🌅 Today’s stat: $48.4 million

Heads up: Yesterday’s newsletter included a link to an explainer for the “science of reading” approach to teaching reading comprehension. That link led to the website of an expert-led initiative called Lead for Literacy, which is funded by the U.S. Department of Education. Elon Musk and President Trump have decided to take down government websites such as Lead for Literacy, with no indication of when—or if—they’ll be back online. Read an explainer about the “science of reading” approach.

SOURCE

The Economics of the Super Bowl: Players, Performers, and Cities

WHAT TO KNOW

• Despite the jaw-dropping prices for ad slots and billion-dollar figures of purported economic impact (which often come from NFL-funded studies and city officials with political interests), empirical research on the economics of the Super Bowl shows the impact on host cities is a “fraction” of what’s touted. Cities foot the bill for all infrastructure and security costs, while also granting the NFL a broad tax exemption, meaning cities can’t collect tax revenue on hotel stays for teams and league executives, parking spots purchased by the league near the stadium, or on the game tickets themselves (Minnesota officials estimates the tax exemption cost the city $10.3 million in lost revenue during Super Bowl LII in 2018).

WHY IT MATTERS

• The NFL explicitly uses the promise of hosting a Super Bowl as a way to entice otherwise reluctant cities and taxpayers to provide subsidies and funding for new stadiums or major renovations. During the 16-year period from 2004 to 2019, 13 different cities hosted the Super Bowl, including nine that were awarded the game shortly after building new stadiums and one that hosted the game after completing major renovations (it should be noted that in the time since the above research was published, two teams have played in Super Bowls hosted in their home cities, which hadn’t happened until the 2020 season and would likely result in a greater economic impact for the city than other Super Bowls).

CONNECT THE DOTS

• Research shows the weaker-than-purported impact of hosting the Super Bowl stems from three main economic phenomena: (1) The substitution effect (when spending that would have happened elsewhere in the economy instead flows to the game, therefore not actually creating new economic activity, only moving it); (2) Crowding out (when the game displaces the typical economic activity that would have otherwise happened in the city; a common occurrence since host cities are almost always tourist destinations in their own right); and (3) Leakages (when money spent in the city immediately leaks out and never makes it into the pockets of local residents). Other research appears to support the findings, suggesting residents are better off economically when their local team wins a Super Bowl rather than when their local area hosts one.