Business at Big Daddy’s tavern will spike 30% this evening during the Cardinals/Brewers playoff game and squirrel shirts are selling like hotcakes. Add hot dog and beer sales, parking revenue, gate receipts to the team, out-of-towners spending, and…you know. Demand will surge for all the stuff sold in and around Busch Stadium. The result? An economic boost.

Yes? Not necessarily.

Some sports economists believe spending is just shifting. One movie theater owner says his sales will plunge by 50%. He loves his team but, “The sooner they lose the better.“

Others say that the spending on hotels and car rentals is overestimated. In his “reality check” paper on mega sports events spending, economist Victor Matheson cites Denver’s projections for the National Basketball Association (NBA) All-Star Game in March, 2005. Starting with an estimated 100,000 visitors, local officials predicted a massive ripple of spending. Matheson points out that Denver had 6,000 hotel rooms and the Pepsi Center where the event would occur seated 20,000.

The bottom line? For the Olympics, the Super Bowl, the World Series, for any “mega” sports event, spending might not be close to projected amounts. In addition, congestion, vandalism, and the cost of public safety could be considerable.

The Economic Lesson

To what extent can we assess benefit and cost for a major sports event? We tend to have a benefit bias when estimating spending and the pleasure and pride of the event is not quantifiable. And yet, the cost in switched spending and tax-payer funded public services could be high.

An Economic Question: For a “mega” sports event would you agree or disagree with the people who say that economists know the price of everything but the value of nothing?