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Tuesday, March 23, 2021

Cobb spokesman: Economic impact estimates of All Star game came from MLB and Braves

Cobb County Chief Financial Officer William Volckmann sent a memo to the county manager last week, saying that the Major League Baseball All Star Game at Truist Park in July would cost taxpayers about $2 million in expenses but the county would see a “robust return” on the investment.

“In the past, hosting cities have experienced an economic impact ranging from $37M to $190M,” Volckmann wrote in the memo. “Many of our surrounding hotels/motels are already completely sold out and the travel and tourism industry, restaurants and event venues will certainly benefit from the All Star Game.”

But county officials acknowledged to The Atlanta Journal-Constitution Monday that any windfall won’t necessarily come back to county government.

The memo ended up as supporting material in an agenda item for Tuesday’s commission meeting, at which commissioners will be asked to approve the $2 million expense. And the economic impact figures in the memo were provided to Volckmann by Major League Baseball and the Braves, county spokesman Ross Cavitt said.

Volckmann’s memo does not mention the source of the $37 to $190 million economic impact calculation. It does reference data from the online Baseball Almanac showing that “the Midsummer Classic is a significant economic boon to hosting cities,” but no specific figures are attributed to the Almanac.

RoyalsRetro (AG#1F) Posted: March 23, 2021 at 09:38 AM | 25 comment(s) Login to Bookmark
  Tags: braves, economics

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   1. Pat Rapper's Delight (as quoted on MLB Network) Posted: March 23, 2021 at 11:30 AM (#6009695)
I give the AJC credit for running even a couple of dissenting sentences. Most stories about how an "economic impact study" paid for by a team or CVB or government entity says they'll generate eleventy kajillion dollars don't get such even-handed treatment.
“These numbers are ridiculous and do not conform to existing studies of the economic impact of MLB’s All Star game,” said J.C. Bradbury, a nationally known expert on sports economics and a professor at Kennesaw State University. “If anything, studies show there is a negative impact on sales revenues.” Cavitt could not identify the years that made up the data or what went into the economic impact calculation, but acknowledged that the game is unlikely to provide a big payoff for county taxpayers: “The actual impact to the county bottom line is going to be minimal,” he said.
   2. jmurph Posted: March 23, 2021 at 11:41 AM (#6009698)
Read a lengthy twitter thread the other day breaking down the economics of the stadium to date, and it was a loser, as expected. I'll keep searching and will post it if I find it.
   3. jmurph Posted: March 23, 2021 at 11:44 AM (#6009699)
I'm pretty sure it was probably Bradbury; this article covers the hits.
   4. Jobu is silent on the changeup Posted: March 23, 2021 at 04:21 PM (#6009746)
Without even reading the details...

~40k seat stadium. Each seat would have to attract enough economic activity to generate $1M - $5M in tax revenue. Seems legit.
   5. bfan Posted: March 23, 2021 at 04:54 PM (#6009749)
~40k seat stadium. Each seat would have to attract enough economic activity to generate $1M - $5M in tax revenue. Seems legit.


You want to try that again? If each of 40,000 seats generated $5 million in tax revenue, that would be $200,000,000,000, I think.
   6. bfan Posted: March 23, 2021 at 05:02 PM (#6009751)
Using the average of the 2 estimates, that would be a $114,000,000.00 economic impact. With a futures game, home run derby and all-star game, does that seem out of reach? It doesn't to me.

You have hotel room nights; flights in and out of the city; meals out by the battery; and so on. Using the per seat analysis, and multiplying the stadium capacity (41,149) by 3, you get 123,447 fannies in seats over the 3 nights. Could the events generate $923.47 per night, per seat? Does that seem out of whack? Maybe a little, but not a lot, if you factor in hotel costs and airfare. I know many are local, but many are not.
   7. McCoy Posted: March 23, 2021 at 05:06 PM (#6009754)
Atlanta is normally pretty busy hotel wise. The ADR and occupancy might be higher than a typical weekend but it's really not a huge deal overall.

The Super Bowl was a big deal for hotels in Atlanta but it was akin to a popular citywide convention than to winning the lottery.

I've done irish folk dancing and cheerleading tournaments that were more insane than the Super Bowl.

And of course Atlanta is the world's busiest airport. The ASG won't even be a blip on their P&L. Hell, Atlanta would likely get those travelers anyway regardless of where the game was played since they are a major stopover hub.

Finally, the vast majority of people going to the ASG will be locals who will not require a hotel room or an airplane ticket.
   8. McCoy Posted: March 23, 2021 at 05:10 PM (#6009755)
What you will get is displaced revenue as has been mentioned int he articles. People that were going to go a restaurant or Target or whatever and instead will opt to go to the Battery and see what it is all about.
   9. Walt Davis Posted: March 23, 2021 at 05:11 PM (#6009756)
~40k seat stadium. Each seat would have to attract enough economic activity to generate $1M - $5M in tax revenue. Seems legit.

Alas, you're off by a factor of 1,000 there. Also he doesn't claim $37-190 M in county tax revenue, he claims the county will see a positive return and it will generate $37-190 M in total economic activity for the county. So that's $1,000-5,000 per seat which, in raw terms, doesn't seem batshit insane.

