• Loading stock data...
Thursday, December 12, 2024
The 2024 Best Employers in Sports Award winners have been announced! See the full list of winners

Does the Vegas Super Bowl Make Economic Sense? Depends Where You Get Your Figures

  • The economic impact on Super Bowl LVIII—already a thorny subject—gets tricky when you consider Vegas’s vitality on a nonfootball weekend.
  • Hotels tend to be filled, anyway, and gamblers will be drawn out of—not into—casinos on game day. And don’t even bring up the Lunar New Year.
Super Bowl
Kirby Lee-USA TODAY Sports

Does today’s Super Bowl, and the festive week that preceded it, make economic sense for Las Vegas? After all, the hotels in Vegas tend to be fully occupied on the weekend of the last game of the year, anyway—and the game itself will draw gamblers, particularly the so-called whales, out of casinos, not into them. So it will be interesting to see whether the Vegas business world gets on board for another run at hosting the top annual sporting event in the U.S.

Boosters of the game foresee a historic economic impact from the week. A projected 150,000 extra visitors will spend an average of four to five times the typical tourist expenditure—that’s what Jeremy Aguero, a principal at the consulting firm Applied Analysis who is on the Las Vegas Super Bowl Host Committee, told reporters last week on a call organized by the U.S. Chamber of Commerce.

“We think about it in gross terms, [where] the total amount of spending activities [are] about $1.1 billion. If we think about it in terms of the net, after we have the displacement effect, it’s something closer to about 800 million dollars in impact.”

That displacement effect is what sports economists contend is the problem with these economic calculations. One can’t just look at the total dollars spent—any estimate has to consider the gap between that figure and what would have been spent anyway. In Vegas, a tourist town, the latter figure is already a big number to begin with.

“We sell out every Super Bowl weekend,” Aguero said. “So there is a displacement effect.” Aguero calculates a small effect by imputing the far heavier spending by Super Bowl visitors.

But it’s unclear from where Aguero and the host committee derived the stat that Super Bowl visitors spend as much as five times the $1,100 average allocated on a normal Vegas trip.

Sports economist J.C. Bradbury believes he has a good idea where that comes from. “A lot of times, the numbers come from [them] just doing a survey,” Bradbury says. “But the person who’s doing the survey is motivated to find the answer. … There is a cottage industry of consultants who are always getting you the biggest number and multiplying it times three or five or something.”

Credit Kirby Lee-USA TODAY Sports

Sports economist Andrew Zimbalist, who in the past has feuded with Bradbury over the subject of economic impact reports, agrees with his rival here. “Most economists who have looked at that usually say, at best: What you should do is move the decimal point to the left one,” he says. “So instead of it being, you know, $300 million, the better estimate would be $30 million.”

The rationale for that multiple is that Super Bowl attendees are wealthy and so they spend more, says Victor Matheson, a sports economist at Holy Cross. The problem with this logic: Sports fans are replacing gamblers, and the usurpers are more apt to spend money in restaurants and retail, lower-margin businesses, than in casinos.

Matheson identifies another issue: yesterday’s Lunar New Year. “Chinese New Year is a gigantic gambling weekend for Vegas normally. In 2007 the NBA had the All-Star Game in Vegas on Chinese New Year weekend,” he says, “and every casino on the Strip said, ‘Never again will we have another sporting event on Chinese New Year, because it was a disaster for our bottom line. We replaced all of these high-roller gamblers with sports fans who are more interested in watching sports than they are in gambling.’

“They blamed an entire quarter of bad results on a sporting event [coming to town during] Chinese New Year. And here we are, 15 years later. Apparently no one remembers that they said, ‘Never again.’”

A counter: Mary Beth Sewald, the president and CEO of the Vegas Chamber of Commerce, told reporters on the Aguero call that the city could not afford the advertising it would take to equal the amount of free publicity it is receiving during the Super Bowl lead-up. And Aguero pointed to the 300 events that occurred in the past week as evidence of economic impact.

Plus, some casinos touted the exposure that the game brings, the stamp of approval, and the projected record gambling handle. “We’ve been waiting for this one for a long time to showcase us as not just an entertainment capital but as a sports capital,” says Dave Horn, the GM of Durango Casino. “I suspect that this handle could be a record breaker.”

The Las Vegas Convention and Visitors Authority offered a preliminary estimate of $500 million in impact, and Brendon Plack, the NFL’s senior vice president of public policy and government affairs, told reporters on the call last week that the final number would be historic. “We’ll know in a few weeks what the tale of the tape says, but we’re expecting a really, really successful weekend.”

What would a record-breaking economic impact look like? Taking these reports with a huge grain of salt, the host committee for last year’s Super Bowl in Phoenix claimed $1.3 billion in economic activity. That’s far and away the highest one of these economic impact figures for Super Bowls. The Super Bowl before that, in Los Angeles, according to that host committee, produced an impact between $234 million and $477 million.

