Economics, Money, Sports…

I thought that the Washington Examiner had gone extinct.  It used to be distributed free as a small tabloid newspaper and I used to pick up a copy at a Metro station when I was heading for a subway ride.  Then it disappeared and I figured that it was a casualty in the struggles of the newspaper industry.  So, I was surprised to get an e-mail from a reader containing a link to a recent article in the Washington Examiner.  What prompted the reader to send it to me is captured in this part of his e-mail:

“…you always say hosting the Olympics is a losing proposition and this guy agrees with you, except he is an economics professor and you’re not.”

Not only am I not an economics professor, I only took 2 courses in economics in my life and the most recent one was in 1971; I do not pretend to have any expertise in that field of study.  So, let me use the words of Professor Raymond Sauer (Clemson University) to explain why things like the Olympics – and even the Super Bowl – are not necessarily money-makers for the host city:

“Brazil invested more than $4 billion in stadiums, sports facilities, and infrastructure in order to host the 2016 Olympics. There is no sign of the hoped-for economic boost. Brazil’s economy remains in recession, and once-shiny new facilities are already degraded, lacking funds for basic maintenance and security. The famed Maracana Stadium sits idle with broken windows, damaged doors, stolen tv monitors and seats, its soccer pitch “invaded by worms” according to a CNN report.”

“The award of a Super Bowl to a host city is typically accompanied by estimates of economic impact provided by professional consultants. The numbers are invariably large, with the Houston Super Bowl Committee projecting $350 million in economic impact, and $31 million in state and local tax revenue.”

“While these numbers sound plausible, they leave something important out of the equation: the unseen impact of bringing the show to town. Mega-events displace other economic activity, business visitors, conventions, and other travel to the host city that would have taken place but go elsewhere during Super Bowl week. That’s why there’s not a single published academic study — and there have been numerous attempts — which finds a measurable uptick in local economic activity or tax revenue of any Super Bowl in the history of the NFL.”

If you would like to read all of Professor Sauer’s comments, you can find them here.

I think I will stay at the intersection of money and sports for a while longer today.  I ran across an article on a week ago saying that the Ryder Cup matches scheduled to be in Italy in 2022 may have to be moved.  Here is the paragraph that caught my attention:

“The Italian Senate recently removed the guaranteed $103 million in funding Rome (and the Marco Simone Golf and Country Club) needed to host the biennial event. This means organizers in Italy will have to find the money elsewhere as it is a prerequisite to hosting the tournament.”

Of course, the organizers claim that the Ryder Cup will “have an economic impact nearing 9 figures” which sounds great until you look at the up-front funding cost of $103M and realize that it too is “9 figures”.  The other thing that made me wonder here was that the Golf and Country Club where the matches will be played needs money.  How did the Ryder Cup mavens decide to play the event at a place that isn’t already good enough to host the event?

Here is a link to the story in case you are interested.

One last sports/money comment for the day…  The Breeders’ Cup races for 2017 will be held in early Nov ember at DelMar Racetrack just north of San Diego.  Bing Crosby and Oliver Hardy were partners in the group that originally built this track and the fact that its street address is on “Jimmy Durante Boulevard” might suggest that the facility has seen its fair share of celebrities.  Hosting this “mega-event” will not be an economic disaster for San Diego simply because the track is already there and would be in use for a Fall meeting in any event.  The marginal costs here are low.

However, that does not mean there are no “money aspects” to this event.  The Breeders’ Cup races now span 2 days and the total purse money offered for the 10 races is $28M.  The folks who own the horses that will run in those races are not exactly living paycheck to paycheck and can afford to come and see their animals compete here.  They can pay “enhanced admission prices” but can the ordinary racing fans.  Here are some of the admission prices that are posted for these events:

  • A two-day admission to the Turf Club – including food – will cost $1,725 per seat and you must buy a minimum of a table for four.  In round numbers, that comes to $7K.
  • Grandstand box seats along the stretch – not including food – will cost $1000 per seat and you have your choice of buying a 4-seat box or a 6-seat box.  By the way, you will have to buy the whole box.
  • Standing room admission will be $50 and you can get to the infield for $85 per day.

Tickets for the events go on sale in 2 weeks so you have some time to figure out how to get the proper amount of funds into your checking account so you can be there for the big races.  Don’t miss out…

Finally, Greg Cote of the Miami Herald channeled Carnac the Magnificent with this comment:

“Answer: KFC gives away tubes of Extra Crispy Sunscreen that smells like fried chicken.

“Question: What do you mean real life sometimes reads like something from The Onion?”

But don’t get me wrong, I love sports………