Final Four and NCAA and Butler University and Lucas Oil Stadium and Sporting Events and Sports Business

VIDEO: The mysteries of predicting Final Four's impact

April 2, 2010

A debate has been raging about whether Butler University’s well-earned spot in the 2010 Final Four will blunt the estimated $50 million in local economic impact for host city Indianapolis. In truth, predicting the event’s true economic impact is fraught with unknowns and rough calculations.

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“It’s exactly inexact,” Bill Benner, director of communications for the Indianapolis Convention and Visitors Association, said of the $50 million estimate. “What we have consistently said is we hope that it will be in excess of $50 million, but we don’t know.”

NCAA studies of past Final Fours provide some basic parameters for visitor spending. For example, an analysis of the 2006 Final Four in Indianapolis found that the event attracted 44,392 visitors, and the average visitor stayed 4.1 days and spent $227.84 per day on lodging, food, sundries and other expenses.

But Butler’s barnstorming run to the semifinals adds uncertainty. Will the majority of Butler fans stay in hotel rooms and eat out for every meal, like other visitors?

Sports economist Patrick Rishe says the home-team deflation factor could cut economic impact by 5 percent to 15 percent. Rishe also raises the specters of “displacement”—subtracting how much the city would have benefitted from tourism on a normal weekend—and whether money spent in Indianapolis actually stays in Indianapolis. The effects can vary wildly, depending on the city.

In the video above, IBJ's Mason King looks at the 2006 Final Four study, projects how much visitors may spend on big-ticket items this year, and runs through the factors that make estimating economic impact such a guessing game.
 

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