Why Cleveland and Philadelphia Shouldn’t Expect Big Convention Profits
Cities may vie to host political conventions, lured by promises of millions of visitor dollars and a chance to shine in the national spotlight, but seldom, if ever, do they reap much benefit.
In fact, such hosting is often a drain on local finances and productivity, warns Victor Matheson, an economics professor at the College of the Holy Cross in Worchester, Mass., who examined decades of municipal hosting experiences.
“Hotels, limo drivers and police officers often fare well. And mayors who like to rub elbows with presidential candidates,” he said. Beyond that, Matheson says, convention visitors crowd out other economic activity, creating losses that typically are not factored into economic impact studies.
“We looked at the impact of such conventions on city economies from 1972 to 2004, and we couldn’t find any positive economic benefit,” said Matheson.
With the 2016 conventions in Cleveland and Philadelphia looming, attention is focused on how those cities will fare. Boosters forecast that Cleveland will be the beneficiary of between $200 million and $250 million in direct spending, as about 35,000 delegates and 15,000 media are expected to descend on the city between July 18-21.
The figures are based on the $214 million in delegate spending at the 2012 Republican National Convention, according to the Tampa Bay Host Committee. That same year, Charlotte, N.C., reported that delegates shelled out some $91 million while attending the Democratic convention in that city.
So far, Cleveland’s convention sponsors have raised nearly their entire $64 million budget, according to Emily Lauer, spokesperson for Destination Cleveland. This is the lakeside city’s first foray into convention hosting in 80 years, since the Republican convention of 1936 when Kansas governor Alfred Landon won the party’s presidential nomination. (In a worrisome note for Donald Trump, Landon was defeated by Franklin D. Roosevelt, who was nominated in Philadelphia, the same city where the Democrats will hold their convention this year.)
Still basking in the attention it received from the Cavaliers’ recent NBA championship, Cleveland wants to capitalize on the economic progress it has made in recent years after a period when declining manufacturing led to a loss of jobs and an ensuing population exodus from the region.
While the area’s employment remains down, declining 8% between 2000 and 2015, the area is mounting a comeback as nearly 21,000 corporate headquarters and professional services jobs have been created over the same period, according to city figures. The area is expecting to grow jobs in those categories by another 10% in the next decade, with major firms like accounting giant Ernst & Young, founded in Cleveland, visibly anchoring the renaissance in downtown high-rise buildings.
The area also is a burgeoning health care hub, with more than 60 hospitals, including the renown Cleveland Clinic, boosting health care jobs by about 20% between 2000 and 2014, according to figures from Cleveland2016, the nonprofit organization hosting the Republican National Convention. In recent years, Cleveland’s population has rebounded too, hitting nearly 400,000 as Millennials flock to the city’s center.
Cleveland is seeking to capitalize on this progress, opening a newly renovated 10-acre park in the heart of downtown just before convention-goers arrive. Their arrival should be a shot in the arm for the many new hotels opening in the city, including the newly built Hilton Cleveland Downtown Hotel, which is next to the Cleveland Convention Center, a key location for Republican convention activities.
“They get to fill their hotel rooms and double their prices,” Matheson said.
But beyond the obvious advantages, there are less positive convention effects. While hotel operators will benefit from the convention, the influx of convention goers is sure to disrupt work and commuting patterns.
People often avoid commuting to work when they know there will be crowded streets and difficulty parking, Matheson says. That means lost productivity, which is hard to measure and typically not calculated when a city considers entering a bid into the contest to host a convention.
“If the message is ‘don’t come to work,’ or people just stay away, it impacts productivity, and that’s a loss that can’t be ignored,” said Robert Baade, an economics professor at Lake Forest College, in Lake Forest, Ill., who has studied the impact of large events on host cities.
Cleveland is also suffering from the polarization caused by Donald Trump. While the Republican convention will undoubtedly garner intense media attention, Cleveland is drawing less support from corporations than in past conventions. One reason is that they do not want to be linked to the protests or violence that may ensue. Donald Trump has promised an attention-grabbing spectacle, but there are worries that his nationalistic and anti-immigrant calls will provoke protestors into confrontations that could be damaging and expensive for the city.
Also, after the recent spate of terrorist attacks in public places overseas, Cleveland and Philadelphia are both expected to have higher security protection. And that is a cost that cities must bear.
“Whatever is done to cordon off areas and cause departures from the normal flow of commercial activity does not help a city,” said Baade. “If a city spends money on police overtime, then the city is taking in less money.”
His advice? “Cities should get together and say it’s too costly” to host such conventions, because they give economic subsidies only to some people, but not across the board.