Live

Watch CBSN Live

What's Atlantic City's payoff from Miss America?

When the Miss America pageant returned to Atlantic City, N.J., last year after a six-year sojourn in Las Vegas, the state gave it $2.5 million in aid, triple the amount it had previously gotten. New Jersey's Casino Redevelopment Authority (CRDA) Chairman John Palmieri noted at the time, "There's a strong economic case to make, not to mention the psychological benefit that is achieved in having a pageant return to the city where it belongs."

Gambling in Atlantic City has taken big hits ... 02:30

Unfortunately for New Jersey, it's not clear how much of a return the state has gotten for its investment in the 90-year-old pageant, the finals of which will be televised Sunday. That's because no one has verified the accuracy of projections in a 2013 study the state used to justify the subsidy.

CRDA spokeswoman Elaine Zemansky told CBS MoneyWatch that officials didn't think it was fair to analyze the results after just one year, given that the state has funded it for three years. "It wouldn't be appropriate or responsible to do a study based on one year," she said, adding that the CRDA wants to see how interest in the pageant builds over time.

The 2013 report, prepared by an outside contractor for the CRDA, argues that the investment will generate an annual economic benefit of $32 million, most of which, not surprisingly, would come from gaming revenue. When indirect benefits, such as income for local business owners are considered, that benefit rises to $45.9 million. The report also estimates that Miss America will create 559 jobs with $12 million in earnings.

A spokesman for the Miss America organization told MoneyWatch: "Officials with the Atlantic City Alliance believe [the 2013 study] actually underestimates the full economic impact the Miss America Organization has on the region."

The CRDA's decision to hold off on evaluating the pageant's economic impact didn't surprise Economist Victor Matheson of the College of the Holy Cross. Organizers of big events like to tout economic-impact numbers beforehand to generate media interest. Once the event is over, they often have no reason to look back.

"They should be able to crunch those numbers fairly easily," Matheson said, adding that one reason event organizers aren't eager to evaluate the accuracy of their forecast is they might not like what they see.

A focal point of the CRDA's 2013 economic-impact projections is the annual parade down the Jersey Shore town's Boardwalk featuring the contestants. The report estimated that 125,000 people will attend the parade, and they'll spend more than $32.2 million while they're in Atlantic City. However, that total impact of $45.9 million includes indirect spending, or what economists call a "multiplier effect." That means for every dollar spent at the pageant, more money will be spent elsewhere.

Matheson said he's skeptical that "anywhere close" to that many people would travel to attend the parade. The official estimate for attendance at last year's parade was 225,000, a figure that statistician Anthony Marino, formerly with the South Jersey Transportation Authority, described as "an extreme embellishment." His estimate of the crowd was between 60,000 and 80,000.

TV ratings for the pageant, which promotes itself as "the world's largest provider of scholarships to women" fell 11 percent last year among viewers 18 to 49, a demographic coveted by advertisers. The overall audience, though, was pegged at 8.3 million, its biggest figure since 2004.

Data from the U.S. Department of Commerce estimates the Atlantic City region's GDP is just under $11.5 billion. So, even with the most optimistic of scenarios outlined by the pageant's supporters, Miss America's economic impact would be skin deep at most.

View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.