With March Madness officially under way, millions of office-bound Americans (from President Obama to your humble blogger) are completing their work while keeping one eye on the latest scores. And, as usual, The Study is taking a look at the economics of the event. So, do cities benefit from hosting March Madness tournament games?
A 2003 paper by two economists says no—at least not when it comes to the men’s tournament. The authors surveyed the host cities of NCAA Final Four games since 1970 and found that “the economic impact estimates provided by Final Four promoters routinely exaggerate the true economic impact of the event.” In fact, despite optimistic impact estimates as high as $110 million, it’s likely that the event either has zero impact or a slightly negative impact. After all, while the Final Four brings in new spending, it also crowds out other spending from residents of the host city who want to avoid the congestion the tournament brings. Moreover, hosting the event requires expensive investments in infrastructure, security, and publicity. Sorry to break the bad news, New Orleans: You’re about to join a long list of host cities that profited far less than they were promised.