BIG GAME, BIG IMPACT?
NFL’s showcase will boost city, but views differ on how much
WHEN: FEB. 5, 2017 • WHERE: NRG STADIUM • WHO: AFC CHAMPION VS. NFC CHAMPION
With the Super Bowl coming to Houston in just 100 days, Sherronda Scoggins has upped her game.
After making the list of qualified vendors ready to supply the hundreds of official parties and events in the runup to the big game, Scoggins took out a line of credit to build a walk-in flower refrigerator and to fill her small warehouse with the inventory she would need to decorate Houston’s biggest venue. And if it pays off, she might be able to expand into the space next door and hire workers.
“Hopefully, if the Super Bowl is good enough to us, we’ll get a truck,” says Scoggin, whose company, KC Events and Florals, operates on the labor of her family and temps. “Our own truck with our own name on it.”
It’s a gamble that much of the rest of the city is making, too, hoping that investments made to capitalize on the mega-sporting event will help the local economy grow long after the hype, hoopla and estimated 150,000 visitors leave Houston. Multimillion-dollar projects that could enhance transportation, boost tourism and burnish the city’s image are underway, propelled by the urgency to get them done for the Super Bowl.
Those projects range from the new Marriott Marquis hotel to an upgraded George R. Brown Convention Center to
road, landscape and other improvements near NRG Stadium, Hobby Airport and local highways. At the same time, political, civic and business leaders say, the international attention brought by the Super Bowl also could pay dividends in the long term, showcasing the city’s increasingly diverse economic base, blossoming downtown and potential as place to live, work and invest.
The economic benefits of hosting a Super Bowl and other major events have long been a matter of debate, however. Houston’s host committee has yet to release its impact analysis, but these reports typically estimate that Super Bowls generate economic activity in the hundreds of millions of dollars. Academics who study such events generally find the added activity, with all the costs taken into account, is much smaller.
“I can’t tell you whether there will be a zero net impact or a modest positive one,” says Andrew Zimbalist, an economist at Smith College who has long studied the sports industry, “but it’s not going to be large.”
Houston, though, may be better prepared to benefit from the Super Bowl than other cities, for several reasons. First, there isn’t much winter tourism in Houston to displace, as in other Super Bowl cities such as New Orleans and Miami, so the net gain here is much greater. Second, Houston’s hospitality industry needs the business, with new hotels built during the shale boom struggling with lower-than-expected occupancy rates as business travel declined.
Third — and perhaps most important — the city really could use a period of prolonged exposure to show business leaders and the millions watching at home that it’s not just a stodgy oil town like it was in the early 2000s. Different times
The last time the Super Bowl came to Houston, in 2004, the city didn’t have to fight for it. The game was a reward to Bob McNair, who had overpaid to buy the Texans, and to the city, which financed most of the cost of NRG Stadium, then called Reliant. While the city and the host committee prepared for the attention the event would bring, hastily finishing street projects and planting trees along the highways, the planning didn’t go much beyond that.
This time, the process was different. The bid package submitted by the city and host committee two years ago included assurances for facilities that would be available for NFL events, transportation options that would be put in place, and security that would be provided.
The city now has about 84,000 hotel rooms, compared to 44,000 in 2004. To leave those visitors with a good impression, the Greater Houston Partnership is planning parties and meetings at its shiny new headquarters — financed by the city’s hotel taxes — overlooking Discovery Green.
The partnership’s focus has changed from 12 years ago. President Bob Harvey said the marketing effort is aimed not only at making the high rollers aware of Houston’s business opportunities but also projecting an attractive image to potential employees.
“Back then, it was all about pitching to CEOs, and frankly their spouses,” Harvey said. “Now, even when you’re talking to a CEO, they want to know what the young talent wants.”
The accounting firm PwC has estimated the economic impact of the Super Bowl since 2003, pegging the game’s value to Houston in 2004 at about $130 million in direct spending. It estimated that the last Super Bowl, number 50, was worth $220 million to the San Francisco Bay Area.
Cities have gotten better at making the most of Super Bowl week, said Adam Jones, a PwC analyst. By planning events within a relatively small radius so visitors spend more time on experiences than getting to them, cities can capture greater returns.
Houston has done that, with NFL Live at Discovery Green — a 10-day music and food-filled festival open to the public — only a few minutes from NRG Stadium via light rail or taxi. Additional bus and shuttle lines will be available should guests want to venture to the Galleria as well.
