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Wednesday, February 1, 2006
Updated: February 2, 12:03 PM ET
What is a Super Bowl worth? Good question

By Darren Rovell
ESPN.com

DETROIT -- When Mayor Kwame Kilpatrick took the oath of office for a second term less than a month ago, he said Detroit's role as host of Super Bowl XL and the revenue the game is expected to generate would key elements in turning around the city's reputation for crime and poverty.

The National Football League gave the game to Detroit in part as a reward to taxpayers who fronted $125 million of the building costs for Ford Field, which opened in 2003. But it isn't clear that hosting a Super Bowl in this town -- or in any other town, for that matter -- is going to be worth the trouble, at least in big-picture financial terms.

League officials and local leaders here have often said that, with 100,000 out-of-towners spending their money in Detroit throughout the week, the Super Bowl will produce an estimated $302 million boost to the economy.

But economists are quick to point out that those sorts of numbers are generally grossly inflated, because the estimates don't factor in the finances of a normal week in the city, the vendors who come from out of town and, perhaps most often forgotten by the public, the cost to ready the city for the festivities.

Free chili for homeless
A simple bowl of chili goes a long way at this Super Bowl party.
For civic leaders in Detroit, where roughly one-third of the more than 900,000 residents live in poverty, the activities surrounding a four-hour football game are great justification for economic revitalization efforts in parts of downtown. While the Detroit Super Bowl Host Committee spent only $18.5 million to attract and stage the game, $3 billion has been invested, both privately and publicly, in projects in the downtown area over the past five years, according to officials with the Detroit Regional Chamber.

To many of those in public office here, this is the best time to have the nation's eyes focused on Detroit -- a time to use the city's new and improved look to woo major corporations and further investments.

"I believe that the Super Bowl has been the catalyst for the development and a new focus toward long-term development here," said Tammy Carnrike, executive vice president of the Detroit Regional Chamber.

But in some ways, that sentiment might be misguided.

"It's not like all these CEOs coming off their private planes for the Super Bowl arrive in Detroit, walk down the steps of their Gulfstream V plane and say, 'Well, gosh dang, I've never seen Detroit before; let's move our corporate headquarters here,'" said Craig Depken, an associate professor of economics at the University of Texas at Arlington, who has studied the Super Bowl's economic impact.

No matter how shiny and new some downtown buildings appear, this week could be viewed as the absolute worst time for Detroit to be in the fishbowl.

Super Bowl party for the homeless
Super Bowl party favors: a hot meal and plenty of hospitality.
A city deficit of at least $180 million has shut down schools and curtailed round-the-clock transit schedules. Both General Motors and Ford reported losses of billions of dollars this year and recently announced plans to cut 30,000 jobs each. Others in the Detroit car-making industry, Delphi and Visteon, are restructuring after filing for bankruptcy.

Because the NFL provides the city with no money to operate the event, the value of being given the rights to host the Super Bowl is arguable. Still, spending is rationalized to the public with reports of an expected windfall of a couple hundred million dollars in business.

"Hosting a Super Bowl in Detroit is hardly a major economic event," Depken said. "In order for that to happen, you'd have to bring the Super Bowl to a place like Moscow, Idaho [pop. 21,271]."

Like Depken, sports economist Robert Baade is critical of economic studies that say hosting the Super Bowl will result in taxable sales of $300 million to $400 million. He has audited the gains of cities who hosted the 39 previous Super Bowls and concludes that the data decidedly doesn't support the premise that hosting a Super Bowl results in a significant economic impact.

Baade says Detroit's estimate of a $302 million impact from this year's game comes from figuring total gross spending around the Super Bowl. To arrive at the net value -- or the gains made by the city government and local business -- Baade suggests moving the decimal point one place to the left.

Charles Lathem at Super Bowl homeless party
At least for a while, Charles Lathem had a place to go.
"It will be closer to $30 million to $60 million in impact," Baade said. The placement of that decimal point makes the difference between having money to pave roads and being able to accomplish the widespread improvements to blighted properties that civic leaders crave.

