How much money will the Super Bowl bring to L.A.?

·9 min read
ARCHIVO - Vista general del interior del SoFi Stadium, momentos antes de que los Rams de Los Angeles.
A view of the interior of SoFi Stadium, minutes before the Los Angeles Rams hosted the Tampa Bay Buccaneers for an NFL game in Inglewood in September. (Kyusung Gong / Associated Press)

Circus performers, carnival games and rapper Lil Wayne will descend on the Shrine Auditorium in downtown Los Angeles as part of a Super Bowl weekend celebration hosted by former NBA center Shaquille O'Neal.

In Santa Monica, a fashion show at an outdoor mall put on by Off the Field Players’ Wives Assn. promises an afternoon "where fashion, football and philanthropy collide."

But the NFL Players Assn. itself has canceled all of its activities for the Super Bowl, including its Friday night VIP party and a separate fundraiser and art auction. It cited "the explosion of Omicron and its pervasive, evolving impacts," showing how hard it has become for organizers and businesses to plan for COVID contingencies.

Big sports events are typically a windfall for the cities that host them, with hotels and local businesses preparing for months in advance to host hordes of tourists and coming up with creative ways to capture their dollars. But with the Omicron variant still circulating and live events trickling back after long shutdowns, are Super Bowl fans ready to party and spend in L.A.?

It depends on whom you ask.

"People are sick and tired of being home all the time and this is going to be their big splurge,” said Roy Weinstein, managing director of Micronomics Economic Research and Consulting, which was hired by the Super Bowl host committee to study the economic benefits expected from the game and related events.

The Super Bowl on Feb. 13, one of the nation's first major sporting events with in-person parties, concerts and other gatherings since the start of the pandemic, will be a big test of whether pandemic-weary Americans are ready to socialize and spend in truly big ways again.

For Super Bowl organizers, tourism promoters and local business owners, it will mean trying to walk a tightrope between promoting safe health protocols and encouraging football fans to celebrate and spend.

High hotel prices and occupancy levels for Super Bowl weekend suggest the lingering threat from the Omicron variant hasn't totally curbed the appetite for celebrations and spending.

Like most major hotels in downtown Los Angeles, the Intercontinental Hotel and the JW Marriott are fully booked for the weekend. In Hollywood, rooms at the Dream Hollywood hotel are going for about four times the region's average nightly rate of $445.

Weinstein's so-called economic impact study projects the Super Bowl will generate up to $477.5 million in benefits, coming from an estimated 150,000 out-of-town visitors who are expected to spend up to $350 per night on hotel rooms and $300 per day on other things. As much as $22 million in taxes will flow into local and state coffers.

"Ridiculous" is how Lauren Heller, an associate economics professor at the Campbell School of Business at Berry College in Georgia, describes the total benefits number.

Heller, who co-authored a 2020 study on Super Bowl spending in the Journal of Sports Economics, said the economic impact of these kinds of sporting events is typically a tenth of what such studies forecast: "Anyone with common sense is going to say it's going to be less."

Nola Agha, a professor of sports management at the University of San Francisco, estimates the economic effect from this year's Super Bowl will be closer to $47 million.

Economic forecasts for such mega-events can be dubious in methodology and are notoriously overhyped, some experts say, acting more as a marketing tool for the events and their host cities than a true analysis of the business and tourism spending that is likely to take place.

"In general, these numbers are vastly overestimated,” Agha said.

And the swiftness of COVID-19 outbreaks is only complicating the ability to make an accurate forecast.

Other events scheduled around the big game include a domino tournament, a cigar party, a cannabis tour, comedy shows and several watch parties, including a bash at the Abbey Food and Bar in West Hollywood that will have drink specials served by waiters dressed as referees.

"It feels like weekend after weekend the [spending] numbers are ticking up again,” said Todd Barnes, general manager of the trendy eatery frequented by Hollywood A-listers. "I think it's going to be a big weekend.”

Organizers of Shaq's Fun House, held annually around each Super Bowl weekend, say tickets are selling 30% faster than in the previous two years, and more than a dozen corporate sponsors have signed up to be part of the festivities. Prices for the event, which is limited to 5,000 people, began at $250 per person for advance sales and go as high as $1,300 for VIP tickets.

"I think people are ready to get back to business as usual,” said Joe Silberzweig, co-founder of Medium Rare, the company producing the event. "The Super Bowl is the best weekend to do that.”

