PHOENIX — Gov. Katie Hobbs is defending the decision to spend more than $2 million in tax dollars to entertain business executives during the Super Bowl.
Gov. Katie Hobbs
And Sandra Watson, director of her Arizona Commerce Authority, said she believes the expenditure will survive a review of its legality by Attorney General Kris Mayes.
Their comments Wednesday came as a study of the impact of the February event commissioned by the host committee says it created $1.3 billion in total economic impact for the state.
A survey found there were more than 102,000 people who came to the Phoenix area for the match-up between the Kansas City Chiefs and the Philadelphia Eagles, said Owain Evans, a research professor at the W.P. Carey School of Business at Arizona State University. And he said not all of them actually came to watch the game, with only about 60 percent of them having tickets.
But the multi-day festivities around the event also included a private CEO Forum put on by Watson’s agency. And a new report by the Auditor General’s Office pegged the cost of “social and entertainment events” at close to $2.1 million.
The biggest piece of that was $1.85 million for the Arizona Commerce Authority to be a sponsor of the Super Bowl. That netted 140 tickets to the Super Bowl itself, a VIP tailgate party and the “Super Bowl Experience” at the Phoenix Convention Center which included everything from a 4-D immersive theater, and equipment room where fans can “suit up” and a post bowl “immersive celebration.”
There also were 70 rooms at the Arizona Biltmore with a hospitality lounge, planned dinner vents, a welcome event with Hobbs and panel discussions with Arizona businesses. And there were gift packages with everything from hats and sunglasses to tumblers.
Hobbs said she sees nothing wrong with that.
“It is absolutely one important tool that we use to attract economic development to our state,’’ the governor said.
Watson defended the expenditure.
“The CEO program really gives us an opportunity to really educate decision makers on the value proposition that we offer for businesses,” she said. And Watson said landing new firms is very competitive.
“What we want to do is position Arizