The Super Bowl May Bring a $500 Million Boost to Houston, or None at All

As METRORail makes clear, the Super Bowl is Houston-boundEXPAND
As METRORail makes clear, the Super Bowl is Houston-bound
Matt Griesmyer

Denise Douglas of Sharpstown is a nurse by day, a balloon decor specialist by night and on weekends.
“When people are planning events, sometimes the last thing they think about is balloons,” says Douglas, owner of Balloon Boutique and More, one of the 417 Houston-area businesses vetted and approved by the Houston Super Bowl Host Committee in advance of Super Bowl LI.

“I’m hoping to do a lot of business for the Super Bowl events,” says Douglas, who went through a lengthy application process to become an official short-term contractor for the National Football League.

Douglas is one of hundreds of people looking to make an extra buck from the 51st version of The Big Game, between the New England Patriots and the Atlanta Falcons, scheduled to take place at 5:30 p.m. Sunday, February 5, at NRG Stadium. The spectacle includes the nine-day NFL Experience, a pro football theme park and fan festival that will be held at a dolled-up George R. Brown Convention Center and the brand-new Avenida Houston, a master-planned entertainment district catawampus to Discovery Green. The corporate-focused campus is anchored by the $350 million Marriott Marquis, a lavish hotel that includes a lazy river in the shape of Texas on the roof of the 30-story fortress.

Denise Douglas is hoping to make some money from her balloon business as a Super Bowl vendor.EXPAND
Denise Douglas is hoping to make some money from her balloon business as a Super Bowl vendor.
Max Burkhalter

Along with hundreds of mid-level vendors like Douglas’s balloon business and Houstonians who are renting out their homes — the HomeAway vacation rental website says that houses around NRG Stadium are going for $10,000 to $15,000 a night — the City of Houston is also hoping for a financial booster shot to try to deal with the budgetary fissure brought on by the downturn in the oil and gas industries.

Upcoming Events

“We’re optimistic that the Super Bowl and its affiliated activities will jump-start the region’s economic recovery in 2017 as the energy industry continues to gain steam,” says City Controller Chris Brown, who adds that the city expects up to $11 million in total direct revenue (sales and hotel occupancy taxes) from Super Bowl 51. Compare that to the Houston-hosted 2004 Super Bowl, which Brown says generated roughly $3.2 million in direct revenue.

Critics say that the hoped-for injection to the local gross domestic product is based upon bogus assumptions and shamefully overblown numbers that need to be deflated like Tom Brady’s (allegedly deflated) footballs. Some even argue that host cities actually lose money on the Super Bowl.

Each year, a consulting firm or a sports business program at a major university will produce a net economic impact study for the host city — often in tandem with the NFL. According to early figures published by the Houston Super Bowl Host Committee, Super Bowl 51 was expected to deluge Houston with $500 million.

“Oddly enough, that’s the number every year,” says Andrew Zimbalist, chair of the department of economics at Smith College in Northampton, Massachusetts. “These impact studies use very general assumptions. Most of them are not realistic.”

Critics say that local residents garner no direct benefit from the Super Bowl, which is played in stadiums that, oh, by the way, were largely financed by taxpayers.

Instead, critics attest that wealthy shareholders in the already-rich NFL are the benefactors. According to a secret bid document unearthed by The Star-Tribune in Minneapolis, the NFL snatches every cent of Super Bowl ticket revenue; at the time of writing, the going price to get into 72,220-seat NRG Stadium to see the Patriots-Falcons and the Lady Gaga halftime show ranged from around $3,200 to nearly $17,000.

Even if the trickle-down benefit is spot-on, some people question where some of the money is going. A number of local public relations firms claim that the Super Bowl Host Committee hired an out-of-state company instead of Houston PR agencies that have worked in local promotions for years to showcase the city. “Los Angeles apparently knows Houston better than we do,” says a Houston-based PR specialist.
Meanwhile, some homeless-service organizations, which have been told that they will receive leftover carpet and chairs from the Super Bowl gala, expect the street population to be bused out of town in order to produce a so-called less unsightly environment for the incoming flocks of corporate interests, league officials, tourists and curious locals. City officials completely disagree.

