The All-Star Game As Economic Boon? Don't Believe the Hype

If you can't afford $400 bleacher seats on StubHub for this Tuesday's All-Star Game, Mayor Bloomberg wants you to know you'll still benefit from all the hoopla. The mayor's Economic Development Corporation has been touting estimates that the Summer Classic — awarded to New York by MLB commissioner Bud Selig to honor the upcoming demolition of the House That Ruth Built — will bring 175,000 new visitors to the city and generate $148 million in economic activity.

If you've ever wondered where these economic impact numbers come from, you're not alone, so we asked EDC spokesperson Janel Patterson for a rundown. The figures, she explains, were first derived in January 2007, for the announcement that this year's game would be held in the Bronx. The city number crunchers started by asking MLB how many visitors, staff, and media it expected to descend on New York during this week's All-Star festivities. (Attendees from the city aren't counted, since it's assumed they'd be spending their cash locally regardless.) Then, explains Patterson, the number of newcomers was multiplied by average per-visitor spending figures provided by NYC & Company, the city's tourism arm; a multiplier was further applied to account for "indirect" spending, as when local merchants take their newfound gains and re-spend them in the local economy.

While some news outlets reported that as $148 million in city "revenue," it's not: "Economic activity" counts all money that changes hands within city limits, meaning when the price of bleacher seats soars on StubHub, the perceived economic impact does as well. (The increase in actual city tax revenue would be measured as "fiscal impact"; Patterson says the city didn't conduct that estimate.) Still, all that money sloshing around has to mean a good chunk of it will trickle down to average New Yorkers, right?

Don't be so sure, says John Crompton, author of a 2006 paper detailing what he calls "mischievous procedures" in economic impact studies that reflect their genesis as more PR documents than scientific treatises. "The All-Star Game, there's no question people will come to town for that," he says. Nonetheless, he questions how many of the "new" visitors will merely displace existing tourists who'll avoid New York because the hotels are full during All-Star week: "If there was no All-Star Game, would those hotels still be at 80% [capacity]? If the answer is yes, then you haven't added to the economic impact, you have merely displaced some other folks who would have come if there was no game."

Add in that the All-Star Game takes place in the summertime — peak tourist time for New York City — and it's even more likely that the All-Star hordes are displacing, say, euro-wielding Germans. Studies of megaevents such as the Olympics and the Super Bowl, notes Crompton, have "looked at the sales volume in cities on the couple of weeks before these games and the couple of weeks after, and they have seen no difference."

On top of that, there's the question of the multiplier used to estimate how much All-Star boodle is recirculated in the local economy. Off-the-rack multipliers like the ones used by RIMS II, the model employed by EDC, come in several flavors — some measure sales and total economic output, while others measure local income. EDC says it used an output multiplier, not income — common practice, says Crompton, because it produces a figure two to three times higher, but meaningless on policy grounds. "What the citizens of New York are concerned about is how much money from this game will end up in the pockets of New Yorkers as income," he says. An extra dozen jerseys sold at the All-Star FanFest doesn't put any money in your wallet, in other words, unless MLB hires local residents to sell them — which is what shows up in the income multiplier. "The RIMS spits that one out, too, but they choose not to use that," he says.

"It's great that the All-Star Game is coming to New York City," concludes Crompton, whose tenure as tourism professor at Texas A&M dates back to when Willie Randolph was still a Pirates farmhand. "There's all kinds of wonderful reasons to have it. But economic impact probably isn't very high up on the list."

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