Here comes another mega sports event, and with it, another mess of road closures in downtown Minneapolis.
The inconvenience for locals, not to mention the arrival of nearly a hundred thousand sports-loving alumni of various schools, is all done in the name of corporate welfare premised on the attempt to pump the local economy with riches.
Last fall, the Minneapolis City Council approved spending $900,000 to cover part of the cost of hosting the Final Four. The city’s tab pays for cops, sanitation, and party space at the Minneapolis Convention Center. Minneapolis hopes to make it all back and then some through a windfall of tourism taxes and fees, and, like the 2018 Super Bowl, justifies public investment as an opportunity to showcase the Twin Cities on a national stage.
It makes perfect economic sense, according to a study by Rockport Analytics, which estimates the NCAA men’s basketball championship will bring 94,000 visitors spending $142 million. Rockport is the same firm that calculated the Minneapolis Super Bowl would generate $343 million for the metro.
Please reach for a grain of salt: Both studies were commissioned by the local organizing committees promoting the events—and conducted before anything even took place.
Minneapolis should be skeptical of Rockport’s rosy analysis, says Victor Matheson, a Ph.D. grad from the University of Minnesota who’s now president of the North American Association of Sports Economists.
After the streets are swept and the ballers and executives have moved on, independent economists reviewing the data usually find far more sobering numbers. Super Bowl studies show that the biggest sporting event in the United States usually generates anywhere from $30 million to $130 million—in some cases not even enough to cover the costs of hosting.
“The rule of thumb we use is just take the decimal point [of official projections] and move it one place to the left, and that’s probably a pretty good guess of what you’re actually going to get,” Matheson says. “It’s easy to get an event to look pretty good if you only include the benefits and not the expenses.”
Most of the time, it’s impossible to get the full picture of what an event costs the public because the demands made of host cities are confidential. But in the case of Minneapolis’ Super Bowl, the Star Tribune got someone to leak the bid book. Its contents were revealing: The NFL requires free police escorts, free parking, free luxury hotel suites, free billboards, plus all revenue from ticket sales. The phrase “at no cost to the NFL” was repeated ad nauseum.
Likewise, Norway had to stop bidding for the 2022 Winter Olympics after it came out that the International Olympic Committee demanded to have a fairytale cocktail reception with the king—all expenses paid by the locals—among other mandates.
The more powerful the league, the greater the demands.
“And of course, the NCAA also puts big demands on cities in order for them to get the Final Four,” Matheson says.
The metro will make a lot of money, though most of it will pour out again, according to economists. All the hotels will fill up and room rates will skyrocket, but a one-off boon for Radisson corporate headquarters won’t mean more jobs (or higher wages) for desk clerks and room cleaners.
There are also opportunity costs. Public resources spent on events could otherwise go to health care, education, and other measures of human wellbeing at the neighborhood level.
Civic boosters argue that big events put Minneapolis on the map. Research shows that surges of tourism don’t last long into the future. If someone comes to the Twin Cities for the local flavor—the arts, food, and outdoors—and they have a great time, they’ll tell their friends and family it’s worth a trip. But if a tourist simply goes home with memories of how great (or heartbreaking) the Final Four was, their friends and family might just want to book tickets to the next host city.
“From an economic standpoint, you want to support things that generate revenue year-round, rather than these big floods,” Matheson says. “If you’re a farmer, you want a little bit of rain on a regular basis rather than one gigantic flood one weekend and drought the rest of the year. Those same principles apply.”
For example, the Minneapolis Convention Center hosts a different event almost every day, things like boat shows, wedding fairs, and industry gatherings of out-of-towners who spend money in bars and shops on Nicollet Mall. That tourism business makes sound sense, because it’s constant.
Minneapolis will make money on the Final Four regardless, says the University of Michigan’s Mark Rosentraub. The cashflow probably won’t be as great as the host committee claims, but will be a nice net positive at a time of year when Minneapolis wouldn’t naturally attract a ton of people.
