'15 Super Bowl visitors boosted tax revenue by double digits
Wow!
Combined sales tax revenue for January and February totaled $14 million in roughly similar categories for restaurants, bars, hotels and retail in downtown Phoenix, Westgate and Scottsdale. That was up 19.5 percent over the same time a year ago.
That sounds awesome. Take that, all you public subsidy skeptics. Giving the Superbowl the benefit of the doubt and ignoring things like growth and the really good weather this winter, that is $2.28 million increase in taxes which we will generously ascribe all to the Superbowl. And probably mostly taken from non-Arizonans, so its like free money.
It is only later in the article that the paper sheepishly inserts this:
Phoenix, Glendale, Scottsdale and tourism bureaus from Phoenix, Scottsdale, Tempe and Mesa combined to spend more than $5.6 million on Super Bowl events and public safety.
So we spent $5.6 million (probably under-estimated) to make $2.28 million (probably not all Superbowl related). The headline was thus a total crock of Sh*t but typical of how, in small ways and large, the media helps push for bigger and bigger government. I am sure the hotels and restaurants did well -- if so, then they are free to form a consortium to pay for the Superbowl's cost next time. Or better yet, have some other sucker city host it and I will happily watch on TV.
Update: I missed this part:
The Arizona Sports and Tourism Authority and Glendale provided a $6.2 million rebate to the NFL on Super Bowl ticket sales, said Kevin Daniels, authority chief financial officer.
I can't tell from the article if that $6.2 million is or is not in the numbers above. I presume it is netted out before hand so that the gain in sales tax would be $6.2 million higher than reported above if this provision did not exist. But this does mean that another valid headline would be:
Nearly 75% of Superbowl Sales Tax Gains Given to the NFL
Watching the Superbowl, and seeing the McDonald's commercial where the company announced a policy that they will ask their customers to do various kinds of performance art rather than pay, I said to my kids, "well, I guess I am avoiding McDonald's for a while." Not only do I not want to sing a song to avoid paying my $5 bill, I probably would pay them $50 to shut up and just give me my damn food.
Early on Monday morning I paid a visit to the Golden Arches while traveling through Union Station in Washington, D.C. After a moment’s wait I placed my order with an enthusiastic cashier, and started to pay.
Suddenly the woman began clapping and cheering, and the restaurant crew quickly gathered around her and joined in. This can’t be good, I thought, half expecting someone to put a birthday sombrero on my head. The cashier announced with glee, “You get to pay with lovin ’!” Confused, I again started to try to pay. But no.
I wouldn’t need money today, she explained, as I had been randomly chosen for the store’s “Pay with Lovin’ ” campaign, the company’s latest public-relations blitz, announced Sunday with a mushy Super Bowl TV commercial featuring customers who say “I love you” to someone, or perform other feel-good stunts, and are rewarded with free food. Between Feb. 2 and Valentine’s Day, the company says, participating McDonald’s locations will give away 100 meals to unsuspecting patrons in an effort to spread “the lovin’.”
If the “Pay with Lovin’ ” scenario looks touching on television, it is less so in real life. A crew member produced a heart-shaped pencil box stuffed with slips of paper, and instructed me to pick one. My fellow customers seemed to look on with pity as I drew my fate: “Ask someone to dance.” I stood there for a mortified second or two, and then the cashier mercifully suggested that we all dance together. Not wanting to be a spoilsport, I forced a smile and “raised the roof” a couple of times, as employees tried to lure cringing customers into forming some kind of conga line, asking them when they’d last been asked to dance.
The public embarrassment ended soon enough, and I slunk away with my free breakfast, thinking: Now there’s an idea that never should have left the conference room.
It didn't look touching on TV, it looked awful. I had already decided to avoid McDonald's for the time being based on the commercial but my thanks to the author for confirming it.
I wish we saw this attitude more often, particularly among large corporations (from an article discussing aftermarket ticket prices for the Super Bowl).
