The World Cup appears to have delivered exactly the kind of spectacle its American host cities hoped for. International visitors filled hotels, packed restaurants and brought an unusual energy to cities that rarely find themselves at the center of the global sports world.
According to a July 20 article in The Wall Street Journal, the Scots drank Boston dry, Dutch fans filled Kansas City hotels and French visitors ate their share of Philadelphia cheesesteaks. The Journal reports that soccer fans “opened their wallets and boosted spending” across host cities, with places such as Kansas City and Philadelphia apparently enjoying particularly strong increases in tourism.
That sounds like a successful event. It does not necessarily amount to economic growth.
The distinction matters because cities routinely justify public spending on stadiums, convention centers and major sporting events by promising an economic return. Increased hotel occupancy and restaurant sales are certainly good news for the businesses receiving that money. But measuring the economic effect of a major event requires considerably more information than anecdotes about busy hotels and crowded bars.
The Journal article itself acknowledges that the complete tally is still being calculated. Yet its headline describes a “surprise economic boost,” while the story says some business owners are already “claiming economic victory.” Based on the evidence presented in the article, however, what host cities experienced was an increase in tourism and visitor spending. Those are measurable and worthwhile outcomes. They are not, by themselves, evidence of net economic growth.
To establish that, analysts would need to answer several additional questions.
How much of the spending was genuinely new to the local economy? How much spending by residents was simply shifted from one business to another? Did regular tourists avoid host cities because of higher prices or crowds? How much did local governments spend preparing for and hosting matches? And how much of the revenue generated by the tournament ultimately remained in the local economy?
Economists studying major sporting events have long warned about these effects. The most important is substitution: A local resident who spends $100 at a World Cup event may have spent that same $100 at another local restaurant, theater or entertainment venue. From the perspective of one business, the tournament generated additional revenue. From the perspective of the metropolitan economy, much of that spending may simply have moved around.
Then there is displacement. Major events can attract visitors while simultaneously discouraging people who would otherwise have traveled to the city. Hotels may be full and room rates may rise, but that does not tell us how much additional economic activity occurred compared with what would have happened without the event.
None of this means the World Cup was a bad deal for host cities. Quite the opposite may eventually prove true. Kansas City, Philadelphia and other hosts could benefit from international exposure, repeat tourism and the experience of successfully managing an enormous global event. Residents may also value the experience itself. A city does not need to pretend every public celebration is an economic-development program to conclude that it was worthwhile.
But those benefits should be evaluated on their own terms.
The early evidence described by The Wall Street Journal supports a narrower and still positive conclusion: The World Cup brought visitors to American cities and those visitors spent money. Some hotels, restaurants and other tourism businesses apparently did very well. That is worth reporting and cities should examine the final numbers when they become available.
What policymakers should resist is converting a month of visible activity into an unsupported claim of economic growth. Busy sidewalks are not a gross domestic product calculation. Full hotels do not account for public costs. A restaurant owner having a record week cannot tell us whether the metropolitan economy as a whole grew because of the tournament.
Cities competing for the next major event will inevitably hear forecasts about visitors, spending and economic impact. The World Cup offers a useful reminder to separate those concepts. Visitor counts can be measured. Hotel occupancy can be measured. Tax collections can be measured. Net economic growth is harder to establish.
The World Cup may ultimately prove to have produced meaningful economic gains for its host cities. If so, the evidence should demonstrate it. Until then, cities can celebrate a successful tournament without turning crowded bars and full hotels into an economic-growth statistic they do not yet have.