The Sixth Federal Reserve District is currently pro-football central. In just over a week, Miami, home to an Atlanta Fed branch office, will host Super Bowl XLIV (44, for those of us who are Roman numeral-challenged). That game will feature the New Orleans Saints—from another city that is home to an Atlanta Fed branch office.
Hosting and playing in the Super Bowl will be a shot in the arm to the economies of Miami and New Orleans. And they need it.
Few cities have felt the recession as deeply as Miami. Employment in the Miami-Ft. Lauderdale metro area peaked in December 2007. Between then and July 2009, a total of 225,000 jobs were shed, which amounts to a 9.2 percent decline. Miami has seen a bit of a rebound in employment since then, driven largely by local government hiring and a small increase in retail.
In the New Orleans metro area, the job losses have not been nearly as severe, in large part because of ongoing rebuilding efforts as New Orleans continues to recover from Hurricane Katrina. Employment peaked in December 2008 at 531,500 and then declined by 12,000, to 519,500, in July 2009 (–2.3 percent). Since July, New Orleans has added just under 5,000 jobs, with more than half of these in the healthcare and education sector. However, overall employment levels remain well below pre-Katrina levels—by 79,500 jobs, to be exact. The latest "Metropolitan Report" from the University of New Orleans Division of Business and Economic Research notes that post-Katrina population and employment growth stabilized before the recession began, therefore a large part of those 79,500 jobs represent a structural loss.
So, Miami is experiencing a cyclical downturn and New Orleans is still feeling the effects of Katrina. How much of an impact will hosting the Super Bowl have on Miami, and how much of a boost will playing in the game give New Orleans?
The positive impact of hosting big-time sporting events has been the subject of debate and a number of economic studies. Matheson and Baade conclude in their paper, "Padding Required: Assessing the Economic Impact of the Super Bowl," that
Recent NFL studies have estimated that Super Bowls increase economic activity by hundreds of millions of dollars in host cities. Our analysis fails to support NFL claims. Our detailed regression analysis revealed that over the period 1970 to 2001, on average Super Bowls created $92 million in income gains for host cities, a figure roughly one-quarter that of recent NFL claims. While this figure, like any econometric estimate, is subject to some degree of uncertainty, statistical analysis reveals that, on average the Super Bowl could not have contributed, by a reasonable standard of statistical significance, more than $300 million to host economies.
Nevertheless, Miami will receive a much-needed shot in the arm even if the overall impact on economic activity is not as great as anticipated. Add in the Pro Bowl, which will be played this coming weekend, and the overall impact will be greater.
As for the impact on New Orleans, measurement is even less tangible than in the case of Miami. Let's look at it in two ways: first the ongoing impact of the Saints on New Orleans, then what playing in the Super Bowl means to the economy in the short term.
Regarding the longer term, a report by University of New Orleans Chancellor and economist Timothy P. Ryan, "The Economic Impact of the New Orleans Saints," states that the Saints continue to be an essential revenue producer for the city of New Orleans by serving as an engine that pumps more than $600 million annually into local parishes and the state.
As for the short-term economic gains, there will certainly be more retail purchases of Saints paraphernalia and additional revenue that having a successful sports franchise generates, but the intrinsic psychological impact on the overall recovery of New Orleans is immeasurable.
So, even if some folks don't cheer for the Saints on Super Bowl Sunday, we will all be cheering for both New Orleans and Miami for the boost their economies will receive from the game.
By Michael Chriszt, an assistant vice president in the Atlanta Fed's research department