COVID-era football at Michigan, Michigan State will have far-reaching economic impact

Businesses in college towns like Ann Arbor and East Lansing bank on home football weekends for the huge influx of fans who spend money on hotels, restaurants, bars, shops, and even game-day parking at local residences or schools.

In a “normal” season with seven or eight home games, the economic impact has been found to be enormous. A study by East Lansing-based Anderson Economic Group (AEG) in 2007 of Big Ten football games in the state of Michigan found there were roughly 1.37 million in attendance at Michigan and Michigan State games and the direct economic impact was $88.7 million on the state’s economy.

AEG produced another more recent study on Michigan football’s impact on Washtenaw County based on the 2013 season and determined $12 million per home game is injected into the local economy.

“That’s our seven biggest days of the year, right there, football Saturday,” said Keith Mckendry, owner of Ann Arbor’s popular Mr. Spots restaurant on State Street.

Mckendry said during a football weekend his restaurant is busy Friday, Saturday and Sunday. If there’s a noon game, he and his staff arrive at 5 a.m. to begin prepping for their catering as well as in-restaurant orders. They will open at 9 a.m. and close by 2 a.m.

“Those are the money days that you rely on,” Mckendry said. “We take money away from football season and put it away for a rainy day, which would be summertime. Our attitude, as always, is we work in the summer to get ready for the fall. We look forward to the fall, and now this wrench is in the spokes with COVID. I don’t know what to expect, I truly don’t.”

Businesses around the country slowed or shut down at the start of the COVID-19 pandemic, and for college towns, many of the businesses took a huge hit when students left campus to go home for online coursework in mid-March.

Mckendry doesn’t know what to expect this fall because no one truly does. Michigan and Michigan State are in limbo awaiting a return to in-person classes, but that obviously will look vastly different than it did pre-COVID. At both schools, students will return home for Thanksgiving break and not return to campus until 2021 – MSU on Jan. 11 and Michigan on Jan. 19.

Marquee game lost

And then there’s football season. The Big Ten recently announced its member schools will play a conference-only schedule, expected to be 10 games. Michigan loses its season-opener at Washington and nonconference home games against Ball State and Arkansas. Michigan State, with new head coach Mel Tucker, will no longer play at BYU and drops home games against Toledo and Miami (Fla.)

The Big Ten has not announced the new schedules, but schools are beginning to share information about what attendance could look like this fall. Michigan, which recently announced a projected $26.1 athletic department deficit for the 2021 fiscal year, said last week it will not sell tickets to the general public and individual game tickets will be made available to season-ticket holders and students. Illinois will be at 20 percent capacity this fall, the school announced last week.

But Michigan and Michigan State have indicated no guarantees there will be fans, and officials from both schools have said it is quite possible if there is a season, the games will be played in empty stadiums.

All of the scenarios – no football season, a limited schedule with limited fans, or a limited schedule with no fans – will have a significant impact on the local economies that count on home football weekend consumer traffic.

Julie Pingston, President and CEO of Great Lansing Convention and Visitor Bureau, has seen the Lansing area lose several major events this spring and summer that would have attracted visitors and dollars to the area. She had been upbeat about the upcoming football season before the pandemic because of the nonconference game against Miami, and Michigan and Ohio State visiting East Lansing during Big Ten play.

“We had three marquee games that we were thinking would do very well for the community in terms of people staying over,” Pingston said. “Those three would have definitely sold out all the hotels and really been an impact for our restaurants and everything related to that.

“It’s definitely tens of millions of dollars in loss for the community if the season doesn’t go at all, and if it does go, it’s obviously going to be different. I think it would still create somewhat of a buzz, a social-distance buzz I guess. There would still be some activities surrounding it on a game day. But it’s a significant loss for the community.”

More: The Detroit News picks Michigan State’s best football players for the past 25 years

With Tucker now taking over the MSU football program, Pingston said there has been a sense of excitement in the Lansing area.

“We’re hopeful and really looking forward to this season with the new coach and also with that great schedule for home that we had, where last year the home schedule was not as favorable for that community impact,” Pingston said.