Aguero noted that inflation will produce higher figures than in the past. That said, in  Vegas, which bills itself as the entertainment capital of the country, it’s hard to imagine there is not a great displacement effect in a city that already draws so many high rollers.

“If they were having the Super Bowl in Detroit,” says Zimbalist, “it would have a different effect.”

Linkedin
Whatsapp
Copy Link
Link Copied
Link Copied

What to Read

Bill Belichick to Take College Plunge at North Carolina

UNC made the official announcement late Wednesday.

NFL Scheduling Gambit Pays Off With Two Blockbuster Sunday Games

The Week 15 schedule has a game pairing seen only once since 1970.
Nov 3, 2024; Harrison, New Jersey, USA; New York Red Bulls midfielder Lewis Morgan (9) heads a ball during the first half against the Columbus Crew in a 2024 MLS Cup Playoffs Round One match at Red Bull Arena.

MLS Team to Play in ‘Sports Illustrated Stadium’ in $100M Naming Deal

It’s a partnership with a sister ticketing platform company, not the magazine.

Featured Today

Nov 2, 2024; Denver, Colorado, USA; Detailed view of a Wilson NBA basketball held by a referee during the second half between the Utah Jazz against the Denver Nuggets at Ball Arena

‘Obvious Weak Point’: Refs Remain an NBA Gambling Concern

A season after Jontay Porter, the biggest risk may not be players.
Nov 2, 2024; Ann Arbor, Michigan, USA; Michigan Wolverines cheerleader runs with a flag before the game against the Oregon Ducks at Michigan Stadium.
opinion
December 7, 2024

College Football’s Billionaire Backer Era Begins

Is this the new normal in CFB recruiting?
LA Galaxy forward Dejan Joveljic (9) celebrates with midfielder Riqui Puig (10) after scoring a goal against Seattle Sounders FC in the second half in the 2024 MLS Cup Western Conference Final match at Dignity Health Sports Park
December 6, 2024

With or Without Messi, Major League Soccer Is Barreling Into the Future

After the Cup final, the league looks to accelerate its growth.
Dec 18, 2022; Lusail, Qatar; FIFA president Gianni Infantino claps during the awards ceremony after the 2022 World Cup final between Argentina and France at Lusail Stadium.
December 2, 2024

FIFA Wants More Matches. Resistance Is Growing Inside the Global Soccer World

Resentment and frustration over expanded schedules is nearing a breaking point.
Oct 20, 2024; East Rutherford, New Jersey, USA; Eagles owner Jeffrey Lurie pre game against the New York Giants at MetLife Stadium.

Bills, Eagles, Dolphins Approve Adding New Minority Owners

Vince Carter and Tracy McGrady join the list of Bills owners.
December 9, 2024

Soto Contract Echoes 2000 A-Rod Deal. Could Similar Fallout Follow?

The record-setting Soto deal recalls A-Rod 24 years ago.
Houston Texans quarterback C.J. Stroud (7) walks to the locker room after the game of an NFL football matchup Sunday, Dec. 1, 2024 at EverBank Stadium in Jacksonville, Fla. The Texans held off the Jaguars 23-20.
December 11, 2024

NFL, Nike Extend Uniform, Apparel Partnership Through 2038

Financial terms of the extension were not disclosed.
Sponsored

How UBS Crafts Impactful Partnerships Across Sports, Arts, and Culture

As UBS continues to expand its impressive array of sports and entertainment partnerships, the company solidifies its position as a leader in wealth management.
Iowa’s Kate Martin waves to the crowd during a celebration of the Iowa women’s basketball team Wednesday, April 10, 2024 at Carver-Hawkeye Arena in Iowa City, Iowa.
December 6, 2024

WNBA’s Valkyries Assemble Roster With Fan Favorite Kate Martin

It’s the WNBA’s first expansion draft since 2008.
Jul 20, 2024; Phoenix, AZ, USA; NBA commissioner Adam Silver arrives prior to the WNBA All Star Game at Footprint Center.
December 6, 2024

NBA Set for China Return Five Years After Morey–Hong Kong Fiasco

The Nets and Suns will play two games in Macao in October 2025.
Dec 1, 2024; Baltimore, Maryland, USA; Baltimore Ravens safety Ar'Darius Washington (29) tackles Philadelphia Eagles quarterback Jalen Hurts (1) on the one yard line during the first half at M&T Bank Stadium.
December 5, 2024

NFL Relaxes Drug Policy by Reducing Fines and Resetting Violation Clocks

It makes it harder to test positive for marijuana and reduces fines.
From left, Jeeno Thitikul, of Thailand, Lydia Ko, of New Zealand, and Yan Liu, of the Republic of China, walk onto the first green during the Kroger Queen City Classic in Cincinnati on Sunday, Sept. 22, 2024.
December 4, 2024

LPGA Alters Transgender Player Policy, At Least One Player Barred

The new rules disqualify a current transgender golfer, Hailey Davidson.