Adam Burke, president and chief executive of the Los Angeles Tourism & Convention Board, is also optimistic: "Based on what we are seeing, a lot of people are booking stays pre- and post-Super Bowl," he said.

Burke pointed to an analysis by STR, a Tennessee-based hospitality data company, that projected daily hotel rates in L.A. during the Super Bowl weekend will reach an average of $445, the second-highest average for any Super Bowl — trailing only the $616 average nightly rate during Super Bowl LIV in South Florida.

L.A.'s local team, the Rams, will play the San Francisco 49ers in the NFC championship game Sunday. Although fewer visitors from out of town will be drawn to Los Angeles if the Rams move on to play in the Super Bowl, experts point out that SoFi Stadium, with 70,240 seats, is sold out already and many of the largest hotels are already fully booked, regardless of who plays on Super Bowl Sunday.

Heller, who studied Super Bowl spending, said her work suggests most economic impact studies overestimate the hotel revenue generated by the events, by counting the revenue that would have otherwise come in at hotels without the game.

Additionally, most economic impact studies don't subtract hosting costs for cities, such as paying for extra police, traffic, trash and transportation services, she said.

Weinstein defended his official estimate, saying he was overly conservative in his analysis and relied on what is known among economists as IMPLAN, a software model developed by academics and the U.S. government that has been used since the 1980s.

The software allows economists to input such numbers as hotel room rates and ticket sales for a specific region to get an overall economic activity forecast. Critics such as Heller say IMPLAN isn't sophisticated enough to account for pandemic spikes, among other factors.

Recent sporting events don't offer clear insight into how spending around the Super Bowl may play out, but it seems clear some Americans are not ready to party like it's 2019.

Many of last year's Super Bowl events in Tampa Bay, Fla., were held virtually, via streaming video, because of the pandemic. Those gatherings that were allowed last year were limited in size and included only vaccinated fans.

The previous game in 2020 in South Florida — Super Bowl 54 — was forecast by accounting firm PwC to generate $218 million in direct spending.

PwC didn't conduct a follow-up study after the game to determine whether the pre-game forecast was accurate. Heller, the Berry College economics professor, said such reports are rare.

"They don't want to come back and see how flawed their studies were," she said.

No financial forecast was commissioned for this year's Rose Bowl game in Pasadena. The game was sold out, but event organizers said attendance to the Tournament of Roses Parade on New Year's Day was down slightly, and a surge in Omicron infections forced the cancellation of several indoor events, including a New Year's Eve black tie gala.

Ticket sales to allow up to 30,000 fans to watch the parade floats being assembled inside large warehouses before the parade were also canceled to reduce the risk of spreading the virus.

"The economic impact might have been a little soft on the parade side," said David Eads, chief executive and executive director of the Pasadena Tournament of Roses. "Some people didn't feel good in large crowds and didn't come because of that."

Gregg Smith, co-founder of Smith Brothers Restaurant Corp., which operates three Pasadena eateries, said sales for the parade weekend were "a bit light," declining to give a number.

"My sense is that there is still a bit of caution out here," he said. "People are not willing to just go out and party yet."

Pasadena Chamber of Commerce President Paul Little said food sales to visitors watching the floats after the parade were about 40% of sales at the event in years before the pandemic.

"The parade was not nearly as well attended as in the past," he said. "Clearly, people still don't want to be in close proximity to other people."

As work crews cleared out homeless encampments near Los Angeles International Airport in preparation for the surge of out-of-town visitors, hotel managers in downtown L.A. are hoping images of a sunny Southern California played on television nationwide during the Super Bowl will spur more visits.

Some said demand for rooms among leisure travelers has been on the rise lately.

"We feel a sense of resurgence," said Javier Cano, area general manager of the JW Marriot and the Ritz-Carlton at L.A. Live. "Things are coming back."

At the Dream Hollywood hotel, general manager Vaughn Davis was worried that the coronavirus might prompt booked guests to cancel. It hasn't happened.

Hotel occupancy rates in Los Angeles in October and November surged to pre-pandemic levels, and Davis said his rooms are renting for about four times the area's average.

Several gatherings are planned at the hotel, including a private rhythm and blues night around the rooftop pool and bar, attended by about 200 guests, Davis said. All party guests must show proof they are fully vaccinated.

"We are going to wear our masks and spend money," he said.

This story originally appeared in Los Angeles Times.

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