By Michael F. Carmichael
April 16, 2009
The weekend of the NCAA Men’s College Basketball championship series in Detroit was expected to bring between $30 million to $50 million in gross revenue to the local economy.
“If Louisville had played instead of Michigan State, I would have said it would have been closer to the $50 million range,” says Patrick Rishe, an economics professor in the business department of Webster University, located near St. Louis. “On the other hand,” Rishe continued, “with East Lansing just 90 miles from Detroit, the range will probably be closer to the $30 million end.”
Rishe, who has studied similar situations - such as the 2005 Final Four event in St. Louis where the University of Illinois, a two-hour drive away, was playing - says that there is a “Home team deflation factor” that would be “even greater this year because Lansing is closer to Detroit than Champaign-Urbana [home of the Illini] was to St. Louis. You’ve probably got more day commuters - with just an hour’s drive - and more Michigan State alumni living in the Wayne-Oakland-Macomb county region, the main region of impact for Detroit sports.”
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On the other hand, there seemed to be a benefit to having MSU in the Final Four. Rishe explains “They just set an attendance record of more than 72,000 (nearly 7,500 greater than the previous record) but I know from the data I’ve looked at that ticket sales had been lagging until Michigan State got in. That’s a great economic impact for the NCAA, they get that ticket revenue. But,” Rishe continues, “Michigan State fans didn’t add new visitor dollars in any significant way. They come down from East Lansing a couple of hours before the game and spend a few hours afterward partying, then they go back home. It’s just not the same as if fans from elsewhere were coming to town and spending three nights in a hotel. When you have local visitors in the overall composition it affects how they’re traveling and how long they plan to stay. In any case, there is an economic impact on the area, it’s just not as great as it could have been.”
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The Final Four contests and the events around it, however, did provide a bright spot in Detroit. According to the NCAA and the Detroit host committee, more than 75,000 people were at the Coca Cola-sponsored Hoop City at Cobo Center. Some 300,000 fans attended free (sponsored by AT&T and Coke) concerts along the Detroit riverfront, nearly doubling the previous record. More than 32,000 fans watched the four teams’ free open practices (sponsored by Hershey). In addition, there were youth clinics, improvements to some neighborhood basketball courts and two early learning centers opened.
Local food banks benefitted as well when leftover food from the various events was collected and donated to the Salvation Army and C.O.T.S (Coalition On Temporary Shelter) among other organizations. More than 1,000 pairs of shoes were donated by sponsors to children’s charities and more than 2,000 books were donated to pre-and early-learners.
One noticeable impact on Detroit’s transit system? The 70,000-plus riders on the People Mover.
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Webster University’s Rishe reminds us of what might have been, had the economic climate and the top teams been different. “It’s all relative,” he explains. “If you had a team from the west coast, such as Arizona or UCLA, their fans normally travel pretty well. Ticket sales might not have been as high, but the economic impact on the region might well have been higher because they would have stayed in hotels; they would have stayed three or four days. Likewise, if it had been Louisville in the Final Four, they’re only about four hours away and they have a strong enough fan base so they would have stayed those three or four days and bought their full allotment of tickets.”
Another factor to consider, Rishe explains, has to do with the projected economic impact compared to the actual dollars that end up as income to the region. “There’s the money spent in the community,” he says, “and there’s what remains there.” Of the $30 million to $50 million projected impact, “only 60 to 65 percent of that stays as income, or more like $19 million to $32 million” he points out. “The money retained is really the best indicator of economic impact,” Rishe contends.
Rishe, who founded Sportsimpacts.net, looks at the economic impact of everything from the effect on sports of celebrity endorsements - such as Tiger Woods - to steroid use by prominent ballplayers to whether a bad sports team can affect the city in which it plays. He has also researched the results of the Detroit Red Wings in the Stanley Cub finals and, most recently, is determining the local impact on the Lansing, Mich. area of the state’s 2009 boys’ high school basketball championship games.
Looking at the broader aspects of the impact of major sporting events on communities, the composition of a group traveling to the event can play a significant role.
“When the typical travel party is a family going to an event, they usually spend noticeably less than when it the group is comprised of ‘buddies’,” Rishe explains. Quite often “the buddies are above middle income, with more disposable dollars, even during tougher times,” he continues. There are also gender differences in the makeup of the events and their attendees. The Men’s Final Four are more likely to have groups of male buddies, while the Women’s Final Four has more older women and families.
“That doesn’t affect the total amount of spending,” Rishe says, “but it does affect where the dollars are spent. When it’s a women’s event, there’s more spending in the retail sector and restaurants. When it’s a men’s event there is more in the ‘entertainment’ sector, more on taverns and bars.”
Given all that, does Rishe have an estimate of the economic impact of the Final Four on SE Michigan - before the NCAA issues its assessment sometime in the future?
“I’d say that of the $30 million to $50 million range, with Michigan State playing, it will probably be closer to the bottom part of that figure,” he says. “Had a team such as Louisville been playing, it would have been closer to the top part of the range.”
