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The Economics of Hosting a Political Convention

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The Rocky Mountain News focuses today on those who say hosting the Democratic National Convention in Denver will not result in an economic windfall.

The Mile High City is bidding to host the 2008 convention based in part on projections that the 2004 event pumped $150 million to $163 million into the economy of greater Boston. Boston Mayor Thomas Menino calls the convention a rousing civic success and economic triumph.

But doubters remain.

The primary resource for these critics seems to be be the Beacon Hill Insitute reports released before and after the 2004 Convention in Boston. The same organization did a comparison report on the 2004 Republican convention in New York and concluded:

We find that the convention will provide a positive economic benefit of $163 million, $97 million dollars less than the $260 million figure quoted by Mayor Bloomberg.

Why the disparate figures? It’s because the Boston reports took into account two events that had to be cancelled the week of the Democratic Convention.

These include Sail Boston and the 2004 U.S. Olympic Gymnastic Trials. Together, the events would have generated $110.6 million in benefits and without the disruptions caused by the convention.

As of July, 2005, Boston and Denver are similar in population. Boston ranked 24th and Denver 25th in the list of the nation’s 100 biggest cities.

I covered both the 2004 Boston and New York conventions as a blogger. There was security mania in Boston. Complete gridlock. Too many road closures. There was also the fear factor. The negative local reporting leading up to the convention resulted in many downtown businesses closing for the week, telling their employees to work from home. The Beacon Hill report after Boston found:

In addition, security measures led to the closing of bridges, roads and tunnels and to increased surveillance on the public transportation system. Responding to these
plans, thousands of tourists and workers chose to avoid the city rather than risk sitting in traffic.

While productivity losses were minimal, because many commuters did not come in,
local businesses suffered. The principal reason was that tourists and workers were
not in town to spend as they usually do. The harmed businesses included
restaurants, bars and retail stores.

Denver is laid out differently than Boston. With careful planning, a security plan that makes us safe while not ascending into mania like Boston and by not subtracting $110 million in profits for displaced events, I think Denver will do just fine.

A decision is due any day.

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