Scott Ball / Rivard Report
Want to book late-to-the-game lodging in San Antonio for the NCAA Men’s Final Four? Then get ready for a new kind of March Madness: a challenging search and a punch to your wallet.
Two of the largest hotels, the Grand Hyatt (1,002 rooms) and Marriott Rivercenter (1,001 rooms), are sold out for the three-day basketball event, March 31-April 2. The Hyatt Regency reports that 600 of its 630 rooms are contracted with the NCAA and the rest are booked. The Courtyard Downtown, Doubletree Downtown, and Crockett Hotel say they have no rooms available.
Reservationists direct callers to alternative hotels with a warning: For the few rooms left, be prepared to pay at least $400 per night with some daily rates starting at $630 and rising to $1,000.
Less than two weeks before March Madness descends on the Alamodome, business prospects look very promising. Local economist Steve Nivin projects the Final Four will attract 93,000 out-of-town visitors and inject more than $185 million into the economy.
“The Final Four will bring a huge influx of visitors to the city and their spending will be a big boost to a variety of businesses in the area,” said Nivin, assistant professor of economics at St. Mary’s University. “Most of these businesses will be restaurants and hotels and others in the hospitality and entertainment industries. But many other businesses, like construction, marketing, event production and performance artists, will be positively impacted through all of the other activities that occur in hosting such a large event.”
Nivin expects the number of visitors to exceed the Alamodome seating capacity of 69,228. Why? Many will come to attend ancillary Final Four events, such as the Music Festival, featuring Maroon 5 and Imagine Dragons, and the Final Four Fan Fest.
According to Nivin’s report, visitors will spend an estimated $53.3 million on lodging, $52.2 million on entertainment and shopping, $40 million on food and non-alcoholic beverages, $18.1 million on alcohol and mixed beverages, and $3.8 million on rental cars. The City is expected to spend $18.4 million to produce the event. Production costs include employment, construction, motion picture, and video and security.
“Our downtown businesses are extremely excited about the upcoming Final Four games,” said Richard Perez, president and CEO of the San Antonio Chamber of Commerce. “The event will mean opportunity for small and large businesses alike.”
According to the North Texas Commission, a public-private partnership of cities, businesses, and higher education institutions, the 2014 Final Four in Arlington pumped $276 million into the North Texas economy. According to the Houston Business Journal, Houston recorded a 2.1 percent increase in sales growth during the 2016 Final Four compared with the same time in 2015.
Some academics, however, are skeptical about the economic benefit Final Four host cities enjoy. A 2003 report by two sports economists concluded that economic impact studies embellish projected windfalls.
After studying Men’s Final Fours from 1970-1999 and Women’s Final Fours from 1982-99, authors Victor A. Matheson and Robert A. Baade wrote, “The evidence suggests that the economic impact estimates provided by Final Four promoters routinely exaggerate the true economic impact of the event.”
Matheson, a professor of economics at College of the Holy Cross, and Baade, a professor at Lake Forest College, also wrote, “[T]he economic impact for host cities for the year the event is hosted is on average small and negative for the NCAA Men’s Final Four and small and positive for the Women’s FF. The economic impact, particularly for the men’s tournament, appears to fall short of booster claims of a financial windfall.”
The Rivard Report sent a copy of the Matheson-Baade report to Nivin, director of the SABÉR Research Institute, an economic development think tank that provides research to local government and businesses. After reviewing the report, Nivin said he stands by his projections.
“I’ve seen impact studies that I thought were overblown,” he said. “I can tell you in this study we were as conservative as possible. I wouldn’t put it out there if I thought the numbers were not any good.”
The Matheson-Baade report noted that economic impact studies often fail to consider that a lot of money spent at chain hotels ends up at corporate offices outside the host city, a factor known as “leakage.”
“The impact model we use does account for leakage,” said Nivin, who has conducted sports economic impact studies for the past 15 years.
The Rivard Report showed Nivin’s study to Matheson, who has written for FiveThirtyEight.com, a data journalism website. Matheson said he found two flaws: Nivin failed to account for “crowding out” and underestimated “leakages.”
“Lots of people avoid cities with major events,” Matheson said. “So even if you do get 180,000 hotel room nights from Final Four visitors, the net increase in visitors usually comes in about one-tenth that figure. Also, there’s no doubt that hotels on Final Four weekend in San Antonio will be selling at two or three times their normal rate – but the wages of desk clerks and room cleaners won’t be increasing by two or three times. Profits will be shipped back to corporate headquarters.”
While the retention of hotel dollars might be debatable, the sudden boom in business is not. Downtown hotels are turning away customers, selling out for a holiday weekend when they are not normally full. The few rooms available are tripling or quadrupling in price.
The 2008 Men’s Final Four injected a reported $97 million into San Antonio’s economy. A decade later, later, Nivin projects an additional $88 million in direct spending, a gift for a city celebrating its Tricentennial.
One reason for the new projection is the renovated Alamodome. The seating capacity has increased 63 percent, from 43,718 in 2008 to just under 70,000. More fans, not all from outside San Antonio, are expected to spend more money, and ancillary events are expected to generate considerable spending.
“Everybody is really excited,” said Jenny Carnes, executive director of the San Antonio Local Organizing Committee. “You can feel it from businesses and hotels downtown to volunteers in the community. We launched a volunteer program in November and it took us three weeks to recruit the numbers we needed.”
Final Four visitor spending will not be limited to hotels and businesses downtown.
“There will be spending throughout the city,” Nivin said, “as people venture out to engage in other activities, like visiting the Pearl or the Missions, going to Fiesta Texas, visiting a museum, or going shopping at La Cantera.”