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VIDEO: The mysteries of predicting Final Four's impact

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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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  • Good Grief
    Indy is getting the Final Four on a regular basis and has a deal with the NCAA that most cities would give their "right arm" for.

    Quit whining about Butler being in the Final Four already.
  • Long term success
    The city itself may fall short of some revenue over the course of this 4-5 day period, but the benefits in the long run far outweigh any loss this weekend. So what if we are $5M down on revenue right now? Butler is making a name for itself which means an increase in applications, alumni donations, and eventually a further increase in tuition. The school can only get better from here.

    For the city/area, we will all benefit as Indianapolis will have at least two strong colleges in the city. Columbus has Ohio State, Minneapolis has U. of Minnesota, and Raleigh-Durham has both Duke and UNC. Indianapolis has strengthened its status by the improvements made at IUPUI, the announcement of the state's 2nd medical school at Marian, and now the already highly respected Butler University is proving that they can compete athletically with schools like Duke, Ohio State, IU, and Purdue and at the same time, outshine most/all of them academically. The city should be proud to have Butler win it all even if we lose a few million over the course of the weekend because we will reap endless benefits in the long run.

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