How much money will the convention bring Denver?

WE'VE MOVED! Democratic Convention Watch is now at http://www.DemocraticConventionWatch.com

Whether a political convention is a plus or minus on the local economy is always a subject for debate, and goes to the heart of whether cities are going to bid for future conventions. Past conventions have been a boon for hotels and caterers, but local businesses near a convention arena often see a loss of business. What is Denver expecting?

Denver officials, who went all out to win the four-day convention, hope it will deliver as much as $200 million in economic benefits. But some economists think real world dollars will be much lower.

National political conventions aren't always the economic boons local officials anticipate, economists said. For one thing, higher security costs in the post-9/11 era detract from bottom-line benefits. Also, increased traffic congestion, protests and other disruptions often lead local residents to avoid businesses near convention sites, offsetting some profits.

As a rule, economists like to take economic predictions by local boosters and move the decimal point one slot to the left. That would put the net value of Denver's convention closer to $20 million. "If a city does in fact do well with a political convention, it's just dumb luck," said University of Chicago economist Allen Sanderson, who studies large-scale events. "They rolled the dice. It wasn't careful planning."

Local economic development officials envision hotels and restaurants packed with thousands of delegates, plus more tourists and subsequent business gatherings that they say the exposure of a national political convention will draw long after the delegates go home.
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In Boston, security measures closed miles of highways, disrupted rail service and included random bag checks on subways. Customers stayed away from many businesses near the convention center, and some stores and restaurants closed or reduced hours of operation. Halftime Pizza across the street from the FleetCenter, where the convention was held, closed for the week after security fences and other restrictions made the area difficult to access. A sign was posted outside that said, "Say!!!!! D.N.C. Thanks for Nothing!!! Go Bush."

"Even the businesses that stayed open really didn't do that much at all," said the restaurant's manager, Derick Mains. City officials estimated a net gain of $163.3 million in both direct and indirect benefits as a result of the convention. But the Beacon Hill Institute at Suffolk University in Boston, a public policy think tank, calculated a much lower gain -- $14.8 million. The difference stems from a disagreement over costs associated with events that were canceled because of the convention, such as a parade of tall sailing ships.

For a city like Denver, which is looking to make a name for itself, Denver will be happy if they just break even. But as I've said, the economic equations may have to change in 2012 or the DNC (and RNC) may not have any cities bidding for the 2012 convention.