An economic impact study conducted in 2010 predicted that hosting the 34th America's Cup in 2013 would result in $1.37 billion in total economic benefits to the San Francisco Bay Area. The goal of this paper is to examine the ex post effects of this competition on real taxable sales in the Bay Area.
A panel data set of quarterly observations on taxable sales transactions for all counties in the state of California is employed. These data are explored using two estimation methodologies: difference-in-differences and synthetic control.
Results from a difference-in-differences analysis and a synthetic control analysis produce similar findings. Namely, the 34th America's Cup competition appears to have had a minimal, short-lived impact on San Francisco and no measurable impact on two nearby counties.
The empirical results in this paper underscore the findings of previous research showing that ex ante economic impact studies tend to overstate the net economic benefits of hosting mega-events.
The results of this paper may serve as a warning to policy makers considering using tax dollars to host a mega-event that such events often do not generate the economic gains reported in typical economic impact studies.
This is the first paper to econometrically explore the impact of hosting the America's Cup on taxable sales transactions in a region. This paper also employs the relatively new empirical methodology called synthetic control.
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