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January 27, 2012

Indianapolis to lose money on Super Bowl

Every so often, I get a call from a journalist asking what I think the economic benefits are to a city of hosting a Super Bowl. To which I can now answer with a link to this Indianapolis Business Journal story:

Scores of businesses in and around Indianapolis are licking their chops in hopes of scoring a windfall from the city's hosting of the Super Bowl on Feb. 5.
But the city entity that manages Lucas Oil Stadium, where the game will be played, expects to lose money.
The Capital Improvement Board of Marion County is budgeting for total Super Bowl expenses of $8 million and revenue of nearly $7.2 million, leaving a loss of $810,000.

The main added costs are for extra police time and hiring of additional temporary workers. That's partly made up for new tax revenues from the estimated $200 million in spending that will go on in the city during Super Bowl week,

But that tax money is limited, in part because, notes the IBJ:

  • The NFL is using its tax-exempt status (yes, the NFL is tax-exempt, and yes, lots of other people also think this is ridiculous) to get its wmployees out of paying hotel and restaurant taxes.
  • Food and beverage taxes collected inside Lucas Oil Stadium also won't be going to the CIB, but will be diverted to the NFL.

However, Indianapolitans will at least get the thrill of watching the Super Bowl on TV and knowing that they could be there, if only they had tickets. Plus the free publicity that comes from the world learning what it's like in Indianapolis in January. With benefits like these, who needs tax revenues?


The NFL has tax-exempt status? Is that for all taxes -- local, state, federal? How did that happen? More importantly, who bestowed that upon them?

Posted by Mike on January 28, 2012 12:47 PM

"Plus the free publicity that comes from the world learning what it's like in Indianapolis in January."

Hilarious. Of course, they could also try to move their primary date forward for that once every four years economic boost from all of the political media hacks (rather than sports media hacks) descending into their state.

Posted by Greg on January 28, 2012 01:32 PM

Hmm. So the city gets the chance to improve its facilities significantlly for years to come, plus make a pitch for future events and permanent company jobs to move into the region, all for about 50 cents per resident? So just how is this a losing venture for the people of Indy?

Posted by Tom on January 29, 2012 05:46 PM

Once you've built a stadium, $810,000 isn't that much to spend on a Super Bowl, no. Given that Indianapolis spent $635 million to build Lucas Oil Stadium on the promise that it would bring a Super Bowl, however, this has to be considered a disappointing payoff, to say the least.

Posted by Neil deMause on January 29, 2012 06:19 PM

As if receipts the week of the game are the
only payback to the city. If the only benefit is this, I agree with you. The jury is still out.

Posted by Tom on January 29, 2012 06:33 PM

@ Tom

If what you are saying is in response to a city that spent $100K for the opportunity to host an event like this with the spinoffs it provides, you are right, money well spent.

If it cost $1M - still, money well spent. Few could complain.

Now this is where it gets dicey: at $10M probably remains money well spent; at $100M I think many would want to make sure it was a sound investment; when you start getting into the $1B range it raises red flags.

Considering that once the debt is serviced and retired Indy will probably spend about $1B on this stadium plus monies spent this weekend to get an event like the Super Bowl - does this remain a good investment?

The biggest question I have is how many Super Bowls will Indianapolis get? Atlanta built a "world class" stadium that 18 years later is being phased out of consideration for Super Bowls.

My guess is that this will be a one-and-done weekend and Lucas Oil Field will not see another event like this for some time, maybe ever.

If that's right and Indy never gets another SB is this still a great investment?

Posted by Andrew T on January 29, 2012 07:56 PM

The rationale for hosting, subsidizing, and even tolerating big time sports, including the NCAA, transcends all sense of proportion, logic, business sense, and ethical norms. The electorate apparently is eager to pay more tax to support 1/4 billion dollar pro athlete contracts, stadia of enormity, and the opportunity to eat bad hot dogs and swill expensive bad beer in or near the grand venues. The politicians feel beholden to the electorate and to their one-percenter benefactors who also require exquisite tax-payer provided surroundings in which to lounge while the games go on and on and on. The infrastructure of the news and entertainment media that feed off of the sporting system own powerful pulpits to preach to the masses how wonderful all of it is. People, just pay your sports-welfare taxes and be happy that we live in a free capitalist society. Not that the sports complex is free or even reasonably priced. Just pay your sport taxes and be happy. It's so much easier than investing and getting engaged in education and real economic development. Have another $6 lite beer and an $8 dog! Enjoy!

Posted by Dean on February 1, 2012 11:39 PM

I agree with Dean,

I love when people tell me to "get a life" because I'm fighting against the stadium coming to Santa Clara.

I didn't really object to pro-sports until the greed (and performance drug abuse) got so out of hand. (Oh yeah, I forgot the NFL is "clean" now.)

Posted by santa clara jay on February 2, 2012 02:23 AM

Here in Detroit we were told at length about the benefits the Super Bowl would bring us--$50 million, $100 million, all of which confirmed Frank Rashid's theory that teams and cities arrive at these figures by throwing a dart at a dart board and whatever number it lands on they add "million dollars."

Not that very many people asked about the figures, but when they did we were informed that the intangible (and thus unquantifiable) benefits would be worth whatever money it cost us. People would see what kind of party Detroit could throw and rush at us with investment money or pleas to be allowed to move their companies here.

Thanks to the magic of the internet, the week after the game I checked newspaper reports from around the country. The verdict was almost unanimous: Well-run party, friendly people, the city is a pit. I can't say we didn't get investments, conventions, or other benefits, but I can say I haven't seen any.

Posted by Alex Benskyh on February 4, 2012 09:09 AM

Another reason to just say NO to drugs!!! What a stupid arguement. NO!!! The taxpayer should NOT pay one cent for billionair owners or players. They (the owners) can find ground, build stadiums, hire employees and players, sell tickets, PAY TAXES, and you morons that go to games can support them. Even private (sports teams) that are profitable should have NO NO NO NO public funds expended for ANY venture. Why do you think they get taxpayers to fund it anyway? Duh...because it is UNPROFITABLE to do so!!! Wake up!!!!

Posted by Jeff on February 6, 2012 07:51 AM

I love when people frame their myopic arguments in a way to support their world view no matter the truth.
Inferring that Lucas Oil was only built for the Super Bowl, therefore the Super Bowl has to justify the entire cost of the stadium. That is just silly. The Stadium will host numerous events for 30 years or so that will bring money into the City and surrounding area. Other than the obvious, These events include: State level High School championships, Special College tournaments such as Big 10 Championships, Annual Firefighter conventions 35,000 attendees for a week, Motocross\Monster Truck events, Concerts, the NCAA final four events of one level or another more years than not. We can't even request another Super Bowl until 2019 because the Stadium is already booked with Big Time events. If you don't understand just Google Events at Lucas Oil Stadium to get a taste of what is going on there.

By the way 121 Million dollars is being paid by Lucas Oil for the Naming rights for the first 20 years alone.

No I am sure a Super Bowl did not help Detroit, that city has been run into the ground for 45 years and no one event can fix that.

Indy has had leaders looking to the future for those same 45 years and it shows.

I personally have had friends who unexpectedly profited from the "trickle down" from the Super Bowl. I am not talking about greedy insiders here, I am talking regular people who saw unexpected demands on their modest businesses that helped them pay off debt or just gave them some breathing room in the middle of winter when things are often slow.

I understand many of your principles, in fact I actually have ran for office as a Libertarian, but I prize one thing above all and that is the truth based on real facts and the premise of this article is not.

Posted by Terry in Indy on February 17, 2012 08:06 AM

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