No, the NCAA tournament isn’t an economic boon, next question

With the NCAA basketball tournaments about to kick off, it’s only a matter of time before some reporter somewhere calls me to ask whether they’re really a benefit to local economies in the cities that are chosen to host games. So I’m really glad that Travis Waldron of Think Progress has written an item making clear that the answer is: no, no, a thousand times no.

In their analysis of Final Fours from 1970 to 1999, for instance, professors Victor A. Matheson and Robert A. Baade found that the average economic impact of hosting the NCAA Tournament was actually negative

Matheson and Baade cite various reasons for the inflated economic estimates. For one, cities estimate the money spent by attendees at the events without accounting for money that goes unspent in that area. NCAA Tournament games surely attract fans to certain locations, but they can also prevent local residents from spending money at the same time, as they seek to avoid the crowd. And the estimates rarely account for the cost of putting on the events, so while a city may gross millions in new economic activity, the net gain is much more often closer to zero.

None of this should be new to anyone — even if you missed Matheson and Baade’s paper when it came out back in 2003, we just went through the exact same thing last summer with the Olympics. Not that this will stop reporters from writing stories in upcoming weeks on all that the NCAA means to its host cities, but at least now when they do, we can say “We told you so.”

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11 comments on “No, the NCAA tournament isn’t an economic boon, next question

  1. When you have places like Salt Lake, Dayton, Kansas City, and Lexington as the host cities, well…

  2. You forgot that “civic pride” registers on a binary scale based on the presence of pro athletic events that month, and is worth $1,000 a year for each resident of said city. $2,000 a year if it’s in an arena or stadium that has been renovated to “shiny” in the past 10 years.

    Sincerely,
    – Pro Sports Team Owners
    – Local Politicians

  3. Doh,
    Pro sports and D1 College Athletics

    Sincerely,
    – D1 Athletic Directors and Coaches

  4. Great article and true. A few years ago i was in San Diego for business and had lunch at a resturant across the St. From Petco Park and i was talking to the waiter and asked how much better business was due to the Stadium which was pretty new at the time and he said its worse not better and there regular customers dont come anywhere near the area on game days.

  5. I don’t doubt the veracity of the referenced report, but it’s more than 10 years old at this point. While I’m inclined to believe the results would be similar, I’d have much more faith in this story’s basic premise if there was a more recent study from which to draw conclusions.

  6. I doubt that the economics of spending around the NCAA tournament have changed that dramatically in ten years. But I agree that an updated study would be nice — I’ll contact Baade and Matheson and see if anyone has done a more recent one.

  7. I doubt the methodology of this report. How many factors can affect the economic state of a city and how many were included in this study?

    I know that a gimmick nowadays is to eschew anecdotal evidence in favor of fake science like this study, but I’ll take the bait: Ask those who work in businesses that tend to see large short-term fluctuations in revenue whether they’re better or worse off when the college basketball yokels come to town and a large majority will say, “better”.

  8. Or you can… see what the state collects in sales/ticket/hotel taxes in one quarter compared to the collection in the previous year’s same quarter…. and compare both years to their previous quarter.

  9. This year is below average for snow in the mountains outside of Salt Lake City.

    In most years, the NCAA tournament would be driving some skiers to the Sierras or Colorado. But this year, the skiers/boarders are avoiding Utah anyway.

  10. ChefJoe,

    Got it. And since every quarter and every year is absolutely identical in every way except the presence of the NCAAs, then this is perfect science, right?

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