Victor Matheson is professor of economics and accounting at the College of Holy Cross and has done two studies about the economic impact of college athletics and the local economy.

He believes the $26.1 million deficit Michigan’s athletic department is projecting could be substantially higher when the numbers are evaluated in a year.

Regarding the financial impact of college athletics on college towns, Matheson, in his studies, has found the numbers that visitor bureaus share are probably slightly inflated. In addition to the $12 million estimated for Michigan games, Ohio State reportedly has a $15 million impact, Wisconsin $16 million, Nebraska $12 million and Iowa $16 million.

“When we ran all those numbers, we got actually fairly small economic impacts from hosting college football games, in the tune of several million dollars of economic activity per home game,” Matheson said. “That actually seems to be pretty small considering when you drive into Ann Arbor how crazy it looks during a football weekend.

“But there’s a reason for that in sports economics. It’s what’s called ‘the crowding out effect.’ When there is a football game in Ann Arbor, everything shuts down except for the football game. Even though you have a lot of economic activity associated with the game, it crowds out other activity that normally happens.

"I grew up in Boulder, and when the University of Colorado football is playing, you don’t go to the shopping mall that day, you don’t go downtown, you don’t go out to eat unless you’re going to the football game. Even though it’s a big event, it’s stopping other sorts of activity that would be occurring anyway. Therefore, the net economic impact from all the studies are pretty small and therefore, most economists like me for years have been saying that sports look pretty good, but the actual net impact isn’t necessarily that large.”

But Matheson said the impact of an altered schedule and few if any fans will be felt by individual shops and restaurants.

“Just because it’s not large (loss) for the city of Ann Arbor as a whole, doesn’t mean it’s not huge for individual businesses in Ann Arbor,” he said. “The sports bar that’s across the street from the stadium counts on those six or seven home games a year because that’s a massive day for them. It’s obviously a great day for hotels. It’s a great day for that church that’s got a big parking lot four blocks from the stadium.”

Future problems? 

Those studies, though, were not done during a pandemic. A local college economy that could rely on residents still shopping and going to restaurants when there are no home football games, loses that for the most part because of COVID-19.

“In an age of COVID-19, there is nothing else we’re spending our money on, and there are not other visitors coming into Ann Arbor instead," Matheson said. "So when the economic activity of Michigan football disappears, it’s not getting magically replaced by all the other businesses that were normally crowded. The people who aren’t at the restaurant because of the Wolverines game, it’s not like the other residents are going to be saying, ‘Oh, now that the restaurant isn’t as crowded, we’ll go down,’ because we’re not doing any of those things. The sort of things that make it look like sports has a pretty modest impact, a bunch of that has disappeared.”

These are the immediate issues regarding the impact of a limited or no fall football season, but what about beyond? What if football is played this fall with no fans and those who used to flock to East Lansing and Ann Arbor find that watching at home is a better and safer alternative going forward?

More: The Detroit News picks Michigan’s best football players for the past 25 years

“There’s some real long-term issues here,” Matheson said. “Sports are a drug, right? They try to get us addicted. If you get rid of the addiction, do the fans come back?  Another question is, how long does this persist and whether we will lose our taste for being in large crowds just in general."

At Mr. Spots, Mckendry has removed three tables for social distancing purposes and there is seating for 12 in the restaurant. He said 85 percent of the orders these days are to go.

“We’re thankful through this whole pandemic we were still able to be open and have carry out and delivery,” he said. “We’ve done enough business to keep the doors open, pay payroll and pay food costs.”

Mckendry said students returning to campus will help restaurant sales, and if Michigan Stadium is allowed to have about 25,000 fans, those watching at home will be ordering food delivery.

“That should go through the roof with more deliveries because people are tailgating and watching on TV,” he said. “It’s not going to be as crazy as a game day, but our business should be decent enough. On the other side of the coin, without 107,000 people in the stadium, we probably won’t have to staff our restaurant with employees like we would a game day. It’s not to be as crazy as a normal game day, but as long as the kids are on campus, we’ll be busy.”