On “Report finds Maryland football games provide host of benefits for state, local economies“
As I teach sports economics, I read with interest Clara Niel’s article about the economic impacts of Maryland’s football program. Unfortunately, like many economic impact studies commissioned by sports organizations, this report has significant methodological flaws inflating the figures.
First, as a footnote acknowledges, the report does not adjust for substitution effect, which involves expenditures that would have otherwise occurred in Maryland. This basic error undermines the report’s validity. The report assumes students spend $20 per game while other in-state attendees spend $40. However, it is likely that these amounts would have been spent at other businesses in the state anyway. Removing these two categories would reduce direct spending by more than a million dollars per game with proportionate reductions to indirect spending.
Second, further adjustments should be made to “College Athletics Revenues” of $10.6 million per game. Besides substitution effect reducing calculations for ticket sales, suites and premium seating, the university could have earned much of the $7.6 million attributed to corporate sponsorship, naming rights and media rights without football. For example, Pepsi’s contract with the university grants the company exclusive access to the campus and other marketing rights. It is unclear how much of this value is attributed to football in this analysis.
Third, the impacts of out-of-state visitors would seem grossly overstated as calculations are extrapolated from a game against Penn State. As one of college football’s popular teams, Penn State fans would be especially likely to attend a game in a border state. However, this assumption does not apply well to most other Big Ten schools. While I do not doubt the passion of Iowa or Nebraska fans, it is not credible to assume that more than 10,000 will make the 900+ mile journey exclusively for a game.
Independent researchers have long recognized the problematic nature of economic impact studies commissioned by sports organizations. Rather than seen as credible estimates of economic impact, many researchers consider them to be public relations documents intended to convince a skeptical public of the value of government expenditures on sports venues. The report on the economic impact of Maryland football seems to be part of this unfortunate tradition.
Dr. Michael Friedman
Instructor, Department of Kinesiology
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