5 March Madness Venues Turned Money Pits
PORTLAND, Ore. (TheStreet) -- A city full of tourists, a $70 million-to-$140 million economic boost and a place in the national spotlight. Who wouldn't want the Final Four in their town?
Just consider the cost of building the ballroom before hosting the Big Dance.
Last year, Atlanta's Georgia Dome drew host duties for the NCAA Men's College Basketball Tournament's championship round and, according to Atlanta Convention and Business Bureau CEO William Pate and Mayor Kasim Reed, took in the $70 million in financial benefits the event brought to the city's restaurants, hotels and attractions.
Or, you know, it had an impact that looked nothing like that. Economics professor Victor Matheson of the College of the Holy Cross in Worcester, Mass., and economics professor Robert Baade, now with Lake Forest College near Chicago, took a look at the economics of sporting events going back to 1970 and found that the projected impact was always roughly 10 times higher than the actual outcome. Remember those restaurants and hotels we discussed? Well, many of those are part of national chains and a whole lot of the cash they're taking in goes to those chains' out-of-state owners."Certainly a hotel room in Atlanta this weekend is very expensive," Matheson told Atlanta's WXIA-TV last year. "They're charging two and three times their normal rate. But they're not increasing the salaries of their desk clerks and their room cleaners by two or three times. So all of that money is just going back to the shareholders. It's going back to corporate headquarters in New York City. Not a lot of that money sticks in Atlanta." That's no minor detail, especially considering that the National Football League's Atlanta Falcons and owner Arthur Blank want a new stadium. The Georgia Dome was built only 22 years ago with $214 million taxpayer money and just got $300 million in renovations in 2007 and 2008, but Blank is already looking for $300 million to $400 million in public funding for a new, tech-savvy stadium, has drawn up plans for the facility and has NFL Commissioner Roger Goodell's blessing. Aside from hosting another Super Bowl, another Final Four is one of the best perks a city can ask for when building an indoor or retractable-roof stadium. But is that little bit of questionable economic impact every few years or so worth it? We looked at the Final Four host facilities of the past few decades and found that they not only ended up being a terrible deal for the cities and states hosting them, but that the Final Four did little to pay down debt that remained long after some of the buildings themselves vanished:
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