A million or more people will visit Philly in a few short weeks, and — to hear leaders from a Philly tourism agency and the World Meeting of Families tell it — we’re in for a big payday. The juicy numbers with regards to economic effect to the Philadelphia area from the pope’s visit: $390 million, $418 million, maybe $500 million.
Yeah, not really.
Economists have routinely debunked such beliefs. The cycle of a massive projected effect followed by little to no impact and no fact-checking of the original estimates has happened in countless metropolitan areas that have hosted mega events. Robert Baumann, an economist who has studied this predictable-as-hell cycle, says Philadelphia as a whole will likely break even from Pope Francis’ visit, probably only saved from a loss by the World Meeting of Families’ promise to foot the entire bill. Even with the WMOF’s largesse, Philadelphia faces costs from lost time, disruption to regular business, and from residents leaving the city.
“Those are real costs,” Baumann tells Billy Penn.
Baumann, a professor at Holy Cross University, studied Democratic and Republican conventions from 1972 to 2004 alongside colleagues Victor Matheson and Robert Baade, and found “no discernable impact on employment, personal income, or personal income per capita in the cities where the events were held,” even though projections for them routinely tout up to $200 million in impact. (So don’t believe it when projections about next year’s DNC come out). Other studies have shown big sporting events don’t impact local economies, either. Baumann says the problems with most projections is that they use flawed baselines and don’t take into account lost productivity.
In terms of the baseline, Baumann says many projections compare the anticipated amount of new business from a mega event to zero, as in zero capacity at hotels and and no money made at local restaurants. A city like Philadelphia, with record-breaking tourism numbers in recent years, would probably have hotels at least partially occupied in late September (many of the profits realized by hotels will also go to national or international chains). Our thriving culinary scene already would make significant amounts of money on a normal September weekend.
The projections, Baumann also says, often don’t account for disruptions. Philadelphia schools are closing for at least three days. Many city employees will be out of work for three days, too. Center City restaurants are worrying about security. Other people might take off work during the pope’s visit and those still working or traveling through and into Philadelphia might have to deal with congestion-induced delays around the time of the pope visit.
“Less business is getting done,” Baumann says, “because it’s taking longer for people to get to places.”
There’s also something called the substitution effect. In layman’s terms, the substitution effect is what will happen if you’re planning to get the hell out of Philadelphia on Wednesday to avoid the headache “joyful pilgrims”. A portion of the visitors will simply be replacing the economic impact of people who leave.
One major way Philadelphia could see significant gains is through marketing. The pope’s visit, with Philadelphia in the background, will be televised through the world. Baumann says while it’s impossible to accurately project such gains, the possibility is tantalizing for people who believe it could lead to benefits for the area.
“That’s a hard marketing apple to pass up,” he says.
The estimated economic impacts of $390 million and $418 million were publicized by the Philadelphia Convention & Visitors Bureau and came from a formula designed by Destination Marketing Association International, which describes itself as having a goal “to protect and advance the success of destination marketing.” The $500 million estimate came from the president of World Meeting of Families. Baade, a co-author of the conventions study with Baumann, has pointed out to the Wall Street Journal that organizers and sponsors of the mega events are routinely the groups projecting the widely-reported estimates.
In other words, those who are trying to drum up support and good press for these events will always overstate how much money they’ll make.
A representative from the Convention & Visitors Bureau did not return Billy Penn’s call seeking more specifics about its estimate.
Baumann notes that he and his fellow economists have the benefit of hindsight when they complete their studies. Projections are not easy. But economists aren’t the only ones pessimistic about the money generated by mega events.
Glendale, Ariz., hosted the Super Bowl in 2008 and 2015. The city’s mayor, Jerry Weiers, said Glendale lost $1.6 million in 2008 and expected a loss of $2 million going into this year’s game. Weiers became part of a rare group by denouncing the economic impact of such an event.
The good news for Philadelphia is that the city doesn’t plan to pay for anything. The World Meeting of Families, according to spokesperson Meg Kane, plans to cover the costs of the papal visit based on whatever invoices it receives, from security to infrastructure and beyond. Kane says the WMOF expects $45 million will cover the bill. As of February the group had raised $30 million, and Kane says they are approaching their $45 million goal. That aspect of the pope’s visit will reassure economists.
“We’re big believers if you have the thing built and security is covered,” Baumann says, “then by all means host it.”
Just don’t expect a major economic impact.