Will Cleveland Profit From The RNC?

by Morgan Brinlee

When Cleveland beat out Dallas as host of the Republican party's 2016 nominating convention, hopes were high that the event would lead to some big gains for the Midwestern city. But there's some debate as to whether political conventions are truly profitable for host cities in light of how much public funding they eat up. With the GOP set to descend on one of Ohio's biggest cities in roughly two weeks, many are wondering, will Cleveland make money from the Republican National Convention?

Traditionally, political conventions are thought to bring increased direct spending as thousands of delegates, party leaders, members of the media, and even protesters converge on the host city, dropping cash on hotel rooms, restaurants, bar tabs, and transportation. Recently, however, some economic analysts are pushing back on claims events like the Republican National Convention leave host cities richer.

A Massachusetts economics professor from College of the Holy Cross who has studied roughly 30 years worth of economic data surrounding host cities told Fortune that the potential for profiting from a political convention is small. "We looked at the impact of such conventions on city economies from 1972 to 2004, and we couldn’t find any positive economic benefit," Matheson said.

After analyzing the impact of large-scale events on host cities, Lake Forest College economics professor Robert Baade also told Fortune that though political conventions often leave a sizable chunk of money in the pockets of hoteliers (many national chains owned by large, not local corporations), they can also bring a chaos that dries up regular business and productivity for local and independent companies as residents and tourists stay home in an attempt to avoid the traffic and madness brought on by a convention.

Further complicating matters is the large amount of public funds Cleveland is spending to host the RNC. According to the Wall Street Journal, the city is using "a specially designated quarter-cent sales tax passed in 2007" as well as tax revenue from a downtown casino to cover some convention project costs. These costs are often not factored into estimates of economic benefit promised by convention promoters.

While many promoters have promised the RNC will bring Cleveland an economic boost of anywhere from $200 to $400 million, some businesses are already reporting low expectations for the convention's financial benefit due to a cutback in reservations and budget projections.

General Counsel and Treasurer of the Cleveland 2016 RNC Host Committee has even warned local businesses not to assume they'll "get rich" as a result of the convention. "We are not concerned about that figure," a local newspaper reported Pinney said during a panel presentation at Cleveland State University's law school back in 2014. "We did not do it for that purpose. It is not an economic driver. It was done for one reason. To reintroduce the city to the world. The city has done so much with great leadership and we want the world to see the new Cleveland. That is why it was done. People should not expect to get rich."