"Economic impact for the county" is a broad enough concept to drive a truck through. If you take a $200 a night room at the Hilton for 2 nights that's $400 in economic activity in that county even if most of that money goes to Hyatt headquarters in wherever and the rest is paid out to staff who probably don't live in Cobb County. If the county has a hotel tax, maybe they see $4. So that's $400 spent in Cobb County but maybe $50 of it gets spent in Cobb Couuty. (I completely made up that number.) Those folks going out for meals in Cobb County probably do generate a reasonable amount of actual Cobb County economic activity. I don't know how much tix to the AS game cost and I assume the stadium gets a healthy cut but most of that money is going back to MLB. Then you get assumptions about multipliers -- the hotel staff spend money at the grocery store which gets spent by grocery clerks that gets spent by ... and unsupportable assumptions about how much of that actually stays in county.

Then you get into the quesitons of how much of this economic actifity is actually marginal (i.e. on top of what you'd normally see). If taking the AS game meant losing a major convention (much less a ComicCon type thing), the marginal return might even be negative.
   10. Tom Goes to the Ballpark Posted: March 23, 2021 at 05:14 PM (#6009757)
It doesn’t seem far fetched that the All Star game will generate $100M in revenue. How much of that is spent in Cobb county as opposed to Fulton or Dekalb might affect whether it pencils out for the county though.
   11. McCoy Posted: March 23, 2021 at 05:23 PM (#6009760)
It seems incredibly far fetched to me.
   12. RoyalsRetro (AG#1F) Posted: March 23, 2021 at 05:26 PM (#6009762)

"Economic impact for the county" is a broad enough concept to drive a truck through. If you take a $200 a night room at the Hilton for 2 nights that's $400 in economic activity in that county even if most of that money goes to Hyatt headquarters in wherever and the rest is paid out to staff who probably don't live in Cobb County. If the county has a hotel tax, maybe they see $4. So that's $400 spent in Cobb County but maybe $50 of it gets spent in Cobb Couuty. (I completely made up that number.) Those folks going out for meals in Cobb County probably do generate a reasonable amount of actual Cobb County economic activity. I don't know how much tix to the AS game cost and I assume the stadium gets a healthy cut but most of that money is going back to MLB. Then you get assumptions about multipliers -- the hotel staff spend money at the grocery store which gets spent by grocery clerks that gets spent by ... and unsupportable assumptions about how much of that actually stays in county.


Also, don't these type of studies also include the "multiplier effect" where if the ASG causes someone to eat at a local restaurant, that local restauranteur has more money, and they go out and buy products from local farmers, and that generates even more economic activity, and so on, and so on...and there is a lot of wiggle room to fabricate exaggerate numbers there.
   13. Walt Davis Posted: March 23, 2021 at 05:26 PM (#6009763)
Oops, he does reference "hosting city" (call it Atlanta Metro), not "Cobb County" specifically. If the other counties are chipping into the $2 M ... or if the total cost is $5 M of which $2 M is Cobb's share ... then that's OK I guess. But airfare definitely not of any benefit to Cobb County; hotels and restaurants in other counties not of any direct (and little indirect I'd think) benefit to Cobb County. As a Cobb County commissioner, I'd want to know what the $2 M we're spending brings back to Cobb County.

irish folk dancing and cheerleading tournaments that were more insane than the Super Bowl.

And probably didn't cost the county $2 M.

Anyway, my point, not made very clearly, is that this is how you get to ridiculous estimates like these. If we take the airfare revenue and the hotel revenue and the ticket revenue and souvenirs and 3 meals a day, taxis, shopping at metro Atlanta's fabulous boutiques ... that all probably does add up to $1,000+ per seat. Then ignore that most of that revenue is going to multinational corporations and MLB, pretend it's all marginal revenue, add in a nice multiplier -- the hotel maid will spend $10 of her $15 on groceries, the grocery clerk will spend $5 of their $7 on kids clothes, the retail clerk will spend $3 of their $5 on rent, the landlord will use $1 of their $3 bribing a building inspector ... and you get a wonderful economic impact estimate.
   14. McCoy Posted: March 23, 2021 at 05:28 PM (#6009764)
Thing is I doubt it does add up to 1000+ dollars per seat.
   15. jmurph Posted: March 23, 2021 at 05:29 PM (#6009765)
I encourage people to click the link in post 3 (you can even get the full Bradbury paper there). Other people have done the math already.

"The findings indicate a net increase in taxable sales in the county; however, the magnitude is small and not statistically significant. Though an influx of net new spending is evident, approximately one-third of the project's sales derive from crowding out other local economic activity. In total, added tax collections fall well short of covering the public subsidies that fund the stadium."
   16. McCoy Posted: March 23, 2021 at 05:32 PM (#6009766)
   17. McCoy Posted: March 23, 2021 at 05:35 PM (#6009768)
As I mentioned before most people going to these events will be locals. So no hotel costs not airfare costs. And any food spending will be at least partially offset by the fact that they were already going to spend on food already in the area.
   18. snapper (history's 42nd greatest monster) Posted: March 23, 2021 at 05:57 PM (#6009770)
Anyway, my point, not made very clearly, is that this is how you get to ridiculous estimates like these. If we take the airfare revenue and the hotel revenue and the ticket revenue and souvenirs and 3 meals a day, taxis, shopping at metro Atlanta's fabulous boutiques ... that all probably does add up to $1,000+ per seat.

