The Super Bowl Returns To The Sunshine Economy
Miami will be in the Super Bowl next year regardless if the Dolphins win or lose. It’s all but guaranteed.
The game returns to South Florida for the 11th time in 2020.
It will have been a decade since the last Super Bowl was played here. The game, and all the fanfare surrounding it, has gotten bigger. Supporters say the economics of the game remain strong. And the Dolphin's gamble to renovate the stadium worked.
The stadium was blamed for Miami missing out on hosting a pair of Super Bowls earlier this decade. After the millions of public tax dollars spent on Marlins Park, the Dolphins were shut out of getting tax money to help fix up the stadium, which was known then as Sun Life Stadium. Dolphins owner Stephen Ross tried to get help with renovating the stadium by increasing the hotel sales tax or reducing its property tax bill, but he couldn’t find the political support. He committed to paying for the changes himself, with some borrowed money from the NFL, and the Miami-Dade County agreed to pay incentives to the Dolphins for landing big events -- like $4 million dollars for a Super Bowl. The money won't be paid until 2025.
Other public money is flowing starting to flow now. In early January, the Miami City Commission agreed to paying $500,000 to the local host committee. When Miami last hosted the game in 2010, Miami-Dade County wrote a check for $1.5 million to help and contributed millions by paying for police and fire protection and other services.
For the 2020 game, the host committee expects to raise over $40 million, but chairman Rodney Barreto says, most of that will be from in-kind contributions. "We're still working on the numbers" for the public contributions, he says.
The NFL is known for driving a hard bargain for host cities. For the 2018 game in Minneapolis, the league demanded to not have to pay all kinds of taxes, like sales and payroll taxes, according to a document obtained by the Star Tribune. If it did pay the taxes, the league requested the local host committee to reimburse it for those costs. In advance of this year’s game in Atlanta, Georgia legislators passed a law so Super Bowl ticket buyers won’t have to pay the state sales tax on their tickets. Florida already does the same thing.
Barreto says the NFL asked for tax exemptions to bring the game back to Miami, but he said "no, we're not going to do that."
Hotel spending plays a big role in trumpeting the economic benefits from bringing the Super Bowl to town. In Minneapolis, for instance, an analysis of its 2018 game found accommodations -- hotels and peer to peer rentals like Airbnb -- accounted for 30 cents of every $1 spent by someone visiting for the game. In all, that game was estimated to have made a $400 million net economic gain for the Twin Cities, according to an economic analysis prepared for the local host committee.
Hotel stays are a significant source of tax dollars, too. Hotel guests pay a 6 percent tax in South Florida, plus the local sales tax. And the room rates jump to some of the highest of the year when the Super Bowl is in town. According to the Greater Miami Convention and Visitors Bureau, the average revenue per available room for the night of the 2007 game in Miami was over $322. It was $300 for the 2010 game.
Previous games in Miami have had an estimated economic impact ranging from about $250 million to $450 million dollars, but Super Bowl economics is not straight forward.
Critics point out most of these economic impact figures are generated through organizations with skin in the game, like host committees and visitors and tourism bureaus. There’s the “the substitution effect.” Does Super Bowl spending simply replace spending that would take place anyway, it’s just spent on the Super Bowl instead of something else, like a dinner and a movie. There’s the crowding out effect. How does a Super Bowl draw visitors away from one location to another? There’s the leakage of the economic impact. Many businesses profiting from the Super Bowl bump aren’t headquartered here.
Then there’s the question of gross versus net impact. Even when the Super Bowl isn’t in Miami in early February, South Florida remains a popular place for tourists.
"We're going to bring in about 150,000 people to our community who normally would not come. The stadium only holds 65,000," says Barreto when asked about the criticism. "The net effect of that is that people are going to be paying more for a hotel room."
"It's not really a moneymaker for us," says Dolphins Vice Chairman and CEO Tom Garfinkel. "It's more a source of pride."
Four tent-like poles poking up from the top of the stadium are the most public evidence of the $550 million dollars in renovations to the stadium over the past four years. The stadium is privately owned but on public land.
While most of that investment is in place, other work continues, from pedestrian bridges in the parking lot to the air conditioning.
"We've got five water chiller systems that air condition the building. A lot of those systems are older. The last thing you want to have the air conditioning go out in the suite level during the Super Bowl," says Garfinkel.