Economists skeptical of Pittsburgh NFL draft impact claims

(The Center Square) – There is less than a year until Pittsburgh is set to host the NFL draft and plenty of money has already been set aside for increased expenses, along with promises of hordes of visitors and economic impact.

The problem is that economists who study large events don’t agree. Like Green Bay, Detroit and Kansas City – the past three draft hosts – Pittsburgh tourism leaders are already claiming the city will see an influx of spending and more than $120 million in economic impact.

“Though I am not aware of any academic study of draft events, the extensive study of sports and mega-events demonstrates that there is little reason to believe that the NFL draft might have some large economic impact that might justify these public expenditures,” economic J.C. Bradbury of Georgia’s Kennesaw State University told The Center Square. “We know that these events largely just replace existing tourist spending and represent a small share of the local economy.”

Pittsburgh agreed to send $1 million to an $11 million fund to pay for marketing and other services related to the draft. Visit Pittsburgh and corporate contributions will also go to the fund.

Councilmember Anthony Coghill voiced displeasure when the funding was approved that the council wasn’t consulted about the funding before it was announced and then was later asked to approve the funding that had already been promised by Mayor Ed Gainey.

“To me, that was irresponsible and, quite frankly, perplexing,” Coghill said at a September meeting when the funding was approved.

“I don’t believe the $1 million is a make-or-break deal, but it interferes in the way of public perception and that is very, very important in this. When you have a mega, mega company like the NFL throwing an event in our city, the biggest one we’ll have ever attracted, they don’t want to hear it … we’re at this point because we weren’t informed.”

Pittsburgh is hoping to have much of a 10-year $600 million project to revamp downtown completed just before the draft. Those projects include an improvement project at Market Square and the creation of Arts Landing with an outdoor theater on four acres at Eighth Street and Fort Duquesne Boulevard, according to WPXI.

Pittsburgh will also have additional public safety and public works expenses related to the draft that are not covered by the fund, which will be discussed by Pittsburgh’s city council this year.

There are usually some short-term positives and temporary jobs associated with large events like the draft, but the benefits are never what is advertised, Economist Orphe Divounguy, co-host of the Everyday Economics podcast.

The economic impact numbers are created to gain political support, Divounguy said, but don’t account for diverted spending, crowding out as some people leave a city during a large event and other leakages for the economy of a host city.

“There are some small net positive effects but there’s never what’s advertised by the local organizers,” Divounguy said.

Instead, infrastructure improvements that outlast an event can be helpful for a city long term but generally organizers “count the benefits and underestimate the costs.”

Green Bay lawmakers recently asked for $1.25 million in additional funding for law enforcement related to this year’s draft.

Prices for short-term rental properties in Green Bay dropped in the days before the draft, the Green Bay Press-Gazette reported, while hotel rooms remained available.

“This is a free family event. It’s not like a Super Bowl corporate audience,” Nick Meisner of Discover Green Bay told the paper. “It’s families and it’s real people who are coming to a free event. Those prices are simply out of their range.”

Victor Matheson, an economist from the College Holy Cross in Worcester, said a large economic question is if fans really come from all over the country to the draft or its essentially a block party with families coming to a free event.

“If it is just a big block party, there is no real economic impact because it’s just locals spending their money one place rather than another,” Matheson told The Center Square. “If it is really lots of people coming to town, then you could have some economic impact. But when they report crowds of 200K people, that has to be almost all local because places like Green Bay and KC and Pittsburgh don’t have anywhere close to the hotel capacity to house even a fraction of those people.”