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Film (Incentives) Review: JLF’s Jon Sanders and Roy Cordato Comment for The Daily Memphian

The Daily Memphian recently quoted JLF’s Jon Sanders and Roy Cordato in an article on film incentives in Tennessee. The article focusses on claims made in an economic development study which estimated the financial impact “Bluff City Law,” a new NBC legal drama set and filmed in Memphis, could have on the city.

According to the article:

The Economic Development Growth Engine of Memphis and Shelby County (EDGE) estimated it would cost $13.5 million to buy the exposure that Memphis is getting in the first 10 episodes.

In a study used to justify a $1.4 million property tax break for Comcast owner NBC, EDGE projected the show would bring in $1.7 billion in new visitor spending in Memphis. That’s nearly half of all visitor spending in Shelby County in 2018, when 11.8 million people visited the city…

EDGE’s justification of the local “Bluff City Law” incentive estimated each dollar of advertising would result in $126 in new visitor spending in Memphis. The consulting firm Younger Associates reached that conclusion based on Tennessee Department of Tourism analysis of return on investment from a previous state advertising campaign.

According to the article, Young Associates simply borrowed an estimated return-on-investment from a previous advertising campaign of the Tennessee Department of Tourism ($251 to $1) and divided it in half “to adjust for the fact that ‘Bluff City Law’ does not directly advertise Memphis as a visitor destination.” Sharon Younger, president and founder of Younger Associates, admits she does not know if this method was appropriate:

“So we just had to make some broad assumptions. And that’s why we said we’re knocking this down for this reason,” Younger said. “Was knocking it down in half the right number? Who knows? We just don’t know.”

One thing is for sure, JLF’s Roy Cordato certainly did not think a 15,500 percent return on investment was an appropriate estimate. The article quotes Cordato:

[Dr. Roy] Cordato, the North Carolina economist, [was] skeptical of the benefit-cost ratio based almost entirely on the value of exposure.

“That’s hyperbole,” Cordato said. “They’re going to spend a little over $1 million and get $1.7 billion in return? That’s a heckuva return. Why would you put your money anywhere else?”

Jon Sanders agreed, adding cities generally should not look to the film industry as a reliable source of revenue:

“Tourism inspired by movies and TV shows is really not something that can be predicted, let alone relied upon,” said Jon Sanders, an economist with the John Locke Foundation, a conservative think tank in Raleigh, North Carolina.

“It’s like catching lightning in a bottle when someone creates something that so captures people’s imagination that they want to visit the area where it was set,” said Sanders, who is the foundation’s director of regulatory studies.

Only time will tell if “Bluff City Law” will bring Memphis $1.7 billion in tourism.

Read the full article here. Read Dr. Cordato’s critique of economic impact studies here, and learn more about film incentives from Jon Sanders here.

Brenee Goforth / Marketing and Communications Associate

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