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Is hosting big game a win for Phoenix suburb?

It could be years before local taxpayers find out whether the tens of millions of dollars in debt they could be on the hook for turns out to be a wise investment.
Super Bowl Economy
The $455 million University of Phoenix Stadium will host the Super Bowl game between the New England Patriots and the New York Giants on Sunday, Feb. 3.Ross D. Franklin / AP
/ Source: The Associated Press

Landing the Super Bowl is making the huge bet made on sports-related development in this Phoenix suburb look like a winner. But it could be years before local taxpayers find out whether the tens of millions of dollars in debt they could be on the hook for turns out to be a wise investment.

The NFL will play its biggest game in a stadium that didn't exist when the rights for the 2008 game were awarded five years ago. The sleek $455 million facility opened two years ago on what was little more than a hardscrabble patch of cotton and alfalfa fields 16 miles northwest of downtown Phoenix.

Voters in Maricopa County approved it, giving the NFL's Arizona Cardinals a home to replace the team's previous home at Arizona State University's stadium in Tempe. But the real payoff always was viewed as the bonanza that would come from hosting Super Bowls after the NFL made it clear the ASU stadium used for the 1996 game was too shabby for another championship.

This week, as football players, fans and celebrities descend on Glendale, city leaders are celebrating their new stature among tourist destinations. Their experience serves as a prime example of the transformative abilities of professional sports, including the estimated $400 million windfall that boosters claim comes from hosting a Super Bowl.

During the past few years Glendale has scraped away many of the old farms on its far west side to make room for a sports and entertainment district that will pull in business once slated for Phoenix.

Next to the football stadium, developers recently built a new hockey arena for the NHL's Phoenix Coyotes, along with high-end specialty shops, restaurants with valet parking, and a huge fountain that squirts water in time with rock music. Nearby, the city broke ground in November on a spring training facility for the Los Angeles Dodgers and the Chicago White Sox.

Almost at once, Glendale's urban center moved from a quaint row of antique shops in its historic district to a patchwork of new developments on the west side. "The community decided they wanted to be a little bit more," said Glendale city manager Ed Beasley.

Beasley and other Glendale leaders fought hard for this, beating out bids from Phoenix and two suburbs on its east side, Mesa and Tempe, for the state-funded football stadium.

But the city issued or guaranteed about $150 million in debt for the hockey arena and has made big infrastructure investments in the area, according to Deputy City Manager Art Lynch.

Glendale's population grew by 48 percent in the past decade to nearly 250,000, landing it on the U.S. Census Bureau's list of fastest-growing cities along with Phoenix and several of its other suburbs.

That growth has been accompanied by a jump in the market value of taxable property to $10.3 billion last year from $7.5 billion in 2002. And while home foreclosures have been spiking in recent months, Lynch notes that even with the increase in the city's sports-related debt, there hasn't been an increase in property taxes in 13 years, and in seven of those years, the rate was reduced.

During the past six weeks, Hampton Inn, Residence Inn and a SpringHill Suites opened hotels in Glendale. The combined 700 new rooms almost doubled the amount of hotel space the city had to offer last year.

All three immediately jacked up prices for the Super Bowl rush. Hampton Inn, for example, has no vacancies for Super Bowl weekend despite boosting its nightly rates from about $219 to $799.

Tim Hogan, an economist at Arizona State's W.P. Carey School of Business, said the Super Bowl has a huge economic impact, comparable to an entire year's worth of NASCAR and other events at Phoenix International Raceway.

Hogan, who in 1996 studied the spending habits of tourists attending the Super Bowl in Tempe, said sports fans showing up in Glendale are the perfect demographic for making money. "They're big spenders," he said. "And unlike a Cardinals game, pretty much everybody is from out of town."

Super Bowl tourists not only give a short-term boost to restaurants and hotels, but they help drive the rest of the economy by creating a greater demand for companies that supply goods to restaurants and hotels, Hogan said.

Still, he said the net Super Bowl income for the local economy is likely to be much less than advertised, given the amount the cities are spending to prepare for the game. "The net impact is not going to be $400 million," he said.

Arizona's Joint Legislative Budget Committee estimates that spending by Super Bowl tourists will boost state sales taxes by $3.6 million to $5.5 million. That's based on an assumption that 90 percent of people at the game will come from another state and that another 17,000 will come to Arizona without tickets simply to take part in the festivities.

Many industries have greeted them with huge price markups.

Renting an economy car from Thursday through Super Bowl Sunday will cost $415, more than twice as much as during the same period a week later, according to searches Monday on the travel Web site A four-day luxury car rental was offered for $750, almost double what it would cost the next week.

Arizona Limousines, a chauffeur service catering to corporate clients and people in the entertainment business, is charging $1,200 to drive people to the game and other spots around town Sunday. That's up from $480 for Cardinals games.

Company owner Gene Pierpoint said his markup was reasonable, given his extra overhead during Super Bowl week: renting additional vehicles, hiring temporary drivers, buying $9,000 in parking passes for the stadium grounds and getting hotel rooms for the additional chauffeurs.

"I don't think any of our reservationists have had anybody object to the rates," Pierpoint said.

Across Phoenix, tourists have snapped up most of the metro area's 55,000 hotel rooms. Hotels and resorts still have vacancies, but they're being offered at rates unheard of outside of Super Bowl week.

For example, a modest hotel in suburban Mesa was offering a standard room for $800 for a four-night stay _ $300 more than its room rates the following week. On the high-end of the available hotels, a two-bedroom suite at a Phoenix resort was listed at $2,975 for a four-day stay.

Debbie Johnson, president and chief executive of the Arizona Hotel and Lodging Association, said it's fair for hotels to charge 10 percent to 20 percent more than usual, considering metro Phoenix is hosting both the Super Bowl and FBR Open golf tournament this weekend during its peak tourist season.

But the small portion of hotels that doubled their prices are gouging customers and might be hurting the state's chances at getting other marquee sporting events, Johnson said.

Even before the Super Bowl starts, Beasley said it's been a huge success for Glendale. He said it's already focused international attention on the city, and a few five-star hotels and resorts have recently started looking to build there.

City manager Beasley said city leaders now are eyeing an expanse of undeveloped desert that the city recently annexed. "Successful communities never stop," he said.

"They just evolve into the next phase."