Super Bowl 2014: NFL Predicts Huge Economic Windfall for NY/NJ, but Economists Cast Doubt on League's Figures
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Hosting the Super Bowl has been big business for the National Football League (NFL), with cities around the country going out of their way to woo the professional football league for the rights to have the championship game in their backyard.
The NFL estimates that Super Bowl XLVIII will draw 500,000 people to the New York and New Jersey area, more than three times the number drawn to New Orleans for last year's Super Bowl, bringing in $600 million in additional revenue to New York and New Jersey, up from last year's estimated $480 million that New Orleans raked in.
"It's going to be a huge economic boon," said U.S. Congresswoman Carolyn B. Maloney (NY-D). "Tourism employs one in seven people in New York state. But thanks to the Super Bowl, we're seeing more hotel rooms booked and restaurant tables reserved and even more excitement than usual for this time of year."
February is a down time for New York City's tourism industry due to the winter weather but the Super Bowl allows for hotel rooms to fill up that are normally empty this time of the year. Manhattan hotels, which have 82,000 hotel rooms available in the borough alone, were charging up to $1,000 per night for rooms that go for $100, according to Newsday.
For those with deeper pockets, Sofitel New York, was offering a package deal worth $100,000 for 20 guests to use 10 double-occupancy luxury suites over Super Bowl weekend, which includes daily breakfast, round-trip transportation to MetLife Stadium, and tickets in Section 300. The W Hoboken has been booked near capacity for months with rooms going for $832-a-night for a minimum three-night stay as opposed to the average $300 to $500 this time of the season.
"There is tons of hotel availability, from the Ritz Carlton to the roadside motels at the Holland Tunnel," said Robert Tuchman, president of Goviva, a New York City-based sports marketing firm, to USA Today. "It's actually the great thing about [New York City / New Jersey] hosting the Super Bowl; there is tons of space for fans making late decisions on rooms. Much more than I ever anticipated."
New Jersey also stands to benefit by taxing every individual player, coach, trainer, and anyone else who regularly travels with the two teams participating in Super Bowl XLVIII. Both teams will have to pay a "jock tax" - a 8.97 percent commuter tax on all out-of-state athletes that play in New Jersey that takes a bite from the paychecks of visiting teams and not the Giants, Jets and Devils - who are considered New Jersey residents.
"For all professional athletes covered by this regulation, the average amount of income tax the state collects each year is about $10 million," said New Jersey Treasury Department spokesman Christopher Santarelli to NJ.com.
Similar tax laws are on the books in several states and municipalities, with California having the distinction of starting the trend in tax laws. California collected taxes on the Chicago Bulls' NBA Hall of Famer Michael Jordan after the Bulls defeated the Los Angeles Lakers in the 1991 National Basketball Association (NBA) Finals. The state of Illinois retaliated by taxing visiting athletes who came to the state to play sports, being dubbed "Michael Jordan's Revenge", with other states and cities following their lead to generate more tax revenue.
"Everywhere they play, they must pay," said Steven Piascik, a CPA and financial adviser who specializes in sports accounting. "If you travel with the team, you have to file."
But some sports economist, such as Smith College's Andrew Zimbalist, have doubts about the NFL's figures, saying that the details of the league's numbers are not made public despite touting their final figures with their public relations machine to create demand for the game and a start bidding wars to host the annual event.
"There's false science behind it," said Zimbalist to NJ.com. "The studies that they do that I've seen, they don't make all of them available, but the ones that I've seen use input-output analysis and produce reams of data that an uninformed observer would look at and say, 'Well, this is science.' The NFL certainly wants people to believe that it's science."
While Zimbalist disputes University of South Florida professor Phil Porter's recent estimation that there is zero economic benefit to hosting a Super Bowl, he does believe that the revenue generated by game is not as bountiful as the NFL claims.
"Anybody who sort of says the Super Bowl never has any impact is ignoring the nuances and the details. What is strikingly clear from this scholarly work is that what the NFL is putting out is just PR hype," said Zimbalist. "The most likely thing that you should conclude from all of this is that you should take the NFL numbers and move the decimal point over one space, and then you get a more reasonable number. So instead of $500 million, think more like $50 million."
Zimbalist also feels that New Jersey will get the short-end of the revenue stick despite the game will be played in the East Rutherford, NJ and not New York City.
"I think there's a real serious question about its economic impact on New Jersey," said the economist. "Presumably there will be some people who stay in Newark, maybe there will be some people who will stay in Jersey City, I don't know. Maybe because Fort Lee has gotten all this attention in the last two weeks, maybe some people will stay in Fort Lee. Who knows? But any impact on New Jersey businesses is going to be de minimis. It's unrealistic to expect anything substantial there."
As the Super Bowl approaches, Zimbalist's pessimism towards New Jersey's potential Super Bowl revenue may be coming to fruition, with rooms around MetLife Stadium going for about $247 a night, a drop of nearly $100 since Friday, according to data from the online travel agency Orbitz.
"New Jersey did not fare well," said Mark Giangiulio, chairman of the New Jersey Hotel and Lodging Association and a member of the state Super Bowl planning committee. "We didn't get the windfall we all thought."
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