Big Cash Windfall Unlikely for Tampa, Charlotte

September 14, 2012

National Journal

Stephanie and Julie have a cow

Stephanie and Julie have a cow.

Cities that host political conventions can rake in as much as a quarter-billion dollars or as little as nothing. It depends on who’s doing the math—and what’s in the forecast.

The 2004 and 2008 conventions contributed anywhere from $155 million to $265 million to their host regions, according to city and political-committee estimates. This year, Tampa and Charlotte expect to see as much as $200 million each from the two conventions, according to officials with the host committees. But outside economists say that such projections may exaggerate gains and fail to count losses. The economic effect, they contend, is probably closer to zero.

“Cities are good at adding and multiplying,” said Victor Matheson, an associate professor at the College of the Holy Cross who specializes in sports economics and the impact of so-called mega-events, such as the Super Bowl or the Olympics. “They’re not good at subtracting.”

Matheson suggested that—perhaps ironically—the expected impact from Tropical Storm Isaac in Tampa on Monday might actually underscore the additional economic benefits a convention can bring to a host region. That’s because conventioneers in the Tampa Bay area are “stuck there come hell or high water,” while typical tourists would have left already or canceled their trips.

But it’s unclear how significant the economic benefit could be. The first day of the 2008 Republican National Convention in Minneapolis-St. Paul was delayed by Hurricane Gustav, but there is not much data to determine whether that extra free day actually led to more local economic activity. In Tampa, convention-goers will be forced to spend much of their newfound free time indoors. In fact, Florida Gov. Rick Scott during a news conference on Sunday suggested that some convention attendees limit their travel and movement because local bridges and roads might have to be shut down; visitors wandering the city may not be able to get back to their hotels.

Criticism of official estimates centers on failures to exclude existing activity or to include losses.

Denver reported that the 2008 Democratic convention, where Barack Obama accepted his party’s nomination, contributed $266 million to the city’s metropolitan area. Included in the city’s math was an estimated $26 million from spending on lodging and accommodations. But the report didn’t account for rooms that would have been occupied anyway, economists say. “It’s not like all the hotels were going to be empty,” said Mac Clouse, a professor of finance at the University of Denver’s Daniels College of Business.

During conventions, local residents also go on vacation or work from home to avoid the chaos, thereby denying expected income to restaurants and other shops, Clouse said. And even the benefits from the influx of visitors can be overly concentrated in certain areas, rather than distributed across a city. “The impact is probably still significant,” Clouse said, “but maybe only a half to two-thirds.”