Narrator: The Super Bowl is America's biggest
annual sporting event.
Each year, over 100 million TV viewers
tune in for the big game, making
the Super Bowl nine of the 10 most watched
American TV programs of all time.
And hosting it has become as American as watching it.
Many Super Bowl host committees
believe that popularity can mean just one thing:
big profit for the city.
Committees and the NFL claim that the game
can spur 300 to 500 million dollars
of spending in a host city.
For example, in 2018 Minnesota's host committee
reported that Super Bowl 52 brought in
$450 million to its half of the Twin Cities.
But sports economists, including Victor Matheson,
are skeptical.
Matheson: "If someone claims, 'Look, this event is
three, four, five hundred million dollars,'
what an economist would say is: 'Prove it.'"
Narrator: In fact, when Matheson crunched the numbers,
he found that Super Bowl brings in between
$30 and $130 million, a fraction
of what the host committees and the NFL claim.
Here's why hosting the Super Bowl isn't
as valuable as people think.
So what does it cost to host a Super Bowl?
Matheson contends that for some cities
the cost starts with building a new stadium.
Seven NFL stadiums were constructed from 2006 to 2017.
And by 2019, each will have hosted a Super Bowl.
And on average, taxpayers contribute
$250 million for stadium construction.
Matheson: "They say, 'Look, you build the stadium
and we'll bring you a Super Bowl.'
If the Super Bowl actually brings four or five
hundred million dollars to the city,
then, all of a sudden, handing over
$500 million in taxpayer subsidy
looks like a pretty good deal.
Unfortunately, if the actual impact is a fraction of that,
then, all of a sudden, taxpayers are on the hook
for a huge stadium, and they're not getting much
in the way of help, at least from the Super Bowl,
to pay that stadium off."
Narrator: In addition to the stadium,
which the NFL uses at no charge,
there's also the cost of hosting the event,
like public transportation and police overtime.
For example, in 2014, New Jersey gave the NFL
an $8 million tax break,
and NJ Transit ended up with $5.6 million of losses
transporting fans to and from the Super Bowl.
But on top of that, the NFL requires additional expenses.
Minneapolis's Star Tribune published the NFL's
153-page bid book that it obtained in 2014.
The document lists millions of dollars worth of
the NFL's specifications and requirements for host cities.
The list includes: parking spaces, hotel rooms,
transportation, billboards, security, food,
access to golf courses and bowling alleys, along with
an exemption on paying city, state, and local tax.
Matheson: "That obviously means that a lot less
money is sticking in the city.
That's all going back to NFL's headquarters, and,
at that point, the money does get shared.
But again, it doesn't get shared with local governments.
It gets shared with the other 32 team owners."
Narrator: These are high demands,
and committees comply under the assumption
that they'll make the money back.
But just how much of a profit are cities actually making?
Well, it all depends on how you do the calculations.
Matheson found three differences for the disparity.
The first is substitution effect,
which is when consumers spend money on a sporting event,
that they would have spent anyway.
So it doesn't increase the amount of money being spent.
It rearranges the spending pattern.
The second is crowding out effect,
which is when crowds associated with a sporting event
displace regular spending.
So if the Super Bowl fills every hotel
that would normally be 80% occupied,
the NFL is only accounting for the 20% increase.
And the final reason is leakage,
which accounts for where the money ultimately ends up.
Hotels usually increase prices by three or four times
during the Super Bowl, but corporations and shareholders
reap the benefits of the price increases,
not the local workers.
Matheson: "So, what you're trying to do is,
you're trying to pay
for tens of millions of dollars of expenditures
on really not much in the way of
additional economic activity, so, you can
definitely not come out ahead,
at least as a state or local government."
Narrator: In 2008, Glendale, Arizona hosted
Super Bowl 42, and the city's mayor told ESPN
that the city lost $1 million in the process.
In 2016, San Francisco hosted a week of events
leading up to Super Bowl 50,
which was being held in Santa Clara,
and San Fran ended up with a $4.8 million
public services bill.
Matheson: "We do have some evidence that big events,
like the Super Bowl or the Olympics,
at least temporarily cause a surge in happiness.
But, we need to be careful about that.
So, if you wanna say, hey, bring in the Super Bowl
because it makes people happy, that's great.
Just don't tell us it makes us rich."