By Alan Snel, LVSportsBiz.com Publisher-Writer
It was a year ago when Renee Wilm told a Las Vegas Chamber audience that F1’s Las Vegas Grand Prix would deliver $1.3 billion in economic impact to Las Vegas.
On Wednesday at the annual Vegas Chamber preview session, Wilm — the Las Vegas Grand Prix CEO — displayed a graphic showing net visitor spending of $501 million. And the graphic also used a controversial multiplier, this one was 1.77 percent, to show a visitor spending impact of $884 million.
Oh, by the way, Greg Maffei, the CEO of the Colorado-based company that owns Formula 1 and the Las Vegas Grand Prix, claimed in an apology a week before the Nov. 18 car race that the grand prix would deliver $1.7 billion in spending to Las Vegas.
Why do the economic spending numbers shift?
And why should the public trust that these spending numbers are accurate if they’re constantly changing?
This is just one of several challenging issues facing the Las Vegas Grand Prix, which was criticized for the massive disruptions to commerce and transportation in the Strip area in the months leading up to the November event that literally took over Las Vegas’ entertainment corridor and 3.8 miles of busy roads.
The economic spending numbers presented by sports events, teams and stadiums irritate academic economists, who argue the numbers are inflated and fail to accurately depict the net economic impacts.
“It seems pretty clear that none of these estimates were credible to begin with,” said J.C. Bradbury, professor of economics at Kennesaw State University in Georgia.
“They shift around because the numbers were concocted to motivate support for the event, not provide a realistic measure of the economic impact of the event,” Bradbury told LVSportsBiz.com. “It’s easy to forget what the actual numbers were when you are not particularly focused on them to begin with.”
Using a multiplier as part of economic impact reports is highly controversial and criticized by university-educated economists as a ploy to inflate numbers by sports owners and promoters.
In the case of the F1 Las Vegas Grand Prix, Bradbury had a problem with the 1.77 multiplier number: “Economists who have studied the economic impact of sports venues and events have established that their economic multipliers are no greater than 1. I am not sure of what an ‘impact multiplier’ is. I’ve never seen it used before, even in really bad commissioned studies.”
To try and heal the community relations wounds, the Las Vegas Grand Prix hired former Las Vegas City Manager Betsy Fretwell, who joined Wilm on stage during the Chamber preview event at the Fontainebleau hotel-casino on the north Strip Wednesday.
Fretwell has already met with Las Vegas business owners who lost millions of dollars in revenues because the F1 3.8-mile closed race course created major access problems for businesses.
Las Vegas consultant Jeremy Aguero, who also gave a presentation at the Chamber preview, has supported the grand prix as a big moneymaker for Las Vegas.
But even Aguero had to acknowledge there were “imperfections,” as he called them, in the race’s debut two months ago.
During her talk, Wilm focused on the positives of the race and did not mention that businesses that lost money because of the Las Vegas Grand Prix said they want to be compensated for their financial losses.
Wilm did acknowledge that F1 “showed up with no playbook” for its inaugural race in Las Vegas and that “we got a lot wrong.”
She cited what she described as the “traffic issue” and claimed there were problems like traffic congestion that “no one expected.”
Fretwell, who had to deal with many local community issues as Las Vegas’ city manager for nine years, said she plans to use the NFL’s playbook for fostering community connections that is used for Super Bowls in host communities.
“I’m going to steal from Sam’s playbook,” Fretwell said, referring to Sam Joffray, who runs the Las Vegas Super Bowl Host Committee. The committee is working with the NFL on Super Bowl 58 in Las Vegas Feb. 11 by holding community events like planting trees, donating sports equipment and holding business networking sessions.
“We want benefits (from the race) to spread to other parts of the community,” Fretwell said.
In Year 1, the primary benefits were enjoyed by the two big powerhouse hotel-casino companies in Las Vegas — MGM Resorts International and Caesars International. They reported higher-than-usual revenues for that November weekend compared to the same time period in past years.
But occupancy rates were generally low in other parts of the Las Vegas Valley, Wilm said.
Wilm did say that traffic congestion should be better in Year 2 for the grand prix — assuming Clark County commissioners permit the F1 race.