Pittsburgh could make $200 million from the GOP convention, but there’s no guarantee

To land a major party convention, leaders must spend significant time and money courting donors to bankroll the event.

• An-Li Herring/WESA
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  An-Li became a reporter while completing her law degree at Stanford. In law school, she wrote about housing affordability, criminal justice and economic development, among other topics. She also served as the intern to NPR Legal Affairs Correspondent Nina Totenberg in Washington, DC, helping Ms. Totenberg to cover the U.S. Supreme Court and other legal matters. Originally from Pittsburgh, An-Li interned with the investigations team at the Pittsburgh Post-Gazette before joining 90.5 WESA in August

(Pittsburgh) — When news broke earlier this month that Pittsburgh could host the 2024 Republican National Convention, supporters said the event would be good for Pittsburgh businesses, and could result in an economic impact upwards of $200 million. But estimates of how much the city could bring in and at what cost depends on who you ask.

“Having bodies in town going to these hosted events is great for Pittsburgh, though the direct benefit to the city budget is not so apparent,“ said City Controller Michael Lamb.

He said the only direct revenue for the city would be from increased parking. The city does not receive revenue from hotel, car rental or drink taxes. Allegheny County would receive those dollars. Lamb said the city’s hospitality industry would benefit from the event, since city residents work in the industry.

“I am sure it would be a big revenue event for both the city and the county,” he said. But he added that it would be hard to measure all of the indirect revenue.

“[It is] hard to measure the benefit of Pittsburgh being all over the news for a week,” he said in a text message. “There is definitely a benefit there but not a direct financial benefit.”

Shannon Wolfgang is director of marketing and communications for Visit Pittsburgh, the organization spearheading the bid for the convention. She said based on information the group received from Tourism Economics, a data and research company that studied the economic impact of the party conventions, the financial impact could be substantial for the region.

“The 2016 National Convention [in Cleveland] resulted in up to $188.4 million in economic benefits,” she said. “So [that amounts to] nearly $200 million for that region. Visit Pittsburgh is basing its expectations on what was shared from Tourism Economics.”

Some critics have said Pittsburgh doesn’t have enough hotel rooms to host the RNC. But Wolfgang said the RNC requires at least 16,000 hotel rooms, and Allegheny County has 18,300 hotel rooms.

“The county alone definitely has enough hotel rooms to host the convention,” she said.

A potential financial strain

To land a major party convention, local leaders must spend significant time and money courting donors to bankroll the event.

For example, in the years leading up to the 2016 Democratic National Convention in Philadelphia, officials and consultants spent between six and eight months raising money. The consultants earned more than $270,000 for their work in 2014, according to a 2017 report by the Pennsylvania Auditor General Eugene DePasquale.

The Philadelphia Visitor and Convention Bureau said the city spent $132.9 million directly related to the convention and received $46 million in federal funds to support public safety costs. The total economic impact was $230.9 million. That included all spending related to the DNC. But in the end, it was hard to determine the final amount the city received for hosting the Convention.

Studies of the 2016 RNC in Cleveland found the city gained between $142 million and $188 million even though the event had been expected to generate $200 million for the local economy. According to Tourism Economics, Cleveland’s host committee spent $46.1 million and received a federal grant of $49.9 million for security.

Hosting a national convention requires cities to prove they have secured financing ahead of the gathering. In 2012, Charlotte hosted the DNC and fell short by $10 million. The host committee was forced to tap into a line of credit it had established with Duke Energy, the city’s major power company. Similar issues could occur in Pittsburgh if the city is not able to raise the funds needed to hold the four-day event.

Wolfgang said there isn’t a clear idea of what Pittsburgh or Allegheny County would have to spend to host the RNC. “Much of the requirements for the city, for the county, for the local host committees, those will need to be identified as the convention is designed and implemented,” she said.

It’s not unusual for cities to start the fundraising process while bidding, but Wolfgang said it’s too early to talk about Pittsburgh’s fundraising plans.

“As this is still an open bid, we don’t have any information to share at this time,” she said.

She added that the financial burdens aren’t clear yet, either.

“It’s too early to talk about the financial breakdowns and who would be responsible for what,” she said.

A less rosy projection

It’s no surprise that Pittsburgh has emerged as a top contender for the 2024 RNC, said Victor Matheson, economics professor at the College of the Holy Cross in Worcester, Mass. Pennsylvania is a key electoral battleground, and Matheson said the GOP could view its convention as a way to energize Republicans in and around Pittsburgh.

