How economic impact is calculated for Lions games, Taylor Swift and Beyoncé
Visit Detroit's $20 million economic impact projection for the NFL divisional round, the city's first NFL playoff game since 1957, was small compared with the projected impact of April's NFL Draft, economic experts tell Axios.
Why it matters: Economic impact gets a lot of attention from the general public but how it's calculated isn't often explained.
- With half a million people expected to visit for the NFL Draft, insiders are forecasting an economic impact of "hundreds of millions" — potentially 15 times larger than each playoff game.
The intrigue: Economic impact is an estimate typically measured using software that inputs relevant information like ticket prices associated with an event or pre-event spending such as merchandise sales or parking costs.
- Chris Moyer, communications director for the economic development nonprofit Visit Detroit and a Grosse Pointe City Council member, tells Axios that Visit Detroit uses a proprietary software tool to calculate economic impact.
How it works: The calculator takes direct and indirect spending into account, meaning transactions happening inside places of businesses and economic activity outside establishments.
- "The bars, the restaurants, the Uber drivers — most of those people are Detroiters or at least Metro Detroiters that own and operate those establishments," Moyer says.
- With January being the slowest business month of the year, "two weekends was enough that businesses were making as much money as they've made in full months," Moyer says.
How it works: "What typically happens from Visit Detroit or others is that you have third-party economists study the commercial receipts that happened during the timeline of the event," MEDC president Quentin Messer tells Axios.
- These figures come after entities studying them are able to "collect the receipts," Messer explains. "There's typically about a year or two lag and because you have to compare the receipts — if you don't have receipts, the data isn't there."
Between the lines: James Hohman, director of fiscal policy at the Mackinac Center for Public Policy, a Midland-based nonprofit that advocates free markets and limited government, tells Axios that organizations often use economic impact calculators that are available for purchase like REMI or IMPLAN.
- While the software is often used to advocate for policy, some say Visit Detroit's figures should be trusted more than other economic projections.
- Hohman said, "$20 million isn't a huge thing; it sounds more reasonable than a lot of other analysis."
Zoom in: While downtown businesses will be getting the most cash, the city is making an effort to put NFL Draft events in neighborhoods.
- "On a Sunday morning if you're walking through West Village, I don't think those businesses are doing better because there's an NFL game," Moyer said. However, if a few more bars or restaurants capture a few more customers, that's a win, Moyer says.
- One neighborhood that receives an economic boost is Corktown, which has bars and restaurants like Old Shillelagh or McShane's frequented by attendees of sporting events almost every weekend.
More Detroit stories
No stories could be found
Get a free daily digest of the most important news in your backyard with Axios Detroit.