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Revealing Economic Impact Numbers

2012 February 6
by Victor Matheson

According to Bloomberg/Businessweek, in preparation for the Super Bowl, Rick’s Cabaret International, a national chain of strip clubs, flew in more than 100 dancers to its Indianapolis club for a week of “nonstop party action”. According to Rick’s spokesperson Allan Priaulx, strippers from the company’s Miami, New York, Minneapolis and Texas venues converged on Indy to take advantage of the money-making potential of the Super Bowl crowds.

The presence of imported exotic dancers actually illustrates one of the primary economic factors that reduces the economic impact of mega-events on host cities. The money earned by these out-of-town performers during Super Bowl week would be counted by consultants attempting identify economic impact since any spending at Rick’s Cabaret by Super Bowl visitors would be figured into direct economic impact calculations. However, the money wouldn’t be earned by Indianapolis residents but instead would immediately head out of town in the pockets (well, maybe the g-strings) of the dancers when they head home. Furthermore, the earnings would not stick in the city to be spent and respent, lowering the multiplier and any potential indirect economic impact. Yet, it is the residents of Indianapolis who are on the hook for over $600 million in public funds that spent building Lucas Oil Stadium.

Interesting economic examples pop up in the darned places. Now if I can only get my Dean to pony up some funds for a little field research…

5 Responses
  1. Glenn permalink
    February 7, 2012

    You think of everything, don’t you?

  2. February 7, 2012

    It seems as if there are more and more things taking away from in-town economic impact day by day. From Federal taxes to strippers, what is it going to take for a dollar to stay local?

  3. Phil Blackman permalink
    February 8, 2012

    I agree with this article but money is spend by the strippers. There is lodging, food, transportation (taxis) so it does create some revenue for the city but only a fraction of what the strippers make. When flying from Northern California to Las Vegas for New Years there was 2 strippers on the plane going to work for the weekend. Highly compensated jobs will make anyone travel.

  4. February 8, 2012

    For two week strippers don’t pay hotel bills, don’t eat at restaurants, don’t go sightseeing, pay local taxes, buy souveniers? They spend a lot more than the guy who flys in and out in his private jet on Sunday.

  5. Victor Matheson permalink
    February 8, 2012

    Andy and Phil,

    You are absolutely correct about this, but these expenditures are generally identified by consultants and included in their economic impact analyses. It is important to remember that most of us here at TSE are not claiming that the economic impact is zero but rather that the economic impact is simply far less than advertised. Thus, we would likely agree that the spending BY these strippers should count but not the spending ON these strippers.

    Thanks for the comments.

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