“What we’ve seen within the past five years is communities going out, learning what has worked, what hasn’t worked in cities that preceded them,” Jones said. “We continue to see year over year improvement in the model.” Hard to measure
University of Houston economist Bill Gilmer looked at additional tax revenues generated during the 2004 Super Bowl, about $5 million, and estimated the 2017 edition would bring in an extra $6.6 million in sales taxes for the city plus another $2.2 million in hotel occupancy taxes and $6.8 million for Metro.
Longer-term benefits are harder to measure. The city’s tourism promotion arm, Houston First, said it was able to go after bigger conventions when the Hilton Americas was completed in 2004. That added 1,200 rooms directly connected to the convention center, and the Marriott Marquis will have a similar effect. The city booked a record number of room nights for future conventions in 2015 and expects to break the record again this year, according to Houston First.
Although city government will incur costs to help put on the party — about $5.5 million, mostly for security, according to special events coordinator Susan Christian — all of that will be reimbursed by the host committee. So will the cost of rent for the convention center, which the NFL receives free of charge.
The state also will kick in money to cover the expenses of host committee and other entities from its major events trust fund, which is supplied by taxes on sales, hotels, alcohol and rental cars. In 2011, the fund awarded Dallas $32.1 million, forecasting that the event would generate about $26.8 million in extra tax revenue; the Houston host committee expects a state contribution of $20 million to $25 million.
The Department of Homeland Security also provides funding for security, since the Super Bowl ranks as a high-profile terrorist target.
Other costs are more subtle. For example, the NFL required that all sizable public venues — from parks to downtown theaters — be reserved for Super Bowl-related events. They’ll release those they don’t need at the end of this month, but that leaves little time for planning other events.
In addition, the city designated five “clean zones” around areas with major Super Bowl activities — including most of downtown, the area around NRG stadium, most of the Galleria, and spots in Memorial City and Midtown — where commercial activity will be limited by agreements with sponsors. That means local businesses could lose out.
Finally, there are the projects to make sure the city looks its best, such as $300 million in hotel taxes going into the east side of downtown for a pedestrian-friendly Avenida de las Americas, a new facade for the convention center, and other projects. The city and county are spending nearly $20 million on road upgrades around NRG Stadium and even more on the strip of Broadway leading into the city from Hobby Airport, which is new pavement, better lighting and gravel paths and plants along the median.
It’s a welcome sight for Trina Love, who’s lived in the area for 20 years and never seen much improvement.
“They want to make it look nice so people will come back,” she said. “I think it’s going to be much better.” The begging model
At the end of the day, the success of the Super Bowl is up to the host committee. A lot of that has to do with begging big companies for money, and it’s a good thing Houston didn’t wait.
The committee signed on most of its “founding sponsors” in the first half of 2014 — big companies like Anadarko, Chevron, ConocoPhillips and Halliburton — before the bottom fell out of the oil industry.
“If we were raising money now from energy companies, it would be very difficult,” said host committee chairman Ric Campo, CEO of Camden Properties, which owns and operates apartment buildings.
Still, that netted only $30 million of a $50 million budget. The rest of the money, for which the committee is looking to perennial Super Bowl sponsors like Pepsi and Doritos, hasn’t come easy either. In September, the committee still had $10 million to go.
Raising the full amount matters because the host committee doesn’t just pay for things the NFL requires. It also can underwrite events that showcase neighborhoods and local businesses and give residents a way to participate.
But neighborhood leaders are worried the benefits of the Super Bowl will stay downtown. Gordon Quan, a former City Council member who serves on the host committee’s community council, is trying to organize a series of events showcasing local restaurants, but the funding promised by the host committee has yet to arrive.
“There’s a lot of uncertainty and discourage- ment,” Quan says. “We’re running out of time, and if they’re not giving us money, we have to go pitch to other people.”
Diane Schenke, president of the Greater East End Management District, voiced similar concerns.
Campo said the host committee has a lot of requests and limited funding, so everybody can’t get what they want. Campo noted that the committee has retained 50 local vendors for various tasks, such as event production.
Sherronda Scoggins has been busy making alliances with big event producers that might give her a subcontract and smaller ones that might assist if she gets the call. Even if the phone doesn’t ring, she says all the investment and education will be worth it because of the connections she’s made and the potential for new business.
“If nothing comes out of Super Bowl, something comes out of Super Bowl,” she says. “The whole point is to be prepared.” lydia.depillis@chron.com twitter.com/lydiadepillis