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Super Bowl Windfall Not Paying Off For Phoenix Business Owners

Posted in Features, Sports by dionrabouin on July 27, 2015

Phoenix Westgate Mall

PHOENIX — Fred Verbeke expected Super Bowl week to produce a windfall for his burgeoning local eatery. Opened in 2013, his Chocolade van Brugge Belgian chocolate shop, located in Scottsdale’s posh Fifth Avenue shopping district, has steadily gained new customers and grown to include a staff of five people. Verbeke had scheduled that staff for extra shifts to accommodate the anticipated 100,000-plus visitors pouring into the Phoenix area for the big game this week. But so far, “nothing.”

“I’ve never had bad days like this,” Verbeke says. “It’s definitely hurt us. I actually staffed up my people — double — and I had to send them home. I’m actually 600 percent below my normal days last year. … We just had a new shipment come in, we made extra waffles, we made everything extra, but it’s just not gonna happen. Until last week, it was really busy here.”

Verbeke even signed up for the Big Game Ready promotion championed by GoDaddy, Paypal and Yelp for businesses to attract customers via social media and signage that shows support for the heavily trademarked contest between the New England Patriots and Seattle Seahawks.

Business has also been slow at the White Hawk Gallery, a boutique that specializes in upscale Native American jewelry. Owner Mohammad Amirah bought extra supply from merchants and added hours to the schedule for his staff this week only to see “no one show up.”

“We’re seeing less traffic due to the Super Bowl being here,” he says. “This has really impacted our business. I’ve had customers honestly just say, ‘You know what, we were gonna come out, but we’ve decided not to because it’s gonna cost us a fortune, so we’re gonna go out to San Diego.’”

Amirah says he owns three White Hawk locations in the Phoenix area and is seeing a decrease in business of 50-60 percent at all three. “It’s pretty bad,” he says. He’s cut his staff down to one employee at each store per day.

That reality is hard to square with the one in downtown Phoenix where the NFL paints the picture of an economic success story. There are thousands of people enjoying free concerts, food trucks and the Tostitos Party Zone, which boasts 100-person lines of families and friends awaiting the opportunity to play free games for fun and prizes. The league has also packed both the Phoenix Convention Center’s north and south buildings, offering visitors the full “NFL experience” for a $35 entrance fee. The city has even cut off traffic around a nine-block section of downtown, which has been designated an “open campus,” where adults can legally consume alcoholic beverages — largely provided in blue and red aluminum bottles by Super Bowl sponsor Budweiser — on public streets and sidewalks.

The NFL announced Phoenix could expect a $600 million financial boon from hosting the Super Bowl in 2015, the Phoenix Business Journal reported last year. But the unfortunate truth for businesses such as Chocolade van Brugge and White Hawk Gallery is that this is business as usual for the Super Bowl.

“I’ve never ever found a significant impact of any of these events,” says Philip K. Porter, a professor of economics at the University of South Florida, in reference to the Super Bowl and other large sporting events. Porter has studied the economic impact of such events since the 1996 Super Bowl.

Phoenix hosted the Super Bowl in 2008, and while hotel, bar and restaurant sales rose by $41.6 million compared with the previous year, retail sales fell by $538.6 million compared with 2007, the Arizona Republic reported. That was largely the result of the economic recession that began in December 2007, but the NFL estimated the Super Bowl would bring a $500 million impact to Phoenix that year, which never quite materialized. Porter points out that the revenue decline associated with the recession was proportionally the same for Maricopa County, which is home to Glendale, Scottsdale and Phoenix, as it was for the rest of Arizona, despite the Super Bowl’s presence in the county.

“If $500 million actually happened, you’d be able to see it,” he says. “It would stick out like a sore thumb.”

The economic-impact estimates for the Super Bowl are based on informal surveys done by the NFL combined with the total spent by the league and its teams that is multiplied to find the so-called ripple effect of that spending on the local economy, the Arizona Republic reports. Such estimates neglect to point out how much of that money leaves town with the NFL and other corporations that aren’t based in the host city. It also doesn’t subtract the millions of dollars cities have to lay out to finance host committees, spending by tourism bureaus or police and public-safety costs. The safety spending alone costs an estimated $400,000 for Scottsdale, $1 million for Phoenix and $2 million for Glendale, the Republic says.

“Certain people benefit — the hotel owners certainly benefit, people that do partying, catering, that sort of business, they may get some benefits,” Porter says. “On the other hand, if it’s just the average person, they’ve just been sold a bill of goods.”

While local business owners like Verbeke, Amirah and others see their sales dwindle, businesses like Hilton, Hyatt and Marriott reap big rewards. For the week of the Super Bowl, hotels in Phoenix are charging average rates 364 percent higher than normal, according to a recent survey by TravelMag.com. The study finds some hotels in the region increasing rates by 1,000 percent over their usual price during the year. Further driving demand, the NFL reserved nearly 20,000 of the Phoenix area’s 55,000 rooms. Hotel owners come out on top because of the increase in room prices, but the Arizona Republic finds that while occupancy rates and revenue for hotels increase for the weekend of the game, they decrease before and after Super Bowl week, meaning fewer people overall come to visit.

The money paid for hotels, frequently accounting for the biggest spend visitors make during a Super Bowl trip, often leaves them too cash-strapped to splurge on many of the things they would in other circumstances, Porter says. Additionally, the Super Bowl drives out the kind of travelers many businesses depend on and replaces them with a spate of visitors who are in town just for football.

“If you look at the local events — the local zoo, the aquarium, ski resorts, other things that people would typically go and enjoy when they’re on vacation — you’ll see activity at those places actually goes down around the Super Bowl,” Porter says.

It’s a game of economic musical chairs, explains Neil deMause, co-author of “Field of Schemes: How the Great Stadium Swindle Turns Public Money Into Private Profit,” that often leads to taxpayers and local businesses having nowhere to sit when the music stops.

“You’re bringing a lot of people somewhere to spend money, but it’s like saying ‘Look at the economic impact from having a bunch of people get out of an airplane and walk around handing each other $20 million in $100 bills,’” he says. “[What city] they’re spending the money [in] doesn’t really matter, they’re just handing it to the NFL. Unless they’re stopping along the road to eat, there’s not a lot of spinoff for the rest of the local economy.”

And the problem isn’t simply a loss of revenue for small or local businesses. Tammy Nappe, a bartender at a P.F. Chang’s in Scottsdale that sits between the Scottsdale Mall, which is hosting the city’s Fan Fest in collaboration with ESPN, and the W Hotel, says she has seen foot traffic at the internationally known restaurant come to a virtual standstill.

“We thought we’d be a lot busier. It’s really strange,” Nappe says. “I’m driving to work, and I see so many people out and around the mall, but they’re just not in the restaurant right now. Everything’s booked up. This is our season, so we should be running some pretty good numbers. We should be pretty busy.”

Nappe says servers who were expecting to work extra hours are being cut during their shifts and leaving with only $20-$40 per night. While it’s left her confused, economists have found that the low spending numbers from early in the week during the Super Bowl are typical, even in industries that generally benefit from the game.

That’s a lesson Amirah says he learned in 2008. “Everyone that was coming into the store was either asking for directions of an NFL supplier, store location or any NFL merchandise — pins, pendants, earrings — that had anything to do with the NFL stuff,” he says. “No one’s asking for the turquoise and silver and things like that.”

This year, he lined a table with NFL and Super Bowl T-shirts, hats and drink cozies, placing it in front of his jewelry store. “If you’re not selling Super Bowl stuff,” he says, “you’re not going to have any business.”

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