June 04, 2010

NBA All-Star Game shows zero impact on Texas economy

The first solid numbers are in for the economic impact of February's NBA All-Star Game, and they're a bit less impressive than expected:

Based on the economic score, the dollars spent, let's look at the economic impact of this year's NBA All-Star Game:

It's not $152 million as predicted.

Tax receipts from the State of Texas show the game brought in zero.

The numbers are reflected in tax receipts from five North Texas cities which were predicted to post large hotel, restaurant and alcohol revenue increases as a result of the game.

But instead of that boost, year-to-year revenue comparisons with 2009 — during the depth of the economic downturn — show only small increases or decreases during February, the month of the game. The All-Star contest was early in the month, allowing businesses ample time to report their revenues.

What the heck happened? Well, presumably there was some of the "crowding out" effect observed by economist Phil Porter, where Super Bowls and other mega-sporting events end up driving away as many visitors as they attract, because of booked hotel rooms and traffic fears. Dallas TV station WFAA, which unearthed the tax receipt figures (and is, incidentally, one of the few TV stations in the country that still does investigative reporting), also notes that the initial projection of $152 million in impact cited "a 'literature search on the Internet' as a secondary source, using numbers — presumably from news stories — about earlier All-Star games in Washington, Philadelphia and Atlanta. But news stories frequently quote economic impact estimates from the consultants themselves."

Consultant Michael Casinelli, who prepared the initial economic impact report, defended his methodology, sort of, saying "There is never enough data" to get reliable figures, and blaming "alarmist" university academics for pooh-poohing the benefits of sporting events. Which he's sure must be there, even if you can't see them.