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A Beehive (State) of Activity?

I know this might get old to readers, but if sport teams stopped producing bogus economic impact numbers, and if the press stopped blindly parroting the figures, we wouldn't have to repeatedly talk about economic impact here at thesportseconomist.com.

Here is the latest example of bad economics, this time from Real Salt Lake of Major League Soccer who hosted the second leg of the CONCACAF Champions League final on Wednesday in front a sell-out crowd of over 20,000 fans at Rio Tinto Stadium. The headline from ABC News of Salt Lake City, is that the "Biggest soccer game in Utah history boosts economy," relying on an estimate of economic impact of $2 million from Real spokesman Trey Fitzgerald. The story's reporter, Noah Bond, doesn't seem even faintly aware of the fact that RSL may wish to publish large estimates of economic impact to justify the controversial $35 million subsidy the team received to build their stadium.

That being said, it's not fair to accuse RSL of any economic missteps without evidence, so what do the numbers say? The article gives the impression that the $2 million figure was arrived at by simply multiplying the 20,000 fans by a guess of roughly $100 spending per fan.

Supposing one accepts that assumption, 20,000 fans each spending $100 at the game only equals $2 million in economic impact for the state if those 20,000 fans were visitors to the region. Otherwise they are simply local residents spending money at Rio Tinto instead of elsewhere in the economy.

For example, the article mentions that nearby Crown Burger had a great night, but it's not like the people eating there would have fasted in the absence of the game. The spending at Crown Burger simply came at the expense of other food establishments in the region unless the game actually brought new people to SLC.

This is a elementary economic error, but one that is all too common in the popular media, and it's an error that is encouraged by local sports franchises that are hungry for public subsidies. In this case, I think the majority of the blame must be sqaurely placed on the media. Team spokemen are supposed to do what team  spokesmen are supposed to do. Reporters are just not supposed to fall for it.