Content provided by Paul Vaaler of the Carlson Schoo

Last week saw one of the biggest sports events ever to hit Minneapolis and the Twin Cities: Super Bowl LII. And it was a business boomlet for Twin Cities area hotels, bars and restaurants, and just about any good or service offered with an Eagle, Patriot or NFL logo or endorsement.

But before we go too ga-ga about it all, let’s try to understand better its real net economic impact and maybe deflate more than a bit the business boomlet to its right size. Estimates of the net economic impact of the Super Bowl were all over the map in the run-up to last Sunday. There were “estimates” from Super Bowl boosters in the $300 million range. Here’s where you can look over the details of a $340 million estimate prepared in April 2016 for the Super Bowl host committee: That estimate is almost certainly a substantial over-estimate. For example, it assumes that 5,000 new jobs paying on average $50,000 per job are to be created because of the Super Bowl. Hmm. Really? When? Where? For how long? That’s just wrong and likely wrong by a lot.

And how many new out-of-town visitors did we get? Well, again, Super Bowl boosters told us that they’d come in droves. Here’s an estimate from last year of 1,000,000 Super Bowl visitors, again from the Super Bowl host committee: Hmm, Really? When? Where? For how long? That’s again just wrong and likely wrong by a lot.

Serious estimates of additional visitors, jobs, spending and other economic activity tied to the Super Bowl will take some time to complete. Here are a few conjectures. We probably had 60,000-80,000 visitors coming to the Twin Cities during Super Bowl week with the majority arriving in the last three days. That’s a lot, but not as many as, say, the more than the 150,000-250,000 out-of-towners estimated to have visited the Twin Cities back in September 2016 when Hazeltine National Golf Course hosted the Ryder Cup. How many jobs? After excluding the thousands of volunteer jobs that the Star Tribune listed in incredibly small print last Monday, the number of jobs created expressly for the Super Bowl could still have numbered 5,000, but most will be temporary jobs paying at or near minimum wage, which will not net those temps $50,000. That’s a lot less economic punch than we might get from the 10,000-15,000 temporary jobs the 2017 Holiday Shopping Season created for several weeks, not one or two.

How about the real bump in sales of goods and services tied to the Super Bowl? That is ascertainable in the coming months. Sales and related tax receipts get reported to at regular intervals. Sales taxed at 4% are multiplied by 25 to estimate the total gross revenue. Comparison with last year’s figures (and adjustment for a little inflation and population growth from last to this year) should give us a reasonable estimate. Let’s say from $30-50 million in new direct revenue, largely in Minneapolis, almost exclusively in the Metro area. With some multiplier for indirect and induced “ripple” revenue maybe that doubles to $60-100 million. That’s positive revenue, but it’s not without direct (and unreimbursed) expenses incurred by Minneapolis, the Metro and the State of Minnesota. And indirect costs in the way of lost work time –those volunteers from Target could have been helping you find a blender in aisle 5– and traffic, etc. Let’s charge $30 million in expenses so that maybe the net direct, indirect, and induced income (revenues less expenses) is from $30-70 million. Not bad, but I’ll bet the Ryder Cup beat that number, and didn’t need $500 million in taxpayer funds to construct a stadium to do it.

Lastly, what about the intangibles tied to the Super Bowl? The world saw Minneapolis and the Twin Cities. They saw a city and Metro area that is welcoming, well-organized and, well, warm. Even when it’s -10 degrees outside. That’s valuable. Here’s a nice article about those intangibles written in the LA Times recently: I think that’s worth something, especially to Minneapolis and the city tourism and convention agencies as well as to local area businesses that headquarter in Minneapolis. But residents in Rochester, Mankato, Rousseau and Grand Portage also paid taxes that went to financing US Bank Stadium and to financing some of the expenses incurred by the State of Minnesota to host this football lollapalooza. What did they get? Hmmm.

The Super Bowl is done and so is the business boomlet for Minneapolis and the Twin Cities. It’s a lot less than was promised to us, but it was still positive. And there are some area businesses that definitely benefitted: Polaris products buzzing around a snowly Minneapolis; Taylor Corporation’s Timberwolves and Lynx seeking the next big NBA or WNBA event at the Target Center; Minneapolis as a city that works, even at -10 degrees. But let’s not get rhapsodic. The game is done, the NFL is gone, and all of us are getting back to work…after bundling up properly. That’s Minnesota in winter. Now, let’s get back to business.

Last week’s business boomlet at home contrasts with a finance “bustlet” on the New York Stock Market. Drops in the Dow Jones Industrial Index of about 600 points (2.2%) last Friday and about 1200 points (4.7%) last Monday have us all wondering: What gives? I’m not going to repeat many prognosticators who have reminded us that stock markets go down as well as up. What this latest development does tell us is that stock markets can shift faster than the underlying economic fundamentals they try to anticipate. That’s right. Stock prices reflect the future, not the past. They tell us what its worth today to have a claim on future earnings (and a vote on who runs the companies cranking out those future earnings). The outlook on future earnings at many US firms went down when employment figures remained strong and wages for the employed showed a broad increase. That’s something economists have been looking for for years. Now we see it and markets get spooked. They think wage increases mean inflationary pressure and substantial interest rate hikes. And then the Era of Cheap Capital comes to an end.

Maybe so, but maybe not. Wage increases paired with labor productivity increases are not necessarily inflationary. Last year (2017), US labor productivity rose 1.7%. Wages didn’t budge; hours worked increased instead. So let’s say we see another 1.7% increase in labor productivity in 2018. Maybe workers (and our economy) can afford 3-3.4% increases in wages without fear of stoking inflation. Another variable to watch is the price of oil. A barrel of West Texas crude is about $64 today, up about $50 a barrel last August. Energy goes into everything we produce, but bringing the cost of energy down is anti-inflationary. Productivity, oil and a little level-headedness.

This Tuesday, February 13 at 11am Dave and we will be broadcasting from the Carlson School with our Business by Carlson Quarterly Report. Valentine’s Day is just around the corner, but Dave and I are having a chat about –what else– the Business of Romance! Flowers, candy, dinners, and so much more generate more than $18 billion in sales in early February. We’ll talk about how and why businesses capitalize on sentiment and emotion along with great panelists like my Carlson faculty colleague, Vlad Griskevicius ( and Hope Wixon of Wixon Jewelers ( You can learn more about the event the Carlson School and WCCO Radio websites. Listen on WCCO or come on down to the Carlson School ( at 11am. It’ll be informative and a lot of fun!

To hear today’s edition….Listen here!


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