Will moving the All-Star Game cost Georgia $100m? Almost certainly not

Sport

Major League Baseball has found itself at the center of a maelstrom over its decision to relocate this year’s All-Star Game from Atlanta over a new law in Georgia that critics say is a form of voter suppression.

Naturally, Donald Trump didn’t take long to pipe up. He released a statement calling for a boycott of baseball for “interfering with Free and Fair Elections”. Georgia’s Republican governor Brian Kemp, who signed the bill into law, descried the “cancel culture and partisan activists” who are “coming for your business”.

But in recent days the rhetoric has come to focus on a single number: $100m. That’s the “estimated lost economic impact” from the relocation for the state of Georgia according to a statement from Holly Quinlan, president and CEO of Cobb Travel and Tourism.

The full heft of the right-wing media ecosystem has seized on this $100m figure in the days since it surfaced in the hopes of swaying public opinion. In fairness, Stacey Abrams, a one-time Democratic candidate for Georgia governor also spoke of the economic impact of the relocation and the PGA made a similar argument while defending the Masters, which is played in Augusta, Georgia.

“Joe Biden, Stacey Abrams, Major League Baseball, Delta, Coca-Cola: they all lied about Georgia’s election laws and that has now cost the people of Georgia almost $100m in revenue,” Fox News pundit Sean Hannity thundered during his monologue on Tuesday night. “Every person in Georgia should be furious.”

But while Georgia’s $100m figure surely makes for a juicy cable-news chyron, the consensus among sports economists is these estimates are routinely exaggerated.

“The rule of thumb that I always tell everyone is just take whatever number the boosters are telling you, move the decimal one place to the left and you’ve probably got a pretty good guess,” said Victor Matheson, an economics professor at the College of the Holy Cross. “We’ve actually gone back and looked at data for cities that have hosted All-Star Games and Super Bowls and Olympic Games and events of that scale, and we always come up with numbers that are a fraction of what the numbers that were predicted ahead of time.”

MLB’s decision to move the game to Denver was quickly hailed as a win by Colorado governor Jared Polis, who claimed the event would translate to $190m in revenue, according to the state’s Office of Economic Development and International Trade. But Matheson treats that number with equal skepticism.

“There is some loss, so it’s not zero, but it’s a whole lot closer to zero than the $100m number Atlanta was throwing around and the $190m gain that the governor of Colorado is throwing around,” Matheson said. “The problem is that so many cases are just reported uncritically, even though these are economic impact estimates are generated often by the teams and by Major League Baseball or a city’s own convention bureau. There’s no real reason that you should believe economic impact numbers that are commissioned by people who are made to look good by big economic impact numbers.”

He added: “The numbers don’t match reality in any sort of significant way. What worries me is always when you have these huge numbers that just become commonplace, then when it comes time for someone like [Atlanta Falcons owner] Arthur Blank to come out and say, ‘Hey, I want $600m for a new NFL stadium in Atlanta, then you’re like, well, that’s, you know, that’s, that’s so much economic impact. Of course we’ll hand over that sort of money.

“That’s where these really become damaging fictions. If someone just wants to throw a number out there just for fun, that’s fine. But when there’s an actual clear ask, that’s a problem.”

Craig Depken, a sports economics professor at the University of North Carolina Charlotte, said economic impact estimates are normally derived from three figures: direct spending, indirect spending and induced spending. But it’s often unclear how these streams are calculated and weighted.

“There’s the direct spending associated with an event,” Depken said. “There is the indirect spending, which is done by firms that are busy spending in anticipation of the crowd showing up. Then there’s the induced spending. There are three levels of spending going on. The induced is the rounds of spending that would happen. After the wait staff gets a bigger tip, they’re more likely to spend that money locally in the following weeks, right? Maybe buy a new set of tires or whatever. That’s the induced spending.

“The question of the $100m is, what number am I looking at? Am I looking at the direct spending? If it’s direct spending, then you’re ignoring those other two sources. If you’re talking about the overall effect, then the actual spending is much less because you’re inflating it.”

As a test case, Depkin examined two previous MLB All-Star Games held in Texas, which has no income tax. That allowed him to control for the impact of the sales by looking at the monthly sales tax revenues around the events.

“From there, you get back out a back of the envelope calculation of how much activity was associated with the event because almost everything in Texas is sales tax,” Depkin said. “If we knew that sales tax went up by a million dollars, then that meant that activity went up by $60m. Unfortunately, in both of those instances the net impact of the All-Star Games on local sales taxes was statistically insignificant.

“Essentially statistically zero.”

The idea of a US sports league relocating an event from a state over disagreement with a law is hardly new. The NFL famously pulled the Super Bowl from Arizona in 1991 over the state’s refusal to honor Martin Luther King Jr’s birthday. More recently, the NBA relocated the 2017 All-Star Game from Charlotte because of North Carolina’s so-called “bathroom bill” that restricted the rights of transgender people. In both cases, the states reversed course.

“It is reasonably remarkable that Major League Baseball is pretty widely considered the most conservative of the big leagues in the United States,” Matheson said. “And if even Major League Baseball says this is going too far for us, that’s saying something. This isn’t the NBA where the face of the league is LeBron James, or Major League Soccer, which is kind of a countercultural league in a lot of cities, including Atlanta.”

Ultimately, he said, the true impact is “primarily symbolic rather than economic”.

“The one thing Denver really does have going for it is that they get a good reputation in just exactly the same way that Georgia gets a bad reputation,” Matheson said. “They get a little bit better halo effect from this event than you might normally get, because they can kind of be seen as the white knights stepping in for those bad folks in Georgia. So again, it’s, it’s not just the bad reputation that Atlanta’s getting here, but I think Denver is getting a little bit of positive spin here, even though again, the dollars aren’t very significant.”