Saint Louis Dodged a $40 Million Bullet

On Tuesday, the Democratic National Committee announced that the 2012 Democratic National Convention will be held in Charlotte, N.C., which edged out Saint Louis primarily because of political considerations. No doubt the convention would have attracted a great deal of media attention to the city of Saint Louis, and it would have been interesting to be at the center of the nation’s political conversation for a week. However, from an economic point of view, Saint Louis isn’t missing out on anything and will probably be better off not hosting the convention. (This has nothing to do with the fact that it’s the Democratic National Convention; my points would be just as valid if the Republicans were considering the city for their convention site.)

A 2008 study of the economic impact of political conventions found “no statistically significant evidence that these huge conventions contribute positively to a host city’s economy.” The authors point out that political conventions crowd out a great deal of day-to-day economic activity, so although hotels typically benefit from the influx of convention attendees, local shoppers avoid the area because of the crowds and stringent security. This is precisely what happened in New York City during the Republican National Convention in 2004, as reported by the New York Times:

But some businesses, particularly those around Madison Square Garden, where tight security scared off customers, said they paid a heavy price.

“We had high hopes, but there was nobody on the streets,” said Marlon St. Clair last week as he presided over uneaten platters of barbecue chicken, corn bread and ribs at Soul Fixins, a restaurant on 34th Street between Eighth and Ninth Avenues. “Usually we are packed at lunchtime. But there’s nobody here to eat.”
[…] It was clear that parts of the city were emptier than usual, particularly Midtown. Even though the state suspended sales tax on many items of clothing for the week of the convention, popular stores like the Gap and H & M at Herald Square were deserted.

Ridership on the commuter railroads showed declines, ranging from 10 to 60 percent, and bridge and tunnel crossings plummeted as well, indicating that a goodly portion of workers simply stayed away.

If Saint Louis held the convention, it would be a tremendous inconvenience for anyone who works or shops downtown and would likely lead to a great deal of lost productivity and business from local sources.

Conventions also cost tens of millions of dollars. The parties themselves foot a great deal of the bill, and the federal government shells out huge amounts for security (the impropriety of which could be the subject for another entire blog post), but a massive amount still has to be raised locally. Organizers in Charlotte expect their costs to total more than $40 million. Organizers for the last two conventions managed to raise the funds without turning to local and state taxes, but as Mike Dino, CEO of the 2008 Denver Convention Host Committee, put it, “We worked hard, but we got lucky too.” If Charlotte does not prove as lucky, its taxpayers will most likely be left holding the bag. Saint Louisans should not envy them. As with government, so too with political conventions — less is usually more.