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Political Conventions Don’t Bring Economic Benefits To Host Cities

Much like hosting the Olympics, being the host city for one of America’s major political party conventions does not tend to help the economy of the host city:

Cities that host political conventions can rake in as much as a quarter-billion dollars or as little as nothing. It depends on who’s doing the math—and what’s in the forecast.

The 2004 and 2008 conventions contributed anywhere from $155 million to $265 million to their host regions, according to city and political-committee estimates. This year, Tampa and Charlotte expect to see as much as $200 million each from the two conventions, according to officials with the host committees. But outside economists say that such projections may exaggerate gains and fail to count losses. The economic effect, they contend, is probably closer to zero.

“Cities are good at adding and multiplying,” said Victor Matheson, an associate professor at the College of the Holy Cross who specializes in sports economics and the impact of so-called mega-events, such as the Super Bowl or the Olympics. “They’re not good at subtracting.”

(…)

In a 2009 study, Matheson and two colleagues reviewed every national political convention hosted between 1972 and 2004, comparing 14 convention towns with 36 similar regions. None of the 18 conventions over that span had any impact on personal income or local employment in the host city, they found.

“There’s no statistically significant evidence that national political conventions make substantial economic contributions to cities,” said Douglas Frechtling, the chairman of George Washington University’s Department of Tourism and Hospitality Management, who teaches graduate courses on destination economics and reviewed the available literature related to conventions. If anything, Matheson and his colleagues were not conservative enough, Frechtling said.

There’s no doubt some prestige associated with hosting a convention, and the week-long media coverage arguably contributes some degree to publicity for tourism and such, but as a money-maker political conventions don’t bring in nearly as much money for local economies as their promoters like to claim.

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About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway. Follow Doug on Twitter | Facebook

Comments

  1. I’m not sure that makes sense. The piece criticizes expansive accounting, but chooses a questionable alternative. Personal income and local employment are many steps away from convention revenue. I’d much rather see a month-to-month sales tax chart for convention and non-convention years.

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  2. Dave Schuler says:

    Off-hand I’m guessing that the hookers and liquor distributors do pretty well.

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  3. al-Ameda says:

    @john personna:

    You’re right, for a baseline, the minimum one has to do is look at (1) quarterly sales tax data which has the data for individual restaurants and establishments, and (2) hotel tax data, which has occupancy and room rate data. Those 2 pieces of data will tell you the incremental benefit that a city realized by hosting a major convention (over the same period a year ago when they did not).

    I’ve worked as a back room financial analyst in municipal bond finance and I can tell you that cities (and their local chambers of commerce) often overestimate the immediate benefit and ongoing benefits of convention facilities and special events as a source of revenue. It’s a very uneven record.

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  4. Clanton says:

    Let’s also look at the expense and hassle that these conventions cost the cities. Charlotte is fixing up things that haven’t been touched since the ’70′s; such as paving streets, fixing 5 year old potholes, and erecting a fake park just for the convention. Many people who work in town or anywhere near (5 mile radius will be effected) are staying home. Anyone who goes near the arena BANK OF AMERICA STADIUM (not “Panther Stadium” as the DNC people keep calling it – was never named that) is subject to multiple searches and pat downs. Forget trying to park anywhere but somewhere in S.C. and taking a shuttle bus for $50 a ride. And now extremist (terrorist) groups are threatening to blow up bridges and cause other problems. Looks like Chicago Summit all over again. Why are our troops overseas when we have this going on? I read that now the National Guard will also be helping out. So there are SWAT teams from around the country, horse mounted police, snipers, and all kinds of undercover operatives.
    Some people are renting out their houses for thousands of dollars – there’s some real capitalist ventures! As I have said, very few of these conventions are ever remembered unless something really big happens.

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  5. Herb says:

    ” as a money-maker political conventions don’t bring in nearly as much money for local economies as their promoters like to claim.”

    Reading the headline, my first thought was “In comparison to what?”

    It’s inconceivable that hosting these conventions “Don’t Bring Economic Benefits To Host Cities.” All those full hotels, the breakfasts, the lunches, the dinners, the shopping. There’s gotta be some economic benefit.

    Turns out, “it depends on who’s doing the math,” or more importantly, how you define “economic benefit.”

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  6. Clanton says:

    While some businesses like the ones you mentioned (including the food wagons and venders) will do well, consider that many businesses will be closed due to the heavy restrictions, security, and the chance of trouble in the city. Of course figure in the heavy outlay of money that the city has spent “fixing things up”. How much the DNC kicked in for this, I don’t know. The last I heard, the DNC was short on money.

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