“What we are going to be doing for the Super Bowl is what we’ve been doing every day for the past few years, which is helping the homeless find permanent housing,” says Marc Eichenbaum, special assistant to Mayor Sylvester Turner for homeless initiatives. “We will not be sweeping or moving the homeless at all.”
At the same time, the piggybacked circus that comes with the unaffiliated events will be in full swing, including a Johnny Manziel selfie photo opp for $50 apiece out at Katy Mills Mall. Not kidding.

From the look of things in the weeks leading up to the game, Houston may not be ready — and that’s without the mobs of Super Bowl-starved Dallas Cowboys fans. After getting punked by the Green Bay Packers in the divisional round, the Texans will be staying home and watching other teams vie for the Vince Lombardi trophy for the 21st consecutive year.
Poor Cowboys. (Nah, not really.)

*****

In early January, the Houston Super Bowl Host Committee backed away from the $500 million economic impact estimate and came up with $350 million instead.

“We’ve taken a conservative approach and taken into account displaced tourists — money that would be spent in the city if the Super Bowl were not here,” says Hasting Stewart, senior director of media relations for the committee, a 40-employee liaison between the NFL and local government entities and businesses.

Kevin Cooper, senior director of media relations, “reallocated” our numerous requests to speak to chairman Ric Campo and president and CEO Sallie Sargent and instead put us in touch with Stewart.
“Yes, we took those things into consideration. Absolutely,” says Stewart when asked if the costs of hiring a bulky security staff and paying overtime to police and fire were subtracted. When Super Bowl 49 packed up and went home in 2015, the production gave the host city of Glendale, Arizona, the gift of a $2.1 million payment — just for the security.

The Houston Super Bowl Host Committee, which Stewart says is operating on a $63 million budget made up of private donations and corporate sponsorships, will reimburse the city for the expected $5.5 million in security costs. Additionally, the state will earmark between $20 million and $25 million toward the host committee’s costs from its major events trust, which is funded by statewide sales, hotel, alcohol and rental car taxes.

Regardless of the amount of private, corporate or state dollars invested in the Super Bowl, Zimbalist, the economics professor, throws up his hands — and not in a touchdown sign — at any estimate that lands in the hundreds of millions of dollars. “It’s still far too high. It’s silly,” says Zimbalist. “You’ve got to move the decimal point one space to the left. At least.”

“The reality is that it could be zero, it could be negative $50 million, it could be $75 million,” adds Zimbalist. “You don’t know ahead of time.”

An independent study published by BBVA Research in December estimates a $69 million net economic impact from Super Bowl 51. “It represents less than one half of a percentage point of economic output,” the study concludes. “While positive, the net economic impact represents a small fraction of the overall size of the economy and will not alter underlying economic trends.”

*****

Here’s something not under debate: The Super Bowl is a crazy enormous deal and so is the NFL, which raked in $13 billion in revenue for the 2015 season.

The last five Super Bowls attracted an average 111.7 million viewers in the United States; for Super Bowl 50 in 2016, onlookers watched 30-second commercials that cost advertisers $5 million each. That’s $166,666 per second.

The hubbub for Super Bowl 51 will be unrecognizable compared with that for Super Bowl 8 at Rice Stadium in 1974, a 24-7 trouncing of the Minnesota Vikings by the Miami Dolphins, and Super Bowl 38 in 2004, a swashbuckling 32-29 victory by the Tom Brady-led Patriots over the Carolina Panthers at what was then called Reliant Stadium.

“Beyond the changes in Houston, the size of the game has changed significantly,” says Stewart of the host committee. “When the game was here in 2004, the fan festival was all on Main Street and it was only four days and a couple of hundred thousand people.”

Stewart tells the Houston Press that the committee expects more than 1.1 million visitors to the greater Houston area in late January and early February. That contradicts the 138,000 non-local visitors forecast by Rockport Analysis, a West Chester, Pennsylvania, consulting firm hired by (wait for it) the Houston Super Bowl Host Committee to produce an economic impact study. If one is counting the marketing-speak figure of “visitors days,” then it’s 550,000 people, according to Rockport Analysis, but that’s still far shy of one million folks.

There will certainly be fewer football fans in town since the Houston Texans and the Dallas Cowboys aren’t playing in the grand finale. But it doesn’t matter a heck of a lot because the phenomenon of “the Super Bowl is awful, I’m getting the hell out of here” — called the crowding-out effect in economic parlance — is going to happen no matter what, according to Zimbalist and Victor Matheson, an economics professor at College of the Holy Cross in Worcester, Massachusetts.

