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MLB All-Star Game is big deal for Colorado, but economic impact is probably overstated

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Posted at 1:01 PM, Apr 06, 2021
and last updated 2021-04-06 15:22:33-04

DENVER -- There's no doubt the MLB All-Star game is an attraction. The tourists, the national media, the best in the majors taking their swings with a wild crowd as the backdrop. From 2014-2019, cities estimated the Midsummer Classic brought in $70 million in economic impact.

One leading economist says you should take those numbers with a grain of salt.

Victor Matheson, a professor at the College of the Holy Cross, is one of the co-authors of "Home Run or Wild Pitch?: Assessing the Economic Impact of Major League Baseball's All-Star Game." His work looks at the impact of All-Star Games from 1973-1999.

Please note: The following transcript was lightly edited for clarity.

You've studied how cities are affected by the All-Star game. What did you find in your research?

We look at things like employment, or GDP, or taxable sales, to try to figure out if we see a big bump associated with the All-Star game. Typically, what economists find is there's very, very little actual economic impact from these sort of big games. So even though it looks like a lot of economic impact, lots of people pouring in, seeing all the people in and outside the stadium, it's actually a fairly small economic impact. 2021 might be a little bit different.

Why is there a large disparity between your research and the economic impact data released by cities?

Number one, it's known as the "substitution effect." The substitution effect is when local people go to the All-Star game. Most of the people who are gonna be in Coors Field are gonna be local people from Colorado who are spending their money at the game, rather than elsewhere in the local economy. That's not new economic impact that's being generated, but is instead just shifting around where economic impact is happening.

A second thing is what we know as "crowding out." And crowding out is when the crowds and congestion associated crowds out other people that might be normally in the city. Denver, under normal circumstances, is pretty full on a typical July weekend. If you displace regular tourists to Colorado with Major League Baseball tourists, again, that's not a net gain for the city.

And the last thing is what's known as "leakages." That's when money that is spent in the city doesn't actually stick in the city. So, for example, if you have people staying at the Hyatt or the Radisson, they may be spending a lot of money here, but that money isn't sticking in Denver. It's going back to corporate headquarters in New York City.

You're saying there is no data to support an economic impact from MLB's All-Star game.

When we looked back at cities that hosted the All-Star game, no matter how we tortured the data, we couldn't get it to confess. We couldn't find any significant impact that we could see. [We couldn't find] any bump from the All-Star game at all.

As a typical rule of thumb, economists like me say, "Take whatever the city tells you, move the decimal point one place to the left, and you'll get a pretty good estimate of what Denver can expect. Now, mind you, that's in normal times. 2021 may be a little different.

What are the economic factors that would make 2021 different from other years?

Obviously, the big difference here is COVID, right? Hotels and the entire hospitality industry has been decimated over the last 14, 15 months or so. Any economic impact is good economic impact at this point. Anything you can do to get hotel rates back up to the normally 70%, 80% full that a hotel needs to stay in business, as opposed to the 20% or 30% full that they've been over the past year, is going to be something that's nice for them.

The second thing is, this is just a really good piece for Denver and Colorado's reputation, right? Basically, Denver gets to be seen as the white knight riding in to the rescue to save MLB and the All-Star game from voter suppression and Atlanta. While Atlanta gets a black eye, Colorado and Denver get to be seen as the good guys in this story. MLB wasn't gonna move it from one place with problematic policies to a place even worse. Denver comes off looking pretty good in this story.

What does Georgia lose by losing the All-Star game?

The main thing here is reputation. This is a much bigger symbolic move by MLB than an actual, big economic hit on Atlanta. But it does stand to lose a handful of money and people coming into the area. It does stand to lose some people coming in from across the country and staying in hotels. And, again, after the past year, hotels are desperate for any kind of tourism dollar. That loss of a hotel room is a lot bigger now than it was had this happened a couple years ago.

It is a bit surprising that, of the big sports leagues in the U.S., traditionally MLB has been considered the most conservative of the sports. It's not an NBA, with a face like LeBron James, or it's not MLS, with very large immigrant fanbases. So the fact that MLB is the one coming and making a big stand says something about how popular the stand is against voter suppression. If you're getting MLB to take a stand, the most conservative of the leagues, that's really saying something.