Convention's value to Hub is priceless

7 May 2004

The Democratic National Convention is to economic benefits as Iraq is to weapons of mass destruction: a policy in search of a new rationale. Proponents sold the convention as a cornucopia of monetary delights, a flood of new wealth to the region. Now, new studies predict it may actually be an economic drag.

So should we call a halt to the whole thing? Tell the Dems to find another city? Or just grit our teeth and go forward, vowing never to do this again?

No to all of the above.

The real mistake was ever trying to justify the convention on the basis of economics in the first place.

From the moment Boston organizers started dreaming of landing the convention, they spoke of it in fiscal terms, bandying about the sum $150 million. After the Democrats picked Boston, however, the alleged benefits jumped. Officials said last May that the statewide effect could be $300 million.

In fact, the city was so persuaded about this that a few months ago it launched a hubristic demand for, in Mayor Thomas Menino's words, Boston's "fair share," proposing to bill the state for half of the tax revenue it would collect from the convention. (Gov. Mitt Romney, a businessman who knows not to declare a profit until one is actually earned, declined.)

After that came a flurry of new studies. On March 30, the Beacon Hill Institute declared the convention would generate $121.6 million. A week later, the Boston Redevelopment Authority concluded the windfall was $154.2 million.

A week after that - and apparently in response to a column by the Boston Herald's Cosmo Macero - the BHI amended its analysis, saying the convention would actually COST the local economy $12.8 million.

What changed? Macero had pointed out that the convention had downsides, such as lost worker productivity from traffic delays as well as the cancellation of the Tall Ships parade and a U.S. Gymnastic qualifying event. Netting negatives against positives is an elementary point that the embarrassed BHI had apparently forgotten.

It doesn't end there, however. The BRA is still sticking with its number. Moreover, the revised BHI study is itself full of holes. For example, the institute says canceling the Tall Ships will cost $95.6 million. That might have been true if the exhibition had been similar to the 2000 SailBoston, an 11-day extravaganza with 120 ships. But the event planned for this summer was considerably smaller - only five days and just 10 ships. Its economic impact would have been a fraction of what BHI estimated.

A second example: BHI assumed $23.8 million in lost productivity because it figured that every commuter on Interstate 93 would lose an hour's worth of work due to traffic. That's ridiculous. Wouldn't one think, for example, that at least some of those commuters would take alternate routes or just leave for work early? And wouldn't those arriving late likely just work through lunch hour or stay later?

One can go on. Indeed, it's easy to pick through any of these economic studies and poke holes. So who's right?

It doesn't matter. For one, the numbers are, in truth, trivial. Convention backers go on endlessly about the 35,000 visitors it will attract. Big deal. That happens 81 times a year at Fenway Park. Moreover, not to sound ungrateful, but even under the most optimistic scenarios, the short-term economic impact is minor. Compared to a state gross domestic product of $300 billion, $150 million (or even $300 million) is just noise - little more than a rounding error of one-tenth of 1 percent.

More importantly, in debating short-term economic gains, we're asking the wrong question.

The right question is: What effect will the convention have on the city five, 10 or even 20 years from now? For instance, 10 years from now, a one-time attendee might be CEO of a biotech company in Iowa. Looking to expand, she casts about for locations and, remembering back to her experiences in Boston, decides to locate here.

The effect can be huge but, quite obviously, totally unpredictable.

Yet what is predictable is that scenarios such as these are more likely to occur when Boston exposes itself to the outside world. The less parochial we are and the more we effectively sell ourselves, the greater the odds are that people will move here, do business here, create art here or otherwise engage in a myriad of activities that benefit the region.

And that's why, even if it is a loser in the short run, the convention still makes sense. It's not unique in that, of course. Many other events, including the Marathon, trade shows or the always- elusive hometown World Series, offer the same opportunity. We may whine about them, thinking them a pain, but the right approach is to consider them an investment.

Talk back to Tom Keane at tomkeane@tomkeane.com.