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Calculating the real economic impact of a music festival or other event is far more complicated than it may seem on the surface. Figures supplied by festival organizers may not tell the whole story. The organizers of Burning Man, which attracts nearly 70,000 people to the northern Nevada desert every summer, say it brought $55 million to the area economy in 2013, including more than $500,000 in donations to local charities.
But some people dispute that number, arguing that it’s hard to know how much attendees are spending and where. Some of those dollars may end up going to big companies, like Wal-Mart, where people stop to buy supplies, and that money quickly flows out of the community.
“Without a survey, the estimates are not defendable,” Brian Bonnenfant, a project manager for the Center for Regional Studies at the University of Nevada, Reno, told the Reno Gazette-Journal.
Hosting a high-profile event of any kind can quickly turn into a losing proposition for a city. Glendale, Ariz., which hosted the 2015 Superbowl, actually expected to lose money on the event, in part because many of the people who traveled to the game stayed in the neighboring cities of Phoenix and Scottsdale.
The return on investment may be even worse for multi-day events like the Olympics or the World Cup. “[T]here is strikingly little evidence that such events increase tourism or draw new investment. Spending lavishly on a short-lived event is, economically speaking, a dubious long-term strategy,” according to a report in the New York Times.
Hosting a music festival like Coachella doesn’t require the same level of investment as a major sporting event, of course. And in some cases, at least, it seems that the economic return can be significant. But in an increasingly crowded landscape of festivals, there’s also no guarantee that an event will draw the numbers needed to transform it into an economic engine for the local community.
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