Is Ventura's 250K investment in the 2023 summer X Games worth it? Experts weigh in

Editor's note: This article was updated to correct the total subsidies the X Games received in Minneapolis.

When Minneapolis first hosted the summer X Games in 2017, the city, state and tourism bureau gave ESPN, which owned the games then, a total of $525,000 in grants and spending on public services, along with credits on its rental of U.S. Bank Stadium that were reported as being worth $200,000.

For this year’s X Games, which arrive at the Ventura County Fairgrounds on Friday, Ventura struck a better bargain: The City Council agreed to spend up to $250,000 on staffing, traffic mitigation, police overtime and other public services. The X Games, now owned by a sports-focused private equity firm, is also paying the standard rent to use the state-owned Ventura County Fairgrounds, which should amount to about $250,000, according to fairgrounds officials. There were no other public subsidies, city and tourism officials said.

Two sports economists briefed by The Star on the arrangement said the deals appear unusually reasonable for Ventura’s taxpayers. Cities and other government agencies often open their wallets for sporting events, teams and stadiums, the economists said, spending far more than they could reasonably hope to recover through increased economic activity and tax revenue. They also produce or commission economic impact reports that predict millions of dollars in spending that often fails to materialize.

In Ventura's case, a $250,000 investment to secure the X Games might generate at least that much tax revenue from hotel stays and other spending, said Victor Matheson, a professor of economics at College of the Holy Cross in Worcester, Massachusetts, who studies the business of sports.

“From all appearances, this looks like an event that is going to, at most, lose the city a little bit of money, and maybe make a little bit of money, and be a fun event for the community,” Matheson said.

“It sounds like the folks there are maybe a little more level-headed than the traditional convention and visitors bureau folks,” said Frank Stephenson, a sports economist at Berry College in Mount Berry, Georgia. “They haven’t pitched an extra-large subsidy, and they haven’t made outrageous claims about what the publicity value will be.”

The primary way that a sporting event helps the local economy is by drawing visitors from out of town, Matheson said. Locals who go to the X Games probably won’t add much economic impact, because they’ll spend money at the games instead of on a movie, a dinner out or other entertainment options. If the X Games draws enough spending away from locally owned businesses, Matheson said, it might even have a negative impact.

The clearest way to gauge visitor spending is through hotel room stays, and it appears the X Games could pay for itself solely through the taxes from those hotel bookings.

The X Games employees and contractors who are putting on the event have been staying at hotels in and around Ventura since early July, said Marlyss Auster, the president and CEO of Visit Ventura. Those staffers will pay a total of $1.2 million for their hotel rooms, she said.

The city of Ventura has a 10% tax on hotel rooms and short-term rentals, so that means the city general fund will see $120,000 in revenue just from the X Games staff. That makes up nearly half of the maximum the city has agreed to spend to support the X Games.

More than hotels

“It’s not just the hotels,” Auster said. “We know they’re using local businesses for staff catering. … They really immerse themselves in the city. They don’t just come to the fairgrounds, pop up a few tents, put on the event and go.”

And that doesn’t count any of the athletes or fans. There are about 150 athletes participating in the games, many of them traveling with their families, and each day will bring tens of thousands of attendees, though it’s not clear how many will stay overnight.

“Every new person who visits Ventura is an opportunity for us to shine and have them return as guests,” Auster said. “That’s how we as Ventura residents get cool businesses to go on Mondays and Tuesdays because visitors are spending money there on the weekends.”

The long hotel stays by X Games employees are especially valuable because hotels in Ventura tend to be relatively empty in the middle of the week, even during the summer. Auster said midweek hotel occupancy should be about 10% higher than normal this July due to the X Games.

Overall, Visit Ventura is expecting close to 80% hotel occupancy for the month of July, Auster said, up from 69% last July.

Will the X Games crowd out other visitors?

The X Games probably accounts for a big part of that increase, though not the whole thing. There was still some pandemic hangover in the tourism industry last summer, and tourism spending is up all over the world this year, Matheson said.

It’s not enough to just look at whether the city’s hotels are full during the X Games, Stephenson warned. The key question is whether the hotels are more full than they otherwise would have been — whether the people coming for the X Games are crowding out other visitors.

Stephenson co-authored a study on the X Games when it was in Austin, Texas, in the mid-2010s, and said he “did not find particularly large effects.” The X Games generated about $1 million in additional hotel revenue, not a lot of money in an economy as large as Austin’s.

But Ventura is smaller than Austin, and $250,000 is “not a huge subsidy,” Stephenson said. If the X Games is responsible for some part of the improved performance of Ventura-area hotels this summer, it could prove worth the city’s investment.

Matheson said he thinks the X Games might be a good investment for Ventura because it’s “a Goldilocks type of event.” That means it’s big enough to attract a lot of visitors, but not so big that all other economic activity in the city shuts down as often happens with mega-events like the Super Bowl or the Olympics.

In Minnesota, ESPN commissioned a report that predicted the X Games would bring about $42 million in economic activity. Matheson and Stephenson both said to take figures like that with a grain of salt. Studies commissioned by cities, tourism bureaus and event sponsors usually find much greater impacts than those conducted by independent economists.

Ventura has not done an economic impact study on the X Games yet. Auster said Visit Ventura plans to hire a research firm to conduct a study after the games are over.

“That’s the greatest thing,” Matheson said about the city’s decision to wait. “It is so rare that cities go back and look at whether they made good decisions. They spend a ton of money getting an economic impact report estimate beforehand, and then they don’t spend any money looking at the actual event with real data after it happens.”

Exposure for Ventura

In addition to spending at hotels, restaurants and other businesses, Ventura will benefit from an unusual amount of public visibility during the X Games. ESPN will broadcast more than 17 hours of the X Games from Ventura. The word “Ventura” will be heard more on national television in one weekend than it otherwise would be in a year.

“If we wanted to buy that kind of exposure, it would be way more than a quarter of a million dollars,” Auster said. “We could never afford it if we saved up all of our money.”

Matheson said cities don’t try to buy that kind of exposure because it wouldn’t be worth the expense, but the publicity is “almost certainly worth something.” And it might be worth more for a “hidden gem” like Ventura, he said.

“It’s easier for this event to put Ventura on the map than to put Minneapolis on the map, because if Minneapolis isn’t on your map, you need to get a new map,” Matheson said.

Economists like Stephenson and Matheson have built a consensus that subsidizing sports doesn’t usually pay. But both said Ventura appears to have done everything right in its pursuit of the X Games.

“If you don’t do outrageous things, it’s hard to get outraged,” Matheson said.

Tony Biasotti is an investigative and watchdog reporter for the Ventura County Star. Reach him at tbiasotti@vcstar.com. This story was made possible by a grant from the Ventura County Community Foundation's Fund to Support Local Journalism.

This article originally appeared on Ventura County Star: X Games: Will Ventura's action sports investment be worth it?