Matheson’s Economics of the Super Bowl study explains the crowding-out effect via the 2002 Super Bowl in New Orleans, which was pushed back a week in the aftermath of the September 11 terrorist attacks. The Big Easy initially couldn’t accommodate the game because of a scheduling conflict with the National Automobile Dealers Association convention, but then the city booted the big-deal auto show from its original time slot.

“Therefore, while the Super Bowl filled every hotel room in the city, a large number of these hotel rooms would have been full of auto dealers even in the absence of the Super Bowl,” writes Matheson, who adds that jacked-up hotel rates don’t benefit hourly and minimum-wage employees.

“Local hotel desk clerks and room cleaners…don’t see a 300 or 400 percent increase in their wages. It is not the local workers, but instead shareholders back at corporate headquarters who benefit from the event.” According to hotelplanner.com, a one-star hotel in Houston is nearly double the price at $88, while five-star lodging is up from $220 to $419 a night.

“Another thing that happens often, and it certainly happened in San Francisco last year, is that these blocks that get cordoned off end up creating tremendous amounts of traffic,” says Zimbalist. “Very often, businesses will tell their employees to stay home for several days, and that, of course, lowers the productivity in that area.” But that shouldn’t be a problem in Houston, which never has any traffic. (Read: That was sarcasm. Houston probably invented traffic.)

And there’s this: The NFL forces the host city to pay a state sales tax rebate on the game tickets and parking fees. League officials are also exempt from forking over sales taxes during official NFL events, says Zimbalist.

In 2014, New Jersey stared down into an $807 million pit when, according to The Record, state lawmakers were told of the $7.5 million sales tax rebate the state paid the NFL following Super Bowl 48 at MetLife Stadium in East Rutherford.

“Have the Super Bowl in the Ukraine next year,” said an angry Senator Anthony Bucco.

*****
Still to be determined: How far will the trickle-down benefits go?EXPAND
Still to be determined: How far will the trickle-down benefits go?
Matt Griesmyer

‘The Super Bowl is going to be nice,” said Jeff, a 51-year-old homeless man who spoke to the Press near the intersection of McGowen and Main in Midtown. He squinted into a Wednesday morning sun in mid-January as a Metro light-rail train, wrapped in cherry-red Super Bowl advertising, pulled into the southbound station.

The intersection of a city’s homeless community and the Super Bowl has been a fiery issue in recent years. In 2015, during the lead-up to Super Bowl 50, San Francisco mayor Ed Lee didn’t mince words to the homeless community that lived along the Port of San Francisco’s Embarcadero waterfront and roadway.

“They are going to have to leave,” he said before softening his proclamation to say that housing would be available to them. However, many of the local shelters were at or close to capacity. Reports differ on what actually happened — USA Today interviewed a homeless man who said that city officials moved him to a less visible site, while the San Francisco Chronicle found little evidence that the homeless were whisked away to incognito land.

“Mayor Turner has made it clear. We’re not going to hide or sweep them under the proverbial rug,” says Eichenbaum, who adds that since 2012, the city’s homeless initiative program has permanently housed more than 8,000 homeless individuals. “Houston is a compassionate city and we’re out to help. The mayor believes that we don’t hide problems; we fix them holistically.”

In October, Turner announced a campaign to clean up the U.S. 59 underpass at Wheeler Avenue. As we’ve reported on numerous occasions, the crude encampment and center of the kush synthetic drug epidemic has been home to Houston’s largest street population.

On January 14, Turner touted that the city had removed piles of debris but didn’t toss personal belongings or force anyone to relocate to a shelter. Eichenbaum denies that the Super Bowl was the reason for the expeditious timeline. “Nope. The cleanup of that area has always been a high priority,” he says.

David Taylor remains concerned. The president of Magnificat Houses, a homeless-placement and -service organization, says that some of the homeless folks Magnificat feeds at the Loaves and Fishes soup kitchen have said that the city is moving them to a motel.

“You hear a lot of rumors on the street, but this sort of sounds like the MO of the City of Houston to me,” says Taylor. “I’ve asked the city what’s going on and they’re not responding to me. I don’t know that we’ll know or the people in the street will know until the morning of.”