But factor in construction of U.S. Bank Stadium, and this justification dissipates.
To bring both the Super Bowl and the Final Four to Minnesota, the new football arena had to be built. The NCAA always insists on having its championship games in football stadiums these days—despite player complaints about them having the wrong scale, and ruining shooters’ depth perception—because they can sell more tickets, even if they’re nosebleed seats.
There are bigger stadiums than U.S. Bank, but few newer, and even fewer with a worse public financing scheme: Minnesota’s elected officials built a $1 billion stadium with $500 million of public money.
“It was a surprising deal,” Rosentraub says, laughing. “You’re not going to make [the public investment] back in operations.”
Instead, economists can point to intangibles, things like civic pride. U.S. Bank Stadium is an incredible piece of architecture, Rosentraub says. Though locals’ view of its soaring skyline disruption may be clouded by knowledge of the price tag, it’s an objectively bold design in a town not known for its downtown sights.
There’s also research, believe it or not, showing big sporting events make people happy.
Looking to make money off games gets the premise all wrong. Despite what boosters say, these parties don’t drive tourism, increase employment, or promote regional economic growth. Rather, the real reason we embrace them is that we respond to festive impulses, and choose to prioritize play.
A 2008 research paper by a team of U.S. and U.K. researchers collected data on self-reported satisfaction for 12 European countries that hosted the Olympics, the FIFA World Cup, and UEFA European Championship. Result: the “feel-good” factor associated with hosting is significant, comparable to attending a wedding. Your own.
They added an obvious caveat: “Although we find the magnitude of hosting football events in comparison to a person being married, say, is large, the former effect seems very short-lived, while the latter effect is generally much longer lasting.”
In any case, so long as U.S. Bank Stadium is already there, Minneapolis might as well host as many things as it can, while holding elected officials accountable for signing away public money and resources to meet organizers’ ransom note demands.
And since much of the net gains Minneapolitans receive will come in the form of joy, fleeting and pure, we should consider it our civic duty to lean hard into the hype. Get down there. Toast to some tourists, and try telling them about all the great things Minnesota has to offer year-round.
By the numbers
Last year Minneapolis hosted the
Final Four. Duke won that year’s
championship in the Metrodome.
Estimated maximum capacity of U.S. Bank Stadium for the Final Four, or roughly 5,000 more bodies than fit there for Vikings games.
Final Four appearances in Michigan State history. The school has won
twice (1979, 2000).
Private planes expected to land in the Twin Cities this week, a dropoff of 1,100 from last year’s Super Bowl.
Men’s tournament teams (roughly 60 percent) with player graduation rates 80 percent or higher. By comparison, 59 women’s teams (92 percent) see four out of five players earn degrees.
Combined Final Four appearances in Texas Tech and Auburn school history; Virgina has made it twice (1981, 1984).
Estimated TV rating for Michigan State’s thrilling 68-67 upset of Duke,
the highest rating for a quarterfinal
contest since 2004.
Games Texas Tech’s Tariq Owens played at other schools (Tennessee, St. John’s) before transferring to play in Lubbock.
Total revenue of the NCAA in the 2017 fiscal year, the most recent available, with roughly 82 percent of it generated by the men’s basketball tournament.
Years of suspension for Kansas standout Silvio de Sousa, whose guardian sought an illicit payment from a fan that was ultimately never made.
Combined salaries of the four head coaches; Michigan State’s Tom Izzo tops the quartet at $4.2 million.
Michigan State players who physically restrained Izzo as he berated freshman Aaron Henry during a recent timeout.
Listed weight of 5-foot-9 Virginia freshman Kihei Clark, whose whipped pass set up Mamadi Diakite’s wide open and overtime-forcing jump shot against Purdue.
Schools where Auburn coach Bruce Pearl has faced recruiting scandals.
Minutes Michigan State junior guard Cassius Winston has sat on the bench in his last two games.
Rank of Virginia’s pace of play, nationally. That’s dead fucking last, and has kept opponents to 55 points per game, compared to Virginia’s average of 71.