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LVSportsBiz.com’s New Policy: Economic Impact Numbers Related To Sports Events, Teams, Stadiums Will No Longer Be Published Without Explanation On How Impact Numbers Were Reached

NFL Commissioner Roger Goodell (left) and Raiders President Sandra Douglass Morgan (right) at a recent Las Vegas Super Bowl Host Committee breakfast in Las Vegas.

By Alan Snel, LVSportsBiz.com Publisher/Writer

LVSportsBiz.com today released a new editorial policy regarding publishing information about “economic impact” numbers put forth by sports teams, leagues and event promoters.

We will publish economic impact numbers only after the provider of the information explains the methodology and criteria for reaching these controversial numbers that are often used by teams, events and leagues to gain public money to build stadiums, justify public dollars for sports events and draw free PR.

It’s a simple news-gathering request: show us the math so that we can publish the economic impact numbers from your sports event, stadium or team.

The Raiders Wednesday released something called the “Inaugural Impact Playbook,” which outlined what the NFL team said were contributions to the community in the form of generating visitor economic impact, supporting workforce diversity and developing football programs for kids like girls flag football.

Raiders owner Mark Davis

The Raiders identified a number for their visitors’ economic impact in Las Vegas without explaining how the impact number was reached.

In response, LVSportsBiz.com emailed Raiders President Sandra Douglass Morgan and PR head Will Kiss for an interview about how the economic impact number was determined before we publish that number.

Southern Nevada is raising more than $1 billion in public money during a 30-year period to pay back the $750 million in public dollars it contributed to help build the Raiders’ stadium in 2020. The UNLV football team paid about $2.2 million to the Raiders to play six games at the stadium in 2022.

Raiders president Sandra Douglass Morgan (left)

About two hours after the Raiders’ press release, Las Vegas-based Ultimate Fighting Championship released an economic impact number for its International Fight Week in July.

UFC, which paid Las Vegas company Applied Analysis to conduct the economic spending report, released numbers for visitor spending, jobs and salaries without explaining how these numbers were reached. LVSportsBiz.com will publish these numbers when UFC and Applied Analysis explain how they determined these economic figures.

LVSportsBiz.com’s new policy comes a month after the Formula 1 race in Las Vegas provided contrasting numbers about economic impacts regarding the controversial race that was criticized for hurting small local businesses and causing major disruptions to commerce and transportation along the Strip entertainment corridor.

The CEO of Liberty Media, which owns F1 and promoted the Las Vegas Grand Prix Nov. 18, said the race would generate $1.7 billion in revenue for the Las Vegas area. Liberty Media CEO Greg Maffei provided the $1.7 billion number as part of his apology for Formula One disrupting transportation and causing traffic jams along the Strip and in the entertainment corridor.

But Las Vegas consultant Jeremy Aguero of Applied Analysis, who has been hired to determine economic impact numbers by F1 and the MLB Athletics for a baseball stadium on the Strip, said the Las Vegas Grand Prix would generate $1.3 billion in spending.   That contrasts with Maffei’s $1.7 billion economic spending number.

Jeremy Aguero

Determining the economic impact of sports teams, stadiums and events is a very difficult challenge because the criteria for sports-related impacts varies from consultant to consultant.

J.C. Bradbury, economics professor at Kennesaw State University in Georgia, explained to LVSportsBiz.com Wednesday that economic impact reports are unreliable because they fail to analyze public investment numbers and economic factors that contribute to the “net” impact.

“Commissioned studies routinely overestimate benefits, underestimate costs, and use analytical methods that research economists do not find credible. For example, commissioned studies often use input-output models that measure gross economic impact, rather than net economic impact,” Bradbury said. “Because they are presented directly to the public, rather than having their methods and estimates scrutinized by economic experts, these mistakes often go unnoticed.”

In addition, the provider of the economic impact numbers can benefit from the rosy numbers presented regarding the impacts of a stadium or event.

Bradbury explained: “The commissioned nature of the studies also creates a conflict of interest between the hiring principal and hired agent doing the analysis. Failing to find the positive impacts that a client desires will result in fewer clients. Being paid to conduct analysis does not mean that it is biased or flawed; however, if it is correct, then it should withstand critical review by other researchers.”

In the case of the state-approved $380 million subsidy for the Athletics stadium construction on the Strip, consultant Aguero appeared in June before Nevada state legislative committees representing the Athletics to make a case for the public stadium money.

Aguero’s apperarances before the state committees with Steve Hill, CEO of the LVCVA public tourism agency and also Las Vegas Stadium Authority Board chairman, came at the same time when Aguero’s Applied Analysis also worked for the Las Vegas stadium board, which is overseeing the A’s stadium process. Aguero also provided A’s stadium economic impact numbers at the time.

The NFL Super Bowl is scheduled for Allegiant Stadium Feb. 11 and you will hear media reports about the big game’s economic impact.

LVSportsBiz.com will publish economic spending numbers in connection to Super Bowl 58 here in Las Vegas as long as the information provider presents the methodology and an explanation on how the number was reached.

Alan Snel: Alan Snel brings decades of sports-business reporting experience to LVSportsBiz.com. Snel covered the business side of sports for the South Florida (Fort Lauderdale) Sun-Sentinel, the Tampa Tribune and Las Vegas Review-Journal. As a city hall beat reporter, Snel also covered stadium deals in Denver and Seattle. In 2000, Snel launched a sport-business website for FoxSports.com called FoxSportsBiz.com. After reporting sports-business for the RJ, Snel wrote hard-hitting stories on the Raiders stadium for the Desert Companion magazine in Las Vegas and The Nevada Independent. Snel is also one of the top bicycle advocates in the country.
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