The Press spoke to a number of homeless people outside of Loaves and Fishes on Congress Avenue and Chartres Street, under the 59 bridge at Preston Street, outside the Wheeler light-rail station at 59, and around the McGowen Metro stop. Nobody could say that an urban cattle drive was imminent.

Taylor says that Magnificat Houses is one of eight charities that have been promised the leftovers, such as chairs, tables and carpet, from the Super Bowl LI Kickoff Gala at the Marriott Marquis Houston, the luxury hotel with the Texas-shaped lazy river. VIP tables for the posh shindig, scheduled to feature appearances by NFL commissioner Roger Goodell and ESPN sportscaster Chris Berman, start at $50,000.

“We have houses and we can probably use some of the carpet…but we would have to have a truck to pick that carpet up to take it to a house and then would have to pay money for an installer,” says Taylor. “It’s a good gesture on their part, but it’s going to cost some money to take it, and I think that’s true for most other ministries.”

*****

A big reason Houston scored the Super Bowl LI bid in May 2013 was the money another city — or, more accurately, another city’s rank-and-file taxpayers — didn’t have. Houston beat out Miami when Dolphins owner Stephen Ross couldn’t procure $350 million in taxpayer revenue to upgrade the team’s Sun Life Stadium (now more ridiculously named Hard Rock Stadium).

Of course, Houston wouldn’t have been in the bidding war to begin with if not for the taxpayer-funded cathedral that is NRG Stadium. Houston residents fronted 72 percent ($289 million) of the stadium’s costs. “The NFL explicitly uses the lure of the Super Bowl as a carrot to convince otherwise reluctant cities to provide public subsidies for the construction of new playing facilities,” writes Matheson.

And then, in order to boat-race Miami in the bidding war, taxpayers were forced to hack up an additional $16 million to pay for everything-is-bigger-in-Texas video boards that are basically like wide-display movie theater screens in each end zone.

The astronomical expenses carry over to downtown Houston’s newly constructed gathering space for the Super Bowl fan festival.

In world’s-fair-like fashion, where an architectural centerpiece is built for gawking visitors, Houston First, which is in charge of the George R. Brown Convention Center and other local performing arts venues, is unveiling Avenida Houston. The public-private project will tie the Toyota Center, Minute Maid Park, Discovery Green and the convention center into one “dining, entertainment and arts district,” says Houston First president Dawn Ullrich. An improved George R. Brown is the site of the NFL Experience; daily admission costs $25 for children 12 and under and $35 for adults.

Ullrich expects the $1.5 billion campus to grab sales and hotel tax revenue long after the Super Bowl leaves town. “We certainly think that the additional leisure tourism will benefit hotels, but we also think that it’s an opportunity to show a colorful and active Houston in the month of February, when the flowers are in bloom and the grass is green,” says Ullrich.

“It will also portray a Houston that’s full of excitement and worthy of a second look, whether it’s for a convention or your next leisure trip,” says Ullrich. As part of a larger tourism campaign, organizers are hoping to cast a grown-up, not-just-big-oil Houston as an international city that’s the “culinary cultural capital of the South.”

In the weeks before the game, the visited Avenida Houston on multiple occasions. There was still a lot to get done.

Aside from an oversize football installation with a “countdown to Super Bowl LI” LED scroll and one seven-foot-tall pair of Super Bowl LI Roman numerals that sat alone in a patch of dead grass, there was little visual indication that the most popular sporting circus in the world was on its way to Houston. Construction equipment and orange cones were in its stead.

A longtime Houston public relations specialist, who wished to remain anonymous, says that the marketing is at a minor-league level because the Houston Super Bowl Host Committee hired a Los Angeles-based PR company.

“They have a satellite office in Houston,” says the PR person. “That could mean a total of one person working from his house.” The Press attempted to ask Stewart about the host committee’s PR strategy, but his cell phone voice mailbox was full and he didn’t return the Press’s email message.

Even though her number hadn’t been called yet, Douglas of Balloon Boutique and More remained thankful for the business opportunity, perhaps unlike some of the other Houston-area Super Bowl contractors.
“You sit in these meetings and everyone wants a chunk of the pie,” says Douglas. “I’m not looking to become a millionaire from this. I just want to be a part of it. I just want to do balloon creations.”


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