Nearly 60,000 people visited Arizona for the Valley’s first-ever NCAA Final Four basketball extravaganza.
On average, they stayed for more than four nights and spent nearly $500 per day.
Their total direct spending totaled approximately $122 million. Including other expenditures, plus “ripple” effects, the Valley’s latest mega sporting event had a $324.5 million economic impact.
That’s a bigger jolt than any other such huge event for the Phoenix area outside of a Super Bowl.
These were among the findings of a study conducted by the W. P. Carey School of Business involving several faculty members and about 25 students.
W. P. Carey has become a national leader in conducting such studies, having started with a simpler marketing study by Michael Mokwa for the first Super Bowl staged in the Valley, the 1996 game at Sun Devil Stadium between the Dallas Cowboys and Pittsburgh Steelers.
Ever since, Mokwa, a professor of business and marketing and Pat Tillman Foundation Distinguished Professor, and his associates have been studying everything from auto races, bowl games (including two more Super Bowls), ASU football, and the Phoenix Open golf tournament to calculate economic impacts.
“We do everything face to face; that makes us different,” Mokwa says. “Rather than look at hotel data and other secondary data, we go out and talk to the people who are coming to these events. We ask them directly how much they’re spending and why they’re here. We were one of the first who has consistently benchmarked within a state all the mega sporting events. Over this period, I don’t know anybody else who’s done that much or had that much experience focusing on these issues.”
Learning how to host iconic events
April’s Final Four capped a remarkable three-year run for the Valley that started with the 2015 Super Bowl and then the 2016 NCAA championship football game. “With the success that we’ve had in recent years, I’d have to say when it comes to hosting iconic events, nobody, and I mean nobody, does it better than the state of Arizona,” Gov. Doug Ducey said at an Aug. 9 news conference at University of Phoenix Stadium in Glendale to announce the W. P. Carey study results. Ducey said he expects Arizona to continue to compete for mega sporting events whenever the opportunity arises.
The Valley’s experience in hosting these events has allowed local officials to learn and grow in expertise. Mokwa recalls the Super Bowl in 2008 when hundreds of media people were headquartered in a sleepy downtown Phoenix; they headed to Scottsdale or Tempe for entertainment and nightlife. For the 2015 Super Bowl, an entertainment district had been set up downtown that drew massive crowds. Mokwa’s favorite stories involve kids from around Phoenix who ventured downtown and interacted with team mascots and enjoyed the festivities.
Those young people “didn’t just watch the Super Bowl on TV; they participated in the Super Bowl.
“I think that’s invaluable to the community … not just to get (visiting) CEOs here but to engage our whole community and provide experiences for everyone, that’s where Phoenix does it better than everybody else.”
For this year’s Final Four, a music festival featuring the rock band Aerosmith drew throngs to the deck park just north of downtown the night before the title game. The Final Four also offered an open-practice day on Friday, March 31, where fans could watch their favorite teams; the two national semi-final games on Saturday; an open day on Sunday where fans traveled the state or played golf; then the championship game on Monday night.
“It was much more fan friendly,” Professor of Marketing John Eaton, who also worked on the study, says of the Final Four vs. Super Bowls. “Fans of the teams coming from other locales had more opportunities to interact with their teams, where Super Bowls are tightly held.”
Fans came in groups chartered through their universities and stayed at team hotels, “as opposed to a Super Bowl that doesn’t have that same alumni network that colleges do.”
The Sunday off day was particularly attractive. “What we found as part of our survey, people went to Sedona; people went up to the Grand Canyon and around the state of Arizona.” More than 3,100 visitors played golf during their Arizona trip, according to Eaton’s data.
The participation of about two dozen W. P. Carey students was crucial. The students are trained in how to approach people and ask such sensitive questions as how much money they are spending and how they are spending it (hotels, restaurants, and bars). “I will still run into students who are now working in the industry, and they will talk about just going out and collecting data and being part of that interaction,” Eaton says.
One student who worked on the survey quizzed somebody who turned out to be a Phoenix Suns’ executive, he says. “He said, ‘Come work for the Suns.’ So, she interned this summer for the Suns.”