“A few tens of thousands of voters in Pennsylvania means a whole lot … as we’ve seen in both of the last two [presidential] elections,” he said.

But while Pittsburgh might represent a strategic choice for Republicans, Matheson is less convinced that the region itself would receive the economic windfall that Allegheny County Executive Rich Fitzgerald and Pittsburgh Mayor Ed Gainey, both supporters of the convention, have touted.

“I usually tell people that if you want a good estimate of the actual economic impact of a big event, take whatever the biggest boosters are telling you, move the decimal place one point to the left, and that’s probably a pretty good estimate of what Pittsburgh can actually expect,” Matheson said.

“The problem is [that] these boosters are pretty good at adding and multiplying, and they’re not so good at subtracting and dividing,” he said.

Although political parties rely primarily on private donations and federal funds to pay for security and other expenses, Matheson noted that mega-events such as the RNC still impose significant “hidden costs” on local economies.

“This is a wildly, wildly disruptive event,” he said. “Basically, all of the regular economic activity that would normally occur disappears as regular economic activity is displaced by convention-goers.”

Acting Allegheny County Controller Tracy Royston said she needs to understand those costs better before taking a position on the region’s bid to host the RNC. Her office serves as the county’s fiscal watchdog.

“What resources [would we] need to deploy, both with safety and security and with just everyday infrastructure?” she asked. The event could require road closures, she noted, so “it does also [have] impact on small businesses, where they are not able to operate during the times that a big national convention is in town.”

Some businesses would benefit, however, she said. Conventions are a boon for hotels, restaurants, rideshare companies and balloon services, for example. And Royston noted that Allegheny County collects taxes on alcohol sales, hotel accommodations, and car rentals to help finance public transportation and tourism services.

But some research indicates that the economic gains of mega-events tend to fall short of projections.

For example, an analysis by Matheson and other economists suggests that the 2008 and 2012 party conventions raked in far less than expected: While each host city claimed the events would inject $150 million or more into their respective economies, hotels brought in only about $20 million of additional revenue on average.

To meet the total projected economic impact, convection-goers would have had to spend at least seven times the amount they paid for lodging, the study said. And even then, Matheson added, “A lot of my dollars go into [a] hotel and then just get sent … back to corporate headquarters rather than sticking in the local economy.”

Bigger than March Madness?

Duquesne University sports marketing professor Ronald Dick said the total economic impact would also depend on Pittsburgh’s hosting capacity. One possible venue, PPG Paints Arena, holds roughly 20,000 people, he noted.

The NCAA has held March Madness basketball games and Frozen Four hockey games at the arena, and those tournaments were projected to generate between $8 million and $10 million each between 2013 and 2018, according to past media reports. More recent large events spurred about $13 million each in direct spending, according to VisitPittsburgh.

“I don’t see how you could get much more revenue than you would hosting the first round of the NCAA tournament because the building only holds 20,000 people now,” Dick said of the possible RNC in Pittsburgh.

In a statement, VisitPittsburgh countered that “there really is no event that Pittsburgh has hosted that compares to the estimated economic impact of hosting the 2024 Republican National Convention.” The statement did not elaborate on the differences, but Dick acknowledged that the event could draw outside spectators and protesters to the area.

“They’ve got to eat, sleep somewhere, too,” he said.

In addition, the event could help to burnish Pittsburgh’s reputation and, thus, pay off in the long term by attracting future visitors and events, Dick said.

“Are the world’s eyes going to be on our city? And does that give us a nice opportunity to showcase the city [with] a lot of media attention and outlets covering it? Sure, of course,” he said.

But Matheson, the Holy Cross professor, disagreed.

“Most of what happens at a political convention has nothing to do with the city at all,” he said. “The reality is that no one’s going to be talking about Pittsburgh. Everyone’s going to be talking about Donald Trump. They’re going to be talking about [Florida Gov.] Ron DeSantis.”

He noted that major party conventions come with risks, too. Politics are often divisive, and conventions can stir unrest. Riots that broke out at the 1968 DNC in Chicago remain a defining feature of that gathering.

“The reputational benefits, especially for something like a national convention like this, can turn out to be as negative as they are positive,” Matheson said.