Two years ago, the Houston Super Bowl Host Committee estimated that its game would generate more than $330 million in economic impact. But when the controller's office tallied the numbers, it came up with only $129 million in direct spending, and that was over the two-week period surrounding the game. The event generated $3.2 million in sales taxes for the city, and the net profit was a measly $913,397.

Economists often note that the Super Bowl attracts a larger out-of-town crowd than any other mega-sporting event. No Super Bowl team has ever played in its home stadium (in Super Bowl XIX, the San Francisco 49ers played in nearby Palo Alto), as opposed to the other three major sports, in which both participating teams play host to games in the finals.

But economists also point out that the impact of Super Bowls in hot-weather sites is minimized by the tourism already booming at that time of year. Those cities are forced to account for the normal gains experienced in late January/early February when they figure the added value of the Super Bowl.

In Detroit's case, the city should be helped by the fact that hotel occupancy ought to be at a much higher rate than it normally is in early February.

"A lot of economists will have that knee-jerk reaction that suggests that the Super Bowl doesn't make a difference, but this one makes more of a difference than it does in other cities that have hosted," Depken said. "They are playing in a city where economic activity is not very large to begin with when the game comes to town."

Laverne King at Super Bowl homeless party
Laverne King spends a quiet moment off the streets at Detroit's Super Bowl party for the homeless.
Patrick Rishe of Sportsimpacts.com was hired by the Detroit Metro Convention & Visitors Bureau to produce the economic study for this year's Super Bowl. He says he anticipates that the direct impact on the community will be worth about $100 million.

The NFL, however, isn't making it easy to get an accurate economic report on the how much money the city will raise, according to Rishe. He says the league will not allow him to do his surveying on Ford Field premises come game day. The NFL didn't respond to a request for a comment.

Some have speculated that the city's relatively close proximity to Pittsburgh -- 285 miles -- could decrease the amount of time Steelers fans will spend in the city. But Rishe isn't convinced that will be the case.

"I'm sure there will be fans who will drive to Detroit, knowing that they won't be able to afford a ticket," Rishe said. "But they will come up for a couple days just to experience being around town with other fans."

Beyond the economic value of the game itself is the hope by civic leaders that visitors who come to Detroit will consider spending their money here again in the future. Despite the current budget crunch, few financial restraints are being exercised in the hope that the Super Bowl will lead to better times -- a line of thinking reflected in Super Bowl spending by the major auto manufacturers this week.

Ford will pay $2.4 million for a 30-second advertisement featuring Kermit the Frog to pitch their Escape Hybrid car. And General Motors will have ads for its brands -- GMC, Cadillac and Hummer -- spread throughout the pregame and postgame broadcasts to go along with 90 seconds of in-game advertising. Plus, GM will have a significant sponsorship presence at one of the Super Bowl's hottest shindigs, the Maxim Party.

"We had two choices," said Mark LaNeve, vice president of vehicle sales, service and marketing for General Motors North America. "We could have stuck our heads in the sand to hide, or we could move forward. Well, we're close to 100 years old and we plan on sticking around for a while."

Ford Field
On game day, Ford Field will give one automaker plenty of exposure.
LaNeve said that, despite the negative attention from the recent earnings reports and layoffs, "in the end, people are looking for a great product they respect."

The brand is certainly getting plenty of exposure to Super Bowl media, which is housed in GM's headquarters at the Renaissance Center. So is Ford, thanks to the company's $40 million investment for 20 years of stadium naming rights at Ford Field, where the game will be played on Sunday night. (Although GM's Cadillac Escalade is the official car of the Super Bowl, GM officials haven't asked the league to attempt to cover up the thousands of Ford signs at the stadium.)

The good news is, Sunday's temperature is expected to be some 35 degrees warmer than it was the last time the area hosted a Super Bowl (Pontiac) 24 years ago, and that might keep people out in the streets and willing to spend money. The bad news is, snow is in the weekend forecast.

While Kilpatrick and other city officials are counting on the Super Bowl as a much-needed boost for Detroit, nothing is guaranteed. As Baade points out, one snowstorm could jeopardize attempts at a reputation turnaround, no matter how hard the city works and how much money the city spends.

Darren Rovell, who covers sports business for ESPN.com, can be reached at Darren.rovell@espn3.com.