The experience in gathering data is “a great thing to put on resumes” as well as being able to say, “I’m part of these world-class events. “That separates them from all the other students who don’t make an effort to do so.”
Along the way, students learn best practices for putting on these mega sporting events.
“How do you put on a press conference where your governor is the primary speaker, not just an academic professor who did a study like this?” Mokwa points out. “So, they learn how to be very competitive both in traditional areas of sports management, working for the Diamondbacks or the Cardinals, but even more so in these particular events and special activities.
“These students are looking for an advantage to break into the industry or improve their position in the industry.”
“Sports is a driver of community pride, as well as economic value and return,” Mokwa says. Because of this practical experience, “Students start understanding that.”
Students such as Sam Minton and Maddie Redmond agree.
Minton, a senior with a double major in business data analytics and sports and media studies, was struck by “how many moving parts go into an event like this.”
“I think at first, from an outside perspective, you think, ‘This is just a basketball game, and some companies are going to be advertising.’ But when you go there you honestly see how many pieces come together to put on a big production like this.
“They had everything from carnival games, a concert, a pre-game show, and that’s not even getting to the actual basketball game that went on at the football stadium.”
Asking strangers for personal information can be a challenge, but surveyors such as Minton explain the forms are anonymous and can’t be traced to anyone. The surveyors target out-of-state visitors, “chit chat” about their experiences in Arizona, “and then kind of lead into what you are studying,” Minton says. “Usually people were pretty nice. Some people weren’t interested. But that’s expected.”
Redmond, the president of the Sports Business Association at ASU, worked on economic impact studies at the College Football Playoff title game in 2016, as well as the Cactus Bowl. For the Final Four, she volunteered as a community ambassador at the Fanfest in downtown Phoenix and the event site in Glendale. Filling out surveys isn’t exactly top-of-mind for people going to perhaps a once-in-a-lifetime event, so some gentle persuasion is “kind of like working on your sales skills. “It’s a business skill,” she says.
Gathering such information may seem like a simple task, “But with that information, it’s going to be put in press releases, announced by the governor at a news conference,” Redmond explains. “You get a chance to be part of something huge. Without students doing that, they wouldn’t have the information they need for those studies.”
Redmond had a chance to walk through the numbers that faculty members produced for the College Football Playoff. “Seeing the results was the most exciting thing to me. Seeing these numbers and understanding that the information that I provided through these surveys impacted this. And these figures matched the faces of the people I interviewed. Just being able to know you made an impact and helped with something was the biggest thing to me.”
Aside from the economic impact, Redmond says she came to realize the depth of people’s commitment to their teams, with fans from around the country chartering buses and selling out hotels. “I don’t think you see that kind of camaraderie or support in any other area or any other place other than sports.”
Crunching the numbers
The study by W. P. Carey’s Seidman Research Institute determined direct spending from out-of-state visitors (including media members) totaled $121.7 million, while spending from out-of-state organizations totaled $38.2 million.
On average, visitors spent $487 per day and stayed 4.16 nights (media members stayed 5.1 nights and averaged $408.64 per day). The average spending on hotels was $138 per night.
State and local governments received $11.7 million in tax revenue.
To measure “ripple” effects, the study used a mathematical model popular with economists called, IMPLAN, says Professor Anthony Evans, who worked on the calculations and is a senior researcher at the L. William Seidman Research Institute.
When these impacts are added, the total impact was measured at $324.5 million. This compares to a total of $752.7 million for the 2015 Super Bowl and $282.4 million for the 2016 College Football Playoff title game.
Skeptics have argued that such impact studies tend to exaggerate the benefits of sports events and teams. They say such spending merely shifts funds from some sources to others, with little net benefit. While this could hold true on a national scale, Evans says the Final Four numbers (and others that were done by W. P. Carey) only measure out-of-state money flowing into Arizona.
“We’re not looking at re-circulation of money inside the state,” Evans says. “That is the critical thing. “We’re only looking at money that comes in from people and organizations from outside the state. That money wouldn’t have been spent in Arizona. So, no, I think (any criticism) is nonsense. The number ($324.5 million) is solid.”