Arrow-right Camera

Business

Glendale leaders look for big return on investment

Thu., Jan. 31, 2008

GLENDALE, Ariz. – Landing the Super Bowl is making the huge bet made on sports-related development in this Phoenix suburb look like a winner. But it could be years before taxpayers find out whether the tens of millions of dollars in debt they could be on the hook for turns out to be a wise investment.

The NFL will play its biggest game in a stadium that didn’t exist when the rights for the 2008 game were awarded five years ago. The sleek $455 million facility opened two years ago on what was little more than a hardscrabble patch of cotton and alfalfa fields 16 miles northwest of downtown Phoenix.

Voters in Maricopa County approved it primarily to lure the NFL’s Arizona Cardinals from the team’s previous home at Arizona State University’s stadium in Tempe. But the real payoff always was viewed as the bonanza that would come from hosting Super Bowls after the NFL made it clear the ASU stadium used for the 1996 game was too shabby for another championship.

This week, as players, fans and celebrities descend on Glendale, city leaders are celebrating their new stature among tourist destinations. Their experience serves as a prime example of the transformative abilities of professional sports, including the estimated $400 million windfall that boosters claim comes from hosting a Super Bowl.

During the past few years, Glendale has scraped away many of the old farms on its far west side to make room for a sports and entertainment district that will pull in business once slated for Phoenix.

Next to the football stadium, developers recently built a hockey arena for the NHL’s Phoenix Coyotes, along with high-end specialty shops, restaurants with valet parking, and a huge fountain that squirts water in time with rock music. Nearby, the city broke ground in November on a spring training facility for the Los Angeles Dodgers and Chicago White Sox.

Almost at once, Glendale’s urban center moved from a quaint row of antique shops in its historic district to a patchwork of new developments on the west side. “The community decided they wanted to be a little bit more,” said Glendale City Manager Ed Beasley.

Beasley and other Glendale leaders fought hard for this, beating out bids from Phoenix and two suburbs on its east side, Mesa and Tempe, for the state-financed football stadium.

The city also issued or guaranteed about $150 million in debt for the hockey arena and has made big infrastructure investments in the area, according to Deputy City Manager Art Lynch.

During the past six weeks, Hampton Inn, Residence Inn and a SpringHill Suites opened hotels in Glendale. The combined 700 new rooms almost doubled the amount of hotel space the city had to offer last year.

All three immediately jacked up prices for the Super Bowl rush. Hampton Inn has no vacancies for Super Bowl weekend despite boosting its nightly rates from about $219 to $799.

Tim Hogan, an economist at Arizona State’s W.P. Carey School of Business, said the Super Bowl has a huge economic impact, comparable to an entire year’s worth of NASCAR and other events at Phoenix International Raceway.

Hogan, who in 1996 studied the spending habits of tourists attending the Super Bowl in Tempe, said sports fans showing up in Glendale are the perfect demographic for making money. “They’re big spenders,” he said. “And unlike a Cardinals game, pretty much everybody is from out of town.”

Super Bowl tourists not only give a short-term boost to restaurants and hotels, they help drive the rest of the economy by creating a greater demand for companies that supply goods to restaurants and hotels, Hogan said.

Still, he said, the net Super Bowl impact on the economy is likely to be much less than advertised, given the amount the cities are spending to prepare for the game. “The net impact is not going to be $400 million,” he said.

Arizona’s Joint Legislative Budget Committee estimates that spending by Super Bowl tourists will boost state sales taxes by $3.6 million to $5.5 million. That’s based on an assumption that 90 percent of people at the game will come from another state and 17,000 others arrive without tickets simply to take part in the festivities.


 

Click here to comment on this story »