"This is really something we never anticipated," said Will Flaherty, director of growth at SeatGeek. "The cheapest seat on SeatGeek right now is $8,000, but no site seems to have any inventory." Flaherty believes speculative buying is behind the spike. Ticket brokers frequently sell "air" to their customers, taking orders before they have tickets in hand. "We've noticed significantly more speculative selling activity than in recent years," Flaherty said. "Over the last few days, those sellers have been scrambling to buy up tickets to fill their orders, resulting in the Super Bowl ticket version of a short squeeze. Brokers with tickets in hand have been taking advantage of their leverage, raising prices dramatically and arbitrarily withholding some of their inventory."
Ety Rybak, co-founder of the high-end brokerage Inside Sports & Entertainment Group, has spent more than anticipated this time around to fulfill orders before the game. "I can tell you some ugly horror stories about what I have had to pay. But that’s part of the business," he said. "If I sold you tickets for $2,500, and I have to pay $7,500 to do it, unfortunately that’s the world that I chose to live in." The flip side to the high costs is a brisk business in late orders.
Maybe the US sugar cartel, among many other groups, could discover this approach to individual responsibility.
I have no idea why this town of 250,000 people is so fired up to hand money over to sports enterprises. This time, its a Superbowl bid:
Glendale is throwing its support behind a regional bid to bring Super Bowl XLIX to the city in 2015.
In return for the prestige of hosting the National Football League game at University of Phoenix Stadium, Glendale must guarantee services such as public safety and sanitation for free and exempt game-day tickets from sales tax for the NFL.
When Glendale hosted its first Super Bowl in 2008, it saw $1.2 million boost in sales-tax revenue. But a city-commissioned study showed it cost the city $2.6 million in services.
The City Council on a 5-2 vote Tuesday approved the resolution. Councilwomen Joyce Clark and Norma Alvarez dissented.
Councilman Phil Lieberman asked for Glendale's cost to host the Super Bowl in 2015, but Deputy City Manager Cathy Gorham said she didn't want to speculate because "things change on a regular basis." The needs in 2015 may be much different from 2008, she said.
These guys are beyond parody. We lost money last time so lets do it again, and by the way lets be sure not to estimate our costs before we make this decision. Here is a bit more:
Clark said the NFL's demands grow more "invasive" every year.
Clark ticked off requirements such as use of the stadium for nearly two months, final cleaning of the stadium and equipment as needed for free. The NFL doesn't pay state or local levies such as payroll, sales, use and occupancy taxes.
Clark cited two former host cities, Arlington, Texas and Miami Gardens, Fla., which did not shoulder the costs of a Super Bowl. In both those cities, the states stepped in and reimbursed them, Clark said. She said that communities that hosted the NFL game didn't see "big spikes" in their tax revenues.
"The city of Glendale should not be expected to pay the Super Bowl's costs without recompense when it benefits the entire region," she said. "We are at a disadvantage because the NFL is hosting in our city."
Alvarez, an ardent opponent of using taxpayer money for professional sports, said the city was in no position to be spending money for the Super Bowl with the economic crisis. She said she couldn't face her constituents if she supported the resolution when there are unmet community needs and employees are still taking unpaid days off.
Note the only alternative suggested - the alternative is not "let's not do this, it makes no sense" but "let's make sure we stick the costs on a larger group of taxpayers.
In the US last year, 754,224 people were arrested for possession (not dealing or production) of marijuana. By the logic of US drug laws, all of these folks are better off with an arrest record and possible incarceration that they are from the nominal negative effects of smoking marijuana (FBI report here, via Radley Balko). These numbers are just insane. And while the report only gives race numbers for total drug arrests rather than for just marijuana offenses, a hugely disproportionate number are black (over 1/3 of arrests).
And speaking of equal protection, the arrest numbers for gambling are eye-opening (table 43). 75% of all people arrested for gambling last year in the US were black, including 90% of the arrests of those under 18 for this offense. It seems it is A-OK for whites to play poker at home for money (I'm guilty) or to bet in Super Bowl pools (guilty again) or to clad themselves in polyester and head to the casino boat, but blacks who choose to compete with the state gambling/lottery monopoly will get arrested. As an aside, I have always laughed at the government piously suing tobacco companies for targeting minorities with their advertising and then using the same techniques themselves to target minorities for their lottery sales.
