Picture the throngs of people wearing black and purple jerseys Sunday. They’re gathering outside the stadium and crowding inside bars and restaurants. They’re buying swag from vendors on street corners and booking rooms at downtown hotels. They’re slamming beers and scarfing down bratwursts.
They are spending millions of dollars.
The Ravens host the Kansas City Chiefs at 3 p.m. Sunday for the AFC championship and a shot at the Super Bowl. It’s one of the most anticipated home games in Ravens history. To casual fans, it might seem the electrifying play of Lamar Jackson is sparking an economic renaissance in Baltimore. But to sports economists the net impact of all this spending is negligible to the region’s economy.
It’s a hard concept to wrap your head around, acknowledged Brad Humphreys and Dennis Coates, economists who have written numerous papers on the economic impacts of professional sports teams. The duo met teaching at the University of Maryland, Baltimore County. Today, Humphreys teaches at West Virginia University.
“NFL games are really good at concentrating economic activity,” Humphreys said, but they’re bad at spurring new economic activity.
That’s because people have a finite amount of money they can spend on entertainment, Humphreys explained. When people spend money connected to the Ravens game on Sunday, that’s money that would otherwise be spent at a bowling alley, a movie theater or a restaurant, he said.
When Humphreys and Coates look at the aggregate amount of economic activity after a game, there’s no bump, they said, or it’s a bump so small it can’t be measured.
Anirban Basu, an economist and the CEO of Sage Policy Group in Baltimore, said this research doesn’t include the most valuable benefit of hosting an AFC championship game — all that free marketing.
“Baltimore is a beautiful city with a terrible reputation,” Basu said, and this game will cast Baltimore in a positive light to millions of people across the country watching the game. “The economic benefits of that are massive.”
Basu said the game will also cause Ravens fans to spend money locally instead of using it on travel or goods outside Maryland. Plus, he said, there are Chiefs fans ― and possibly Taylor Swift fans — traveling to Baltimore for the game, bringing money into the regional economy.
Having a stadium full of fans in red and gold could ruin the home-field advantage for the Ravens, but it would be a boost to nearby hotels, said Daryl Cronk, director of hospitality analytics at the hotel data firm STR.
The hotels near the stadium can charge a premium for rooms on Saturday and Sunday, Cronk said. This could cause a ripple effect in the hotel market, he said, but it’s likely to be muted.
The online ticket resale platform StubHub reported that 61% of its sales for the Ravens-Chiefs game are coming from outside Maryland. However, StubHub handles just a fraction of the tickets at M&T Bank Stadium, which holds about 71,000 people.
Regardless of which team they support, fans will want to celebrate a win — or drown their sorrows — and bars and restaurants near the stadium are preparing for a deluge of business.
“You can hit a golf ball from our dock and hit M&T Bank [Stadium],” said Denis Nash, taproom manager of Checkerspot Brewing. “I didn’t realize just how much of an impact that would have until this year.”
The brewery can hold up to 500 people, and there was a line outside the door for three hours last Saturday, when the Ravens trounced the Texans a few blocks away, Nash said. He had to double the kitchen and bar staff, and he even stepped in to tend bar.
Home playoff games are a lifeline to the bars and restaurants in nearby Federal Hill, said Ricardo Jones, a partner at NOLA, a Creole-style restaurant and bar. The winter months are typically the slowest for these businesses, Jones said, unless they’re lucky enough to have playoff football.
“This AFC championship game is Christmas, your quinceañera, your 21st birthday all wrapped in one,” Jones said. “It’s a big deal.”
Even Charles Village Pub, more than 3 miles north of the stadium, saw its sales double when the Texans came to town compared to a typical Saturday, said manager Amanda Coyle. Zack Hammer tended bar during the game and said there’s a direct economic link between sales at the bar and Ravens touchdowns.
“Everybody goes crazy,” Hammer said. “Everybody high-fiving, ‘lemme buy me and this group here a round of shots; lemme get that guy down there a beer.’”
But it’s about more than just the money, Hammer said, and Nash at Checkerspot and Jones at NOLA agreed. All three said the playoff games create a sense of community among patrons.
The economist Coates, a Ravens fan, said he knows that feeling well. The economic impact of the Ravens playing the Chiefs on Sunday might not be much, Coates said, but the happiness from this playoff run is real.