NFL and conducted by Washington-based Edgeworth Economics placed the average economic effect of NFL teams on local communities at $160 million, or $20 million a game for an eight home-game season.
Another study conducted by the University of Minnesota put the economic effect of a single NFL game at closer to $6 million.
A summary of the U of M study is here, and makes clear that the authors merely took the total number of people who came from out of town for a Vikings game (in this case, a playoff game against Dallas last January), multiplied it by the average spending, and came up with a figure of $9 million. There's no adjustment for the substitution effect, however: How many of those people would have gone into Minneapolis to spend their money some other way if they hadn't been blowing it on the Vikings? And did any of those Vikings fans displace other spending — say, people who chose to stay home that day because they didn't want to fight the football crowds on the highways and in the downtown restaurants?
As for the Edgeworth study (which was actually done for the NFL players union, not the NFL), I haven't been able to find the complete study, but the talking points make it clear that the numbers aren't to be taken seriously:
The studies used in this assessment were commissioned to justify a start, increase, or continuation of public funding for NFL stadiums and/or to retain or draw a team to a city. As such, the numbers are based on the League's and facilities' own projections of the economic activity associated with NFL games.
But don't just take my word for it: Read what sports economists told the Atlanta Journal-Constitution about the study last month. Which Krista Klaus could have found out about as easily as me, if she'd bothered to type "Edgeworth" and "NFL" into Google. Guess she was too busy feeding the hamster wheel.