In this post, I called bullsh*t on this economic contribution number:
A study released today by the Arizona Super Bowl Host Committee
estimates professional football's championship game at University of
Phoenix Stadium in Glendale generated an economic impact of $500.6
million for the state.
I used some quick reality checks to show that the likelihood that this was a truly incremental economic contribution number was zero. Now, Arizona has released its February sales tax numbers (the data I suggested was the best way to try to do this analysis). As I suspected the numbers are not even close. Let's start with this report from the Arizona Republic:
Sales-tax collections at hotels and motels showed the strongest gains
among tourism-related businesses as thousands of out-of-town visitors
booked rooms for the National Football League's Feb. 3 championship
game at University of Phoenix Stadium in Glendale.
The Arizona Department of Revenue said February sales-tax collections
jumped 12.4 percent at hotels and motels. It was the lodging industry's
best showing, as measured by sales-tax collections, since January 2007.
Bars and restaurants also rebounded from two consecutive monthly declines to post a 4 percent gain in tax collections.
Despite the improved showing in those tourism-related categories,
the state's overall collections continued a downward trend, punctuated
by slumping retail sales and the real-estate industry's decline.
Arizona's total tax collections for the month checked in at $444.1
million, a decline of nearly 1.2 percent from the month before.
Well, that sure doesn't sound like $500 millions worth. Let's look at the hotel number. From this Arizona DOR source document (Feb 2008 Tax Facts), the taxable hotel/motel sales in February were about $215 million. A 12.4% jump, if you attributed it all to the Superbowl, would thus be $27 million. Similarly, a 4% jump in restaurant would be $33 million. As I predicted, these don't even add up to $50 million and it is unlikely all of this is due to the Superbowl.
[The above is still substantially correct. What follows is corrected in the update] But wait, there's more! I then I started looking closer at the February tax report. I don't know what copy the reporter was using [probably one "specially annotated" by the Sports Authority], but my copy shows hotel/motel revenues in Arizona going down by 9% in February 2008 vs. Feb 2007. It shows restaurants and bars going down by 2%. I checked the Feb 2007 report, just to make sure, and sure enough the 2007 numbers were much higher, despite one more day in February in 2008! One can find ZERO incremental impact from the Superbowl.
Now these are statewide numbers, and it is possible the author of the article mixed in Maricopa County numbers and that is where the increases were seen. If true, though, this means the dollar increase was much less, because we are using a smaller base (ie just one county, though a very large one). And it means that the County numbers may be misleading, because the Phoenix area just cannibalized sales from the rest of Arizona, which was way down. Either way, it means the $500 million number the Republic keeps pushing is total BS (incredibly, the author reprints the $500 million number in his article, as if it were consistent with the sales tax data he is quoting.)
Update: OK, I was right and wrong. Apparently, when the state of Arizona says "February 2008 Taxable Sales" they mean Taxable sales on reports that they receive in February. Because reports come in after the tax month is closed, by February 2008 taxable sales they actually mean sales that occurred in January, 2008. Many apologies to Arizona Republic writer Ken Alltucker who was kind enough to set me straight. The Arizona DOR report for March 2008 sales, which we now know is actually February 2008 sales, has not been posted online but I am willing to take his word on it. This is not the first time, alas, that I have been fooled by the fact that the government uses cash rather than accrual accounting.
The wasted effort I expended on the February report which is actually January is not wasted: From it, we do know that from studying what is actually the sales for January, the Superbowl had no discernible effect on hotel or restaurant revenues in the weeks leading up to the game, since these numbers were down substantially. I am sure that you will find a few people singing the praises of the Superbowl. I have not doubt that a few exclusive Scottsdale clubs benefited from having a series of celebrity parties during the run-up to the Superbowl, but overall the impact is low for exactly the reason I already stated: Superbowl week, due to the nice weather and the Phoenix Open golf tournament, is already a big one for Phoenix area hotels and restaurants.
The point still stands. I got diverted off on the report discrepancy, but using what I now understand to be correct numbers in the article shows that the ASU B-school study seems to have exaggerated the Superbowl's financial impact by as much as an order of magnitude.
