Having the NAIA football championship played in Rome is a nice additional entertainment option for people in this area. However the primary motivation for keeping the game beyond 2009 is its supposed economic impact. Local officials claimed, for example, that the 2008 game generated local benefits in excess of $1 million.
Hosting the NAIA National Championship does attract some spending by out-of-town guests attending the game. On the day before last year’s game I observed some fans of one of the participating teams checking into a downtown hotel. Likewise, the night after the game I was seated at a table adjacent to the family of a Carroll College player at a local restaurant.
There is reason, however, to be skeptical that such visitors generated enough additional spending to warrant having local taxpayers spring for more than $3 million of stadium upgrades. Summarizing the research on economic benefits deriving from sports facilities and events, prominent sports economists Dennis Coates (of the University of Maryland-Baltimore County) and Brad Humphreys (of the University of Alberta) conclude, “The large and growing peer-reviewed economics literature on the economic impacts of stadiums, arenas, sports franchises, and sport mega-events has consistently found no substantial evidence of increased jobs, incomes, or tax revenues for a community associated with any of these things.” Of course, locally one need only look at the empty space — other than the half built Hooters — around State Mutual Stadium to reach the same conclusion.
Even though the evidence indicates sporting events are economically underwhelming, we need not evaluate the effect of the NAIA Championship solely on the basis of research about teams and events taking place in other places. We can also look at local hotel-motel tax revenues for evidence that the 2008 game produced local economic benefits. Hotel-motel tax revenues are a good place to look for such evidence because the real gain to the people in the Greater Rome community, rather than the mere rearrangement of local spending from one entertainment option to another, is the increased spending done by out of town visitors.
The accompanying chart depicts the combined hotel-motel tax revenue of Rome and Floyd County over the past three years. The hotel-motel tax requires innkeepers to pay 6 percent of their receipts to the city or county. Thus, an influx of visitors for the NAIA championship game should have led to an increase in hotel-motel tax revenue in December 2008. The chart, however, shows no such upsurge (the December 2008 point is marked by a large triangle for easy reference). Indeed, that month marks the second lowest monthly hotel-motel tax receipts of the past three years. It’s difficult to conclude that such a negligible effect on local lodging could translate to more than $1 million of local economic benefit.
Obviously December’s low hotel-motel tax total is partly the result of the economic downturn. However, a careful examination of the tax revenue data indicates that December 2008, the month of the NAIA championship had a larger drop off (about one-third) from the same month in the prior year than did either November or January (about 15-20 percent). It would, of course, be foolish to interpret the year-to-year changes as indicating that the football game hurt local lodging. (As noted above, I personally observed some fans checking into a local hotel.) However, it would be equally tenuous to maintain that the game brought many overnight visitors to Rome but that their effect on hotel-motel tax revenues is obscured by the recession.
The lack of a large increase in hotel-motel tax revenues associated with the NAIA Championship shouldn’t be too surprising. The participating colleges are small and are located more than 1,000 miles from Rome (Montana and South Dakota) so there may not have been many fans willing to travel to Rome for the game. Moreover, the fans who were willing to travel such a long distance to support their teams might well have chosen lodging in metro Atlanta because of its proximity to the airport or other attractions.
Although there are other tourism benefits beyond lodging revenues (e.g., dining revenues), it’s hard to imagine that these effects from hosting the NAIA Championship are large when the lodging benefits are apparently miniscule. Spending more than $3 million on Astroturf and other renovations in pursuit of economic benefits from hosting the football would be a dubious proposition in the best of times. Doing so now, with many families struggling and local unemployment exceeding 11 percent, is unconscionable.
Frank Stephenson is a professor of economics at Berry College.