As McCoy says, assuming 100% of the crowd is tourists, which it won't be. Virtually none of the spending by locals is going to be incremental except the ticket money, which goes to MLB, IIRC. The locals just would have eaten out someplace else.
   19. pthomas Posted: March 23, 2021 at 08:29 PM (#6009780)
When you look around the table, and you don't know who the sucker is....that means it is you.
   20. Walt Davis Posted: March 23, 2021 at 09:16 PM (#6009784)
The article linked in #3 is about stadiums, not special events.

most people going to these events will be locals

Evidence?

As McCoy says, assuming 100% of the crowd is tourists

No such assumption made.

Let me try this again, in ALL CAPS:

I AM POINTING OUT HOW BULLSHIT THESE ESTIMATES ARE. THAT THEY ARE PIE IN THE SKY ESTIMATES OF TOTAL REVENUE "PRODUCED" WITH NO ADJUSTMENTS FOR WHAT GETS DISPLACED, ETC.

3 nights in a hotel at $200 per night for 20,000 people -- $300 per seat.
150,000 meals over 3 days for the tourists at $30 per -- $115 per seat
60,000 meals for non-tourists across 3 days at $50 per (assuming it's mostly dinner) -- $75 per seat
15,000 round-trip flights at $300 per -- $113 per seat. (Other tourists drive.)
40,000 game tickets at $150 per -- $150
40,000 for HR derby, etc. ... another $100 ??
240,000 stadium beers over 3 days ... another $1,000 per seat.

So that's $850 after adjusting for the joke. Add souvenirs (not just purchased by game attendees presumably), rental cars, taxis and other shopping.

Now if only 5,000 people are coming from out of town then, sure, not a lot will be generated. Or if people who are willing to spend a couple hundred on AS event tix alone are then cheapskates when it comes to travel, hotel and meals. Or people spend a few hundred to attend the AS game ... then don't buy a souvenir ...

We're starting from a basis of irrational behavior -- nobody in their right mind would spend $100s for a ticket to the AS game. This isn't a budget family outing, this is conspicuous consumption.

But true enough -- the key piece of data needed is the number of (long-distance) tourists so if anybody had an actual estimate, feel free.




   21. McCoy Posted: March 23, 2021 at 09:21 PM (#6009785)
Ticket Information
The only way to guarantee access to the All-Star Game, Home Run Derby, and other events during 2021 All-Star Week is to be a Braves A-List or Braves Premium Club Member during the 2021 season! Members will receive priority access to 2021 All-Star Game tickets based on package and tenure, so guarantee your seats by becoming an A-List or Premium Club Member today!



How many non corporate sponsors are going to fly from LA to ATL for a baseball exhibition?
   22. McCoy Posted: March 23, 2021 at 09:23 PM (#6009787)
Secondly there's no way 20,00 fans are getting 20,000 hotel rooms even if 20,00 cube from out of state. 20,000 people would probably work out to 5,000 to 10,000 hotel rooms.

   23. McCoy Posted: March 23, 2021 at 09:29 PM (#6009790)
$200 a night might just be a bit high on average for a hotel room as well. Still plenty of rooms being offered at under 100 dollars per night by major hotel companies which tells me they aren't expecting a big surge for those days.

Hotels set prices for each day well in advance and have a pretty good idea of what demand will be. They of course adjust their prices as the days go by to reflect demand but if the rooms aren't high right now they aren't expecting a big demand.
   24. McCoy Posted: March 23, 2021 at 09:42 PM (#6009794)
kind of old but here's a list of the biggest conventions in Atlanta
   25. Howie Menckel Posted: March 23, 2021 at 10:38 PM (#6009796)
economic impact analyses for sporting events like this always have been hilarious, for many of the reasons noted here.

the best ones, though, are for Super Bowls in San Diego and Miami.

I mean, geesh, who from the Northeast or Midwest would ever want to be in those cities in the first week of February? their hotels must be empty that week absent a Super Bowl, right? lol
[NARRATOR: "Everybody. Everybody wants to be there."]

as it happens, one city that did get a nice boost was NYC in 2014. that's one of the slowest weeks of their visitation year. plus while the big corporate events and also the "NFL Experience" stuff all happened there, NJ taxpayers got stuck paying the bill for national security expenses for the Meadowlands Super Bowl while getting little economic benefit, since all the swells stayed in Manhattan. just shows that NJ doesn't ALWAYS outfox NYC.

if the NFL ever tries to come back, I doubt NJ will be as dumb next time. that time, they failed to use their leverage. MetLife Stadium is privately owned, while Giants Stadium was not. but the state still can make it dicey for the league to try to host the game there.

"wow, that smoke detector looks a little worn out over there - would be a shame if something should happen to it and we had to shut down the building that morning...."

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