By Paul O'Sullivan
An article in Friday’s New York Times outlines the financing of Met Life Stadium in New Jersey, home of the NFL’s Giants and Jets from New York. While the stadium itself may not have been directly paid for with public money, the teams were granted state-owned land in return for a relatively small annual payment as well as other benefits that had previously gone into state coffers. Also, the state spent over $250 million on infrastructure projects that may not have occurred in the absence of the new stadium. Any money that is transferred from public to private bodies is effectively a subsidy, while there is also the opportunity cost as the money could have been spent on something else.
One of the arguments for building the stadium was that it would be able to host a Superbowl, which it will do on February 2nd, and that this will have spillover benefits for the state, particularly in terms of an influx of fans and media from outside the NY/NJ area. Economists are generally sceptical about the extent of such spillovers, and many studies have shown that such spillovers are almost always much lower than promised.
Proponents of using public money to host major sporting events usually base their support on a commissioned report that predicts massive economic benefits to the local area. In the case of the NY/NJ Superbowl, the host committee has refused to publish the economic impact report. If past experience of such reports is anything to go by, the expected benefits are likely to be over-stated while the expected costs will be under-stated. The use of terms like ‘economic impact’ and ‘generate economic activity’ usually give the game away as to the true impact of hosting such large events like the Superbowl, Olympics and World Cup. In terms of investing public money, what really matters is the net effect of hosting an event, not the gross effect.
It would be terrible for anybody to think that Irish politicians and vested sporting and business interests would ever engage in this type of behaviour in order to attract a major sporting event to this country.
One of the arguments for building the stadium was that it would be able to host a Superbowl, which it will do on February 2nd, and that this will have spillover benefits for the state, particularly in terms of an influx of fans and media from outside the NY/NJ area. Economists are generally sceptical about the extent of such spillovers, and many studies have shown that such spillovers are almost always much lower than promised.
Proponents of using public money to host major sporting events usually base their support on a commissioned report that predicts massive economic benefits to the local area. In the case of the NY/NJ Superbowl, the host committee has refused to publish the economic impact report. If past experience of such reports is anything to go by, the expected benefits are likely to be over-stated while the expected costs will be under-stated. The use of terms like ‘economic impact’ and ‘generate economic activity’ usually give the game away as to the true impact of hosting such large events like the Superbowl, Olympics and World Cup. In terms of investing public money, what really matters is the net effect of hosting an event, not the gross effect.
It would be terrible for anybody to think that Irish politicians and vested sporting and business interests would ever engage in this type of behaviour in order to attract a major sporting event to this country.
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