This entry is for my girlfriend, Kimberly Huber (she has a
blog, and a bucket list, and food recipes… it’s awesome, see it here). She will
run her first marathon on Saturday in Indianapolis, Indiana at the Monumental
Marathon. In the spirit of her excruciating training I will punish her further
by forcing her to read an econ blog about marathons. Good luck, Kim (with both)!
Don't forget to click on the links for a more, um, indulgent experience...
Abstract: Part 1: The guy
who ran the first marathon surely hated it too… but he died at the end.
Part 2: Bring on the
skinny tourists! Marathons’ benefit to society doesn't stop at the finish line,
it continues through the checkout line. Hosting mainstream competitions, such
as a marathon, can provide a city with a decent short term economic stimulus.[1]Today,
Mayor Michael Bloomberg (New York City) announced that the infamous ING NYCMarathon will commence on time this Sunday, bringing nearly 50,000 runners and their
families into a storm-stricken downtown. Good idea or bad?
Part 1: The Legend of a Legend: Pheidippides
In case you didn't know, the marathon commemorates a death march
of a young boy named Pheidippides (Dippy from here on out)… so think about that
when you’re complaining about your numb foot at mile 20![2]
Dippy was a Greek messenger who, according to my favorite version of the
legend, ran a total of 300 plus miles before collapsing to death. The Persians
were at war with the Greeks in and around Athens, so Dippy ran 150 miles from Athensto Sparta to ask for help, then ran back another 150 miles to fight in the
Battle of Marathon. He survived it, because, you know, ya’ can’t kill a man who
just ran 150 miles very easily, and was immediately sent to Athens to tell of the
good news. After the 26 mile jaunt, he burst into an assembly, yelled “We win!”
and died. The official distance of 26.2
miles began in 1921 to commemorate the 1908 marathon which was extended .2
miles to finish in front of the Royal Box in London[3].
Part 2: Marathons, not your average tourist attractions
Many states have tourism taxes designed at capturing a
little extra revenue from those bedless, kitchenless, transportationless
visitors who frequent their municipalities from the great unknown (see what this
means for Texans here). For example, Hawaii, a state that thrives on tourism, established
the Tourism Special Fund in 1998 which collects taxes from hotels, vacation
rentals, and other transient accommodations. They use the fund to generate additional
tourism through hosting mainstream events. In 2007 the Fund was roughly $70
million, 10% of which went to the marketing of sporting events like surfing
championships, PGA golfing tournaments, the Ironman Triathlon World
Championships, and the NFL Pro Bowl. If you’re reading this as an economist,
you’re thinking cost/benefit analysis. Baumann, Matheson, and Muroi (2009,
Journal of Sports Economics) study the return to Hawaii sports marketing by
looking at the changes in arriving flights surrounding several large sporting
events. They find that only 3 events cause a significant increase in tourism in
Hawaii: the NFL Pro Bowl, the Ironman Triathlon, and the Honolulu marathon.
Additionally, at an upper bound, the
Honolulu Marathon generated the same amount of tourism as the Pro Bowl. Hawaii
spends roughly two-thirds of its entire sports budget on the rights to the Pro
Bowl, but provides no funds to the marathon.
What does this have to do with New York City? It is no
mystery that the city has been on halt while Hurricane Sandy passed and that,
with 32 deaths, morality and ethics enter the equation. But, Mayor Michael
Bloomberg has said the race is a “go” based largely on local economic concerns,
so let’s take a very “economically positive” look at this. The New York
Marathon will attract nearly 50,000 runners and their families and friends.
These runners had to qualify (or be randomly drawn) for this race and have
known for a while that they were running, therefore it is highly likely that
their hotel rooms are booked and bags are packed. New York City collects a 5.8%
tax on hotels plus $2 per day so, assuming one hotel room per runner at an
average cost of $250 for one night (conservative), that’s $825,000 in tax
revenue from hotel accommodations alone. Although NYC charges no sales tax for
shoes and clothing under $110, everything else has a 4.5% city sales tax with
additional surcharge rates sprinkled in.[4]
Linking this to the Hawaii case study, the Honolulu Marathon attracts only
about 40% of the runners but still boasts a net increase in economic activity
of $5.1 million (Honolulu Marathon, 2008). That is, after accounting for local
economic displacement as a result of race congestion, closed roads, etc., consumer
spending increases by $5.1 million. Similarly, NYC is extending little monetary
cost to put on the marathon since most of it will be paid for by entry fees
(about $250) and sponsorships (it’s televised on ESPN2), while forgoing nothing
in the form of lost local economic activity. Storm congestion and road closures
are already inhibiting regular economic
activity. So,
disregarding moral sentiment, giving the “green light” to the race is a no
brainer. With regards to how it “should be”, I’ll act like a good economist and
stay out of that debate…
Justin Roush
University of Tennessee Economics
