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Tuesday, Sep 30, 2014
Joe Brown Columns

Proof of economic impact needed before getting tourism cash

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It seems that every time there’s an event in the Tampa Bay area that draws a significant number of out-of-town visitors, the promoters stress the “economic impact” it will have on the local economy. The numbers, for the most part, are seldom questioned.

Since the late 1990s, for instance, the National Football League has claimed that a host city will recoup at least $400 million in economic activity from a Super Bowl. A lot of people must believe that because there’s no shortage of cities bidding for the No. 1 sports event in America.

Pinellas County’s Tourist Development Council, however, has decided to take a “trust but verify” approach to those sometimes dubious numbers. Before organizers of large-scale events get any of the $1.2 million set aside for marketing next year, they have to prove it will be money well spent. In other words, before they provide thousands of dollars to promote your event, show us the money you claim it will generate for the local economy.

There seems to be no argument that high-profile Pinellas events like the Firestone Grand Prix IndyCar race in downtown St. Petersburg, the St. Pete Pride parade and the Clearwater Jazz Holiday have proven their worth. Others, like the East-West Shrine Game, a college football all-star exhibition held at Tropicana Field, I’m not so sure.

According to businessdictionary.com, economic impact is “a macroeconomic effect on commerce, employment or incomes produced by a decision, event or policy.” I have no idea how you can quantify this, but I’m guessing it involves nights in hotel rooms, along with money spent at restaurants, bars and local shops.

Many economists have conducted studies over the years that not only contradicted the projections of hosting certain events, they found little or no positive economic impact on host cities. One of the most prominent is University of South Florida economics professor Philip Porter, who has used local sales tax revenue to measure the economic impact of high-profile events like the Super Bowls held in Tampa. He found little difference from previous years, and not enough to offset the costs local governments often incur to host them.

The 2012 Republican National Convention held in Tampa only enhanced Porter’s reputation as party pooper when it comes to projected economic impact. And it affected him personally. After dismissing the estimated $175 million to $200 million the RNC was supposed to bring into the Tampa Bay area, he told The Wall Street Journal about the “displacement” factor; that is where one economic activity is displaced by another.

“My consulting office, my wife’s downtown office and the office of several of our friends will have to be closed,” Porter said, adding: “These are predictions. One only needs to look back on the past to note that such predictions are made every time but have yet to materialize.”

While the economic rationale for promoting some events is far from clear-cut, civic pride and/or boosterism often overrides it. Many local officials and business leaders feel the exposure alone is worth whatever the costs, and that the benefits will materialize later.

In the case of Pinellas, I’ve heard residents say there’s no need to spend money to promote local events; they believe the county’s beautiful Gulf Coast beaches are enough to promote it. Indeed, Mother Nature, or should I say Old Man Winter, probably did more this year to boost travel here than any amount of money the Tourism Development Council could ever spend.

Still, I think demanding documentation of economic impact before receiving promotion money is wise.

True, most of these studies are self-promoting with inflated numbers, and they fail to net out the effects of other variables, like security costs. It’s an inexact science, to say the least, but it’s a decent attempt at some semblance of accountability when it comes to spending tax dollars.

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