We can’t know the true benefit of the Super Bowl unless we know its cost

“Minnesota Super Bowl adds $400 million to economy”

So said a headline in the Grand Forks Herald yesterday. As MPR News reports

Organizers of Super Bowl 52 say the game and its visitors netted the region $370 million in local spending during the run up to the Feb. 4 game in Minneapolis between the Eagles and Patriots.

A report released Tuesday estimated $450 million in local spending during the game — minus the money that visitors to Minnesota would have spent without a Super Bowl — brought in $370 million in new spending. Experts hired by the Super Bowl Host Committee say that money circulated through the local economy for an estimated impact of $400 million.

Sounds great, doesn’t it? Well, a couple of things.

First, is this extra money for Minnesota? MPR News quotes College of the Holy Cross economist Victor Matheson who points out that

The sale of an Eagles jersey, he contends, is mostly profit to the NFL and the manufacturer, with some retail markup. And since Minnesota nixed a tax on sports memorabilia in the stadium finance debate and doesn’t tax clothing, local and state coffers wouldn’t net much.

Even hotel revenue mostly goes to out-of-state chains. “Spending does not equal income,” Matheson said in an email, after reviewing the Rockport report.

Second, what about the cost? As MPR notes, “Gov. Mark Dayton and lawmakers committed $498 million in public money to help pay for a new facility for the Vikings in 2012”. We have to offset these costs against the benefits. As I’ve written before, we have to think of all the extra spending and jobs that would have been generated if that $498 million in taxpayers money had been spent on something else. Or, better yet, if it had been left with the taxpayers who earned it to spend as they thought best.

Nobody likes to be a party pooper, but public policy must take into account what is not seen as well as what is seen.

John Phelan is an economist at the Center of the American Experiment.