Jewish World Review April 16, 2004 / 26 Nissan, 5764
What the convention is worth
If there is one thing that Boston's politicians, journalists, and corporate eminentoes seem to know for a fact, it is that the Democratic National Convention will more than pay for itself by showering the city's economy with $150 million in new economic activity.
That claim has been made so often and by so many people that it has all but assumed the status of common knowledge. It appears in scores of news stories some of them dating back to long before Boston was awarded the 2004 convention ("City officials estimate landing the DNC convention . . . would add more than $150 million to the local economy" Boston Herald, June 21, 1998). Mayor Thomas Menino has happily pointed out that $150 million will amount to a return of "three times [the city's] investment." The head of Greater Boston's visitors bureau hails the convention and its "impressive" $150 million economic impact as evidence of "Boston's status as one of the top destinations to visit in the United States." The $150 million payoff is cited at the official website of the Democratic National Convention, www.Dems2004.org. It is cited as well at the convention's unofficial website, www.2004dnc.com.
There's just one thing wrong with this lucrative convention dividend. It's pie in the sky.
According to an analysis released this week by the Beacon Hill Institute at Suffolk University, the convention's net impact on the Boston economy is going to be not a gain of $150 million, but a loss of $12.8 million. Why the drastic difference? Because unlike the cheerleaders who keep chanting "$150 million! $150 million!" the economists at BHI live in the real world. And in the real world, huge public events like presidential nominating conventions do more than rain benefits on the cities that host them. They also impose heavy costs.
Consider Sail Boston 2004, the Tall Ships extravaganza that was expected to draw an estimated 500,000 visitors to the city's waterfront for six days in July. Sail Boston would have meant $85 million in direct spending on everything from T-shirts to charter boats to bar tabs. But the Tall Ships had to be cancelled to make way for the Democratic convention, so that's $85 million the Boston economy will never see.
To that lost revenue, add the $15 million or so that vanished when Boston had to relinquish the US Olympic Gymnastics Trials, which were supposed to be held at the Fleet Center at the end of June. The Boston Celtics, it was reported last week, will probably have to cancel the Reebok Summer Pro League, a yearly tournament that draws thousands of basketball fans to the University of Massachusetts at Boston. Those fans all come with money to spend, but they won't be coming this year another economic hit you can chalk up to the Democratic convention.
Then there is the looming transportation nightmare that already has Boston commuters breaking out in hives. Interstate 93, the city's major north-south artery, is going to be shut down in both directions for all four nights of the convention. North Station, a major portal, will be closed to all commuter rail and subway service. Scores of thousands of commuters will find themselves stuck in the mother of all traffic jams, or forced to take roundabout, time-consuming detours. Estimated loss: 775,000 work hours. According to the Beacon Hill Institute, that translates to almost $23.8 million in squandered economic productivity.
And those aren't the only losses the convention will generate. Thousands of people who work in or near Boston are planning to avoid the city altogether while the convention is in town. Businesses are announcing plans to shut their doors until the Democrats have gone. One Massachusetts politician, US Representative Michael Capuano, has actually encouraged local firms to "consider a snow week in July." Pay employees not to show up, in other words. That too will be a cost of bringing the Democrats' fiesta to Boston.
It may not be possible to put a precise number to all of the convention's negative economic effects all the tourists who end up staying away, all the events that don't get scheduled, all the sales that don't get made, all the dollars that don't get spent. There may be no way to know at least not yet how many of the convention's expenses are going to come in way over budget. (The experience of the last Democratic convention is not encouraging: Los Angeles budgeted $8.3 million to host the 2000 convention. It ultimately spent $35 million). But all of those costs are real real enough to turn a $150 million windfall into a nearly $13 million net loss.
None of this is meant as an argument against hosting political conventions. It's an argument against forcing taxpayers to subsidize political conventions, and then telling them lies about what they're getting for their money. The Democratic National Convention may well be worth hosting for reasons of civic pride or history, especially in a year when a Boston native is to be nominated for president. Why not leave it at that, and stop peddling the phony claim that we're going to make money on it, too?
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