Detroit’s having a bit of a down streak these days. Wouldn’t you agree?Â The nation’s automaking capital is struggling to survive through layoffs, mismanagement and blatant political corruption. And yet, this weekend, all eyes will be on Motown, as it hosts the NCAA Final Four.
Are three basketball games enough to pull a once great city from the doldrums? No. But, can they help? I don’t know.Â But Connell McShane might. He’s an anchor at the Fox Business Network, and was kind enough to give us a few minutes to discuss the economic ramifications of the Final Four.
SCP: Obviously, most of the news coming out of Detroit these days is bad. The Auto industry is crumbling, the mayor went to jail, and the two daily newspapers are essentially dead. Is this the worst possible time to be hosting an event like the Final Four? Or is it the best possible time to be hosting the Final Four?
CM: If any city needs a little pick-up, itâ€™s Detroit. With that in mind, this might be the best time to host an event like this. The fact that Michigan State made it this year certainly helps too. It might give people a little something to cheer about for a change. I donâ€™t know about any tangible economic benefits, but it canâ€™t hurt.
SCP: How much impact will the Final Four have on the local economy? Is it creating new jobs?Â Are local hotels and restaurants depending heavily on basketball fans to help rescue them from ruin?
CM: Iâ€™ve done a number of stories about economic impact of things like sporting events and the building of new stadiums, and the impact usually turns out to be pretty small. For one thing, the estimates that tourism groups throw out there are almost always exaggerated. They try to guess how much spending is going to be done at an event like this, but they donâ€™t always subtract the spending that would have been there in the first place. For example, are people in hotels just replacing those who might be there anyway for another reason? Are locals NOT going out to dinner because The Final Four makes the restaurants too crowded? I know that sounds like something Yogi Berra would say but itâ€™s usually true. The one saving grace for Detroit is things are so bad there that this spending might be mostly new money. In that respect, local restaurants, hotels and other businesses might see a temporary boost.
SCP: The entire state of Michigan is struggling. In addition to hosting the Final Four, the state is also home to one of the teams. Will Michigan State’s appearance in the Final Four have any extra impact?
CM: A lot of the tickets are sold beforehand to fans from all over the country, so Iâ€™m not sure how much impact Michigan State will have. Like the previous question, wouldnâ€™t these seats be sold anyway? Maybe more locals go but theyâ€™re likely just replacing other people, so the seats were probably going to be filled no matter what. Michigan State might help on the margin in other surrounding towns with people going out to watch the game and buying more merchandise. Again, it probably wonâ€™t hurt but I donâ€™t know how large the impact is.
SCP: How are the Big Three handling the event? Are they advertising heavily? Will we hear a story next week about auto companies using federal bailout money to buy Final Four tickets?
CM: I hadnâ€™t even thought of that but nothing would surprise me given the stories about AIG and others in recent months. Itâ€™s fair to say the automakers are a little distracted with their own business right now, but anything that can turn the focus away from finances and back to cars is a potential positive. Perhaps they use the attention to focus on some new products and great deals but theyâ€™re in a really tough spot.
SCP: The closest comparison I can come up with for a city in such dire straits hosting an event of this magnitude is the NBA All Star Game in New Orleans a few years back. Can we glean anything from that experience to predict how Detroit will handle this weekend’s events?
CM: New Orleans was a city hit by a natural disaster so its problems were terrible but temporary. Detroit is a city facing the reality of a big change in its lifestyle. The city is so heavily reliant on an industry that is going through tremendous upheaval. The auto business will survive, but it will be much smaller. Many young people in Detroit, if they stay there, may not work in the automotive industry at all. They may shift to an up-and-coming business like health-care, technology or alternative energy. Some political leaders realize this and are pushing for tax breaks and other incentives to bring new business to town. Others are stuck in the past and reluctant to change. The short answer, then, is no. Detroit will likely make a great showing this weekend and put on terrific show at The Final Four. Unlike New Orleans, which is rebuilding into a stronger version of what it once was, Detroit may never be the same again.