So maybe in the future I will show more respect for reporters who make dumb numerical errors. Or maybe I won't, since I don't get paid to do this nor do I have 2 or 3 layers of editors looking over my shoulder.
Huge alarm bells are going off as I read this headline in the Arizona Republic, whose motto should be "Happy to credulously print any crazy number your lobbying group puts in a press release." In this case, the headline reads:
Ariz. economy reaped $500M from Super Bowl
Uh, sure. Right. Bet that is a quality number. Lets first vet the source. Who provided the paper with this number?
A study released today by the Arizona Super Bowl Host Committee
estimates professional football's championship game at University of
Phoenix Stadium in Glendale generated an economic impact of $500.6
million for the state.
Oh, I see. Certainly a disinterested party. And how was this number arrived at?
Arizona State University's W.P. Carey School of Business
completed the economic-impact report based on surveys of more than
1,500 visitors who came to the Valley to attend the game or take part
in festivities.
The survey revealed that visitors stayed in Arizona for an average of
3.9 nights and spent an average of $617 each day on hotels, food,
alcohol, transportation, recreation, shopping and other categories. The
report also calculated the amount that organizations dropped during
Super Bowl week.
So apparently, these geniuses have found a way to assume that 100% of this $617 per day times 3.9 days is incremental and that there is no substitution effect. However, they have also managed to somehow assume that University of Phoenix Stadium is even larger than I thought. Because using these numbers, the only way to get to $500 million is if there were nearly 210,000 visitors. Wow. This does not even include the thousands of us from Phoenix who were also in the stadium.
Look, the way to do this study is simple. You look at sales tax receipts in Maricopa county over the period of January 2007-February 2008. You calculate an underlying growth rate. Then you compare the sales tax receipts for the Superbowl months (Jan-Feb 2008) with the same months a year previously, and see how much growth there is, if any, above the underlying growth rate. I will tell you the answer right now: It ain't anywhere close to $500 million. I will eat my hat if its over $50 million.
Here is a reality check: In 2004 the entire retail trade, from restaurants to stores to hotels, was $16.4 billion for all of Arizona. This is $315 million per week. Basically the study is saying that the entire retail trade for the whole state of Arizona was more than doubled in Superbowl week.
From a reader comes this story of Arizona looking to the public trough to get funds to lure another SuperBowl. I can say from experience now that Superbowl week is made up mostly of private corporate and celebrity parties that the unwashed locals like myself are either a) not allowed to attend at all or b) can attend only by ponying up $1000 or more. Not being resentful or a leftist, I couldn't really care less about the parties being near by. However, my opinion changes real fast if my tax dollars are required to pay for them:
Super Bowl organizers will try to nail down another big game for Arizona, possibly as early as 2012.
But for the state to stay competitive, taxpayers need to shoulder the
majority of game costs, organizers say. And the organizers plan to
lobby for legislation to accomplish that.
The weeklong celebration culminating with Sunday's Super Bowl XLII cost
the local Host Committee about $17 million. The private sector,
including such big contributors as the Fort McDowell Yavapai Nation and
the Thunderbirds, bankrolled more than 80 percent, while state and
local agencies chipped in the balance.
But with a slumping economy making fundraising a challenge, the Arizona
Super Bowl Host Committee, the Arizona Cardinals organization and
Valley business leaders want see that ratio reversed, with public
dollars financing the bulk of the effort.
Don't you love the last sentence? An exactly equivalent way to state this is "people have other priorities for their own money and refuse to give it up voluntarily, particularly in difficult economic times, so we need the state to take it by force."
No one yet knows how much this year's Super Bowl will fatten state
coffers, though organizers project the game created more than $400
million in spending. An economic-impact study won't be out for at least
a couple of months.
Here is my challenge: Take the Phoenix-area GDP for this Jan-Feb, take out the growth trend line (which can be found in year-over-year comparisons of previous months) and then compare it to the GDP for Jan-Feb 2007. I bet you whatever you care to bet you cannot find an additional $400 million.
