It is very, very rare for a public agency to take a look at the actual impacts of a major sporting event after the fact, as opposed to just throwing around crazy numbers beforehand. So props to the Minnesota Department of Revenue, which followed up on projections that the 2014 All-Star Game would bring $75 million in new economic activity to the state by actually counting up sales tax data, and finding that the actual figure was likely a whole lot less:
The state Department of Revenue, reviewing sales tax data for Minneapolis, added that the true figure could be as high as $55 million, or as low as $21 million…
“At the time, it seemed believable to me,” [Meet Minneapolis director of market research Kevin] Hanstad said of his original projection. Hanstad said he based his forecast in part on the estimated $60 million that the All-Star Game brought to Kansas City and St. Louis, though he added that those estimates were “loosey-goosey.”
He said the actual number for Minneapolis is likely closer to $50 million, and added that even that number remains uncertain. Hanstad said he has the most confidence in just one statistic — that the game itself, played on a Tuesday night, generated $26.9 million in economic benefit.
“It looks like there’s something there, right? But what is it?” said state Revenue Commissioner Myron Frans, who said it is difficult to separate any boost from the All-Star Game from the general upswing that Minneapolis’ economy has seen since 2010. “You don’t want to overstate the case.”
The numbers from the city tourism board Meet Minneapolis, including that $26.9 million figure, are actually more suspect, because they just add up spending at the game and related events, without accounting for what gamegoers didn’t spend on that week. (Data point: When the All-Star Game was in New York in 2013, I dropped several hundred dollars to take my son to the Futures Game, FanFest, Home Run Derby, and the All-Star Game itself. Suffice to say we otherwise didn’t leave the house much that month.) The state revenue figures, on the other hand, at least try to empirically measure the All-Star bump, by comparing tax receipts this July to overall trends.
Their answer — $21 million to $55 million — seems completely reasonable, given that economists have estimated that the Super Bowl’s total impact is around $100 million in new spending, and that’s, you know, the Super Bowl. Remember, though, that this is just economic activity: total money changing hands within the state’s borders. Minnesota’s sales tax rate is 6.875%, which would put the state’s actual take from the All-Star Game at a total of around $2-4 million — maybe a million or two more if you add in any extra state income taxes paid by Minnesotans who made a smidge more money this summer. That’s not nothing, but given that the All-Star Game cost the public about $600,000 in rent breaks, traffic costs, and police expenses — not to mention $387 million for the Twins stadium that earned Minneapolis the right to host the game — it’s pretty unimpressive as windfalls go. I hope the Firestone bunt-at-a-tire game was fun, anyway.
If the city will give me $10,000 to subsidize a new garage for myself I can promise them a huge windfall of economic activity! At the very least a much better rate of return than they get on stadiums.
If the true figure was 21 million and the stated figure was 75 million, the stated figure was 250% than the actual. If the true figure was 55 million and the stated figure was 75 million, the stated figure was 36% more than the actual.
When the revenue department tries to verify these things, they need to focus on comparing actual tax revenue state wide, not just the city.