World Series Economics

Does the World Series Give St. Louis an Economic Boost?

Oct 31, 2013 • Behavioral Economics, Businesses, Demand, Supply, and Markets, Economic Debates, Economic Growth, Economic History, Economic Thinkers, Entertainment, Labor, Lifestyle, Macroeconomic Measurement, Sports, Thinking Economically • 354 Views    No Comments

2 years ago, business at St. Louis’s Big Daddy’s tavern spiked during the Cardinals/Brewers playoff game and squirrel shirts were selling like hotcakes. Add hot dog and beer sales, parking revenue, gate receipts to the team, and out-of-towners’ spending and you got a massive surge in demand because of the World Series.

This year, the St. Louis Convention and Visitors Commission (CVC) Chief Marketing Officer explained why he predicts the city’s economy will benefit. Taking “the total attendance for each home World Series game, which was approximately 48,000,” and knowing that license plate surveys indicate “that about 50-percent of those fans come from outside of a 100-mile radius,” and about “10,000 of them {are} staying overnight,” then, “we are able to value the economic impact.” His totals? A $23.7 million impact.

Yes? Not necessarily. 

Some sports economists believe spending is just shifting. During the 2011 World Series, one movie theater owner said his sales will plunge 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 concludes that cities hosting world series games had little or no spending increases from 1972-2000. The reason is shifting and departing dollars. The shifts relate to normal spending being replaced by World Series spending. Local citizens avoid areas congested by the World Series. People stay home to watch the game. Meanwhile nationally owned hotels receive revenue that is spent far from St. Louis.

The bottom line? Comparing cost and benefit, for the Olympics, the Super Bowl, the World Series, for any “mega” sports event, we seem to have a benefit bias. The event is great for morale.  However, academic studies conclude that spending might not be close to projected amounts while congestion, vandalism, and the cost of public safety could be considerable. Consequently, as Matheson and Baade say, “We would maintain that the World Series strikes out as engine for economic growth.”

Sources and resources: Quoting the St. Louis Convention Center representative, a Forbes article focused on the spending created by the World Series. But then, reading a Matheson/Baade paper, “A Fall Classic? Assessing the Economic Impact of the World Series,” and Matheson’s “Economic Multipliers and Mega-Event Analysis,” you can see why the Forbe’s conclusions are debatable. I’ve also quoted and used sources from our 2011 World Series income post.

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