I am all for full legalization of gambling, but, at the risk of preaching at you, if you are betting one of the following Superbowl prop bets with any kind of cash, you might have a gambling problem. Here are several examples from Sports Book Review:
What song will Tom Petty open with? Petty is this year's halftime entertainment in
Glendale; FOX advertised this fact during previous NFL games using
"Runnin' Down a Dream" off the 1989 album Full Moon Fever. That's a
strong indicator the song will at least be part of what will be a short
set, although a medley like the one Prince performed last year is
certainly possible.
"Runnin' Down a Dream" is the favorite at +110, followed by the 1977 classic "American Girl" at +175.
Color of liquid winning head coach is doused in?
Football lore has it that Bill Parcells got the first Gatorade shower
in 1985, courtesy of Jim Burt and Harry Carson, when the Giants beat
the Washington Redskins
17-3 during a midseason game. The Gatorade was orange (+200), as it was
when Parcells took a bath after winning Super Bowl XXI. But Bill
Belichick was doused in a clear liquid (+300) after winning Super Bowl
XXXIX over the Eagles.
Halftime commercial to have highest rating
Budweiser is the big favorite at "“180, followed by godaddy.com at +275.
Last year's winner was a commercial by Hewlett-Packard; the Bud Light
ads didn't even crack the Top 3. So Anheuser-Busch has reportedly taken
out nine (!) Super Bowl ads this year; Bud should be the value pick
here by sheer volume alone.
Length of National Anthem American Idol winner Jordin Sparks will sing the
Star-Spangled Banner at Super Bowl XLII, presumably because FOX is the
television host for both programs. The over/under for this prop is
103.5 seconds. Sparks took about 102 seconds to complete the anthem at
Game 1 of the 2007 NBA Finals between the San Antonio Spurs and the Cleveland Cavaliers.
Here are a few others I found at this site, with all the prop bets you could ever wish for:
2008 Super Bowl XLII Props - First offensive lineman called for a holding penalty.
Chris Snee (NYG)
David Diehl (NYG)
Grey Ruegamer (NYG)
Kareem McKenzie (NYG)
Shaun O'Hara (NYG)
Dan Koppen (NE)
Logan Mankins (NE)
Matt Light (NE)
Nick Kaczur (NE)
Rich Seubert (NE)
Stephen Neal (NE)
Field (Any Other Player)
Who will the MVP of the Game thank first?
Teammates
God
Family
Coach
Doesn't thank anyone
We must be a secular society - God's fallen to third. I always wanted to see someone from the losing side get interviewed right after the winner thanked God for their win. Wouldn't you just love the losing player to say "Well, you heard it. God was against us. What chance did we have?"
The Cowboys are apparently looking pretty seriously at former Princeton Quarterback Jason Garrett to be their new offensive coordinator, and possibly even head coach. Garrett is one of two Princetonians with a Super Bowl ring (quarterback Bob Holly being the other) as part of the mid-1990s Cowboys dynasty. Who will ever forget that great Thanksgiving game against the Packers when Garrett (15-26-311-2-1 for the day) outduelled Brett Favre for a spectacular win after trailing 14-3 at the half? Well, at least I haven't forgotten.
As I suspected in this post last week, it is increasingly clear that Wayne Gretzky's name was leaked by the NJ Police and/or prosecutors in order to raise the profile of their investigation, and therefore their work. For those not following the case, initially they accused one or more B-list hockey players of running an illegal bookmaking business. When that failed to get their investigation on the front page, they leaked the fact that they had tapes of Wayne Gretzky proving he knew about the alleged illegal activity.
Well, that helped them achieve their goal. They got their investigation on the front page everywhere, and set up a feeding frenzy as the media tried to climb all over each other to throw mud at one of the heretofore last unsullied great names in sports. Now, as I suspected, we find out that they really had nothing on Wayne, and misrepresented what they had to get themselves headlines:
One of Canada's all-time great
heroes may get the change to keep that title, after a long week in an
ugly spotlight. The heat's being taken off Wayne Gretzky.
