Business

College towns face a potentially devastating economic blow this fall: No football

Posted August 14, 2020 11:52 a.m. EDT

— Missing out on college football games is more than just a bummer for die-hard fans of the sport. For university towns and the local businesses that rely on college football to generate revenue, it's yet another 2020 economic disaster on top of the Covid-19 pandemic.

Earlier this week, the Big Ten and Pac 12 conferences announced they were postponing their fall seasons until spring 2021. The news hit hard for businesses in college towns where those teams play.

"The cavalry is not coming up over the hill," said Fritz Smith, the CEO of Happy Valley Adventure Bureau, which promotes tourism near Penn State's campus. "[Local businesses] have got to hunker down and try to figure out how to survive without much customer base coming in. Quite frankly, some of them might not make it."

Penn State was ranked No. 8 in the Associated Press pre-season college football poll this year. The team was expected to contend for a national title in the fall after its successful 11-2 season last year.

The school's football stadium is the second largest in the country, holding up to 106,572 people. Thousands of out-of-towners typically flock to the stadium weekly during the fall, spending money at local hotels, shops and restaurants.

Happy Valley stands to lose about $130 million in revenue, including $70-$80 million in direct spending, as a result of Penn State games being postponed or canceled, according to Smith. For perspective, the State College community adjacent to Penn State's University Park only generated about $8.9 million in total GDP last year, according to a Federal Reserve Bank of St. Louis analysis.

Coronavirus-related shutdowns near the campus caused local hotels to lose 96% of their revenue in April, 92% in May, and 80% in June, according to the tourism bureau.

Judy Karaky, general manager at The Penn Stater Hotel & Conference Center, says state restrictions limiting indoor gatherings to 25 people of fewer and a 25% occupancy cap on restaurants have crippled local businesses.

"No fall football season, unfortunately, will have a negative economic impact on our county and region," she said in email on Thursday. "Having grown up in State College, I personally see the downtown businesses taking a significant hit and I hope our local community does its part to support all of these businesses."

About 60%-65% of visits to the area have some connection to Penn State. The football team is "a big chunk of that," according to Smith, who estimates that Penn State football alone generates about 8%-9% of all visitor spending in the local community.

"We are essentially a white-collar factory town and our factory has shut down," Smith added.

The situation isn't nearly as bleak in metro areas like Columbus, Ohio, home of the Ohio State Buckeyes, who were ranked No. 2 in the nation heading into the fall after playing in the college football playoffs in December.

The state's capital city region, which has a population of more than 2.1 million, is home to major private employers such as Chase Bank, Nationwide, and Honda in addition to state and local government offices.

But Don DePerro, president and CEO of the Columbus Chamber of Commerce, still says the cancellation of Ohio State football games this fall will cost the city "hundreds of millions" of dollars in lost revenue.

"This is like a double whammy for these restaurants and caterers ... who cater tailgate parties," DePerro said.

Kari Pollarine, a day manager at the Varsity Club, a typically bustling Ohio State campus bar, says business has been dramatically slower all summer because of Covid-19. Canceling Buckeye football in the fall, she says, is an additional "big bump in the road."

"I'm hoping maybe with NFL football we'll get some people in, but it's going to be pretty quiet for the rest of the year," Pallarine told CNN Business. "[The bar's owners] are pulling from their savings to keep it afloat. We'll make it just because we've been in business for so long."

In Madison, Wisconsin, Badgers football games generate $114 million for the state each year and employ more than 1,000 people, according to the university's athletic department.

Rob Gard, director of PR and communications for Destination Madison, the city's tourism and marketing organization, says losing Badger football for the fall was expected, and the business community has been banding together and gaining much-needed support from patrons since the pandemic started.

"This certainly will not help us start a rebound," Gard told CNN Business.

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