Gretzky was
beaten down by the media spotlight since early February, when his wife
and assistant coach were implicated in an alleged illegal gambling
ring. Gretzky was pulled into the fray a couple of days later, when
sources suggested he was in the loop on the whole thing. But there's
new information on a wiretap conversation between Wayne Gretzky and
Rich Tocchet, which seems to support Gretzky's contention that he had
no prior knowledge of an illegal gambling ring allegedly involving
Tocchet.
It turns out the conversation on how Gretzky's wife
could avoid being named as a participant was recorded last Monday, the
day after Janet Jones allegedly won money betting on the Super Bowl.
Also, Gretzky's wife Jane was alleged to have laid a half million
dollars in bets -- but that also appears to have been false
information. It's believed she only bet about a fifth of that.
OMG, I guess they told the truth -- they did have tapes that showed Wayne Gretzky knew about the abuses. Of course, what they did not say last week was that the tapes were made AFTER the whole mess became public. OK, I confess, I too knew about the bettin scandal after it became public. There goes my reputation.
Update: Apparently, NJ prosecutors are now saying that the bets Janet Gretsky allegedly made are not even illegal in the state of NJ. So they leaked damaging information about both the Gretsky's "involvement", then 2 weeks later let the other shoe drop and made it clear they really didn't do anything illegal. It couldn't be clearer that the police and prosecutors released the Gretsky's names to the press to grab the front-line headlines they were not getting with their B-list targets.
I discussed why I like the Football Outsider rankings of NFL teams and players here. Typically defenses and offenses are ranked by total yards (given up and gained, respectively). This is a really poor metric, as evidenced in part by the fact that Arizona is something like 3rd in the NFC in offense and 5th in defense by these traditional rankings. The better football outsiders team rankings are here.
A couple of observations
Cincinnati #1 after five weeks. Wow! Both offense and defense in the top 6. I know it is early, but the Outsider's way of ranking teams tends to be more reliable than traditional statistical approaches. For example, last season after week 5 they had Philadelphia and New England ranked #1 and #2, and these two teams eventually met in the Super Bowl. Cincinnati has had a pretty easy schedule to date, which will get harder as the season continues
San Diego is by far the best 2-3 team out there. They have had a brutal schedule, which gets better going forward. They still should be considered a good playoff bet.
Washington is easily the worst 3-1 team out there. Expect them to start losing soon, particularly as their schedule remains tough.
Philadelphia may continue to struggle. The rankings show that their 3-2 record is no fluke, and they have perhaps the toughest schedule left to play of any team in the NFL
San Francisco and Houston are really, really bad. Historically bad. I had been hoping that Arizona had a chance in the Matt Leinart / Reggie Bush sweepstakes, but SF and Houston will be tough to beat.
Chicago is working on the Baltimore Ravens award, with the #1 defense to date in the NFL and the third to last offense. Chicago has also been one of the least consistent teams (highest variance), but has one of the easiest schedules for the rest of the year, so still may have a chance if it can just to anything on offense.
NY Giants and Indianapolis are solid #2 and #3, though you have to worry about the Giant's high special teams score pulling them up - these scores tend to regress to the mean over the season. Is there anyone who wouldn't love to see a Manning-Manning Superbowl?
Find this week's rankings here. Incredibly, Buffalo ended the year at number 5, and just a hair from #4, and are on the outside looking in at the playoffs. I think the Colts are breathing a huge sigh of relief to be facing Denver rather than the Bills in the first round - a fate which they interestingly controlled by tanking the last game of the season, despite their coaches assurances to the contrary.
For the Super Bowl, I am sticking with the Patriots in the AFC. Its tough not to pick Pittsburgh, who were impressive with even their scrubs beating a surging Buffalo team in the last week. However, I will go with experience. The NFC is a total mess. No one has ever lost much money betting against the Eagles to reach the Super Bowl, but everyone else really, really sucks. Everyone else is an 8-8 team, even the Falcons who should be 8-8 but got away with a few. I'll go with NE and Philly in the Superbowl, with the AFC winner, whoever they are, taking the title.
By the way, the Cards finished 27th in the rankings, which is actually (pathetically enough) one of their best finishes. However, don't get cocky. You can see from this post that the Cardinals are still the standard for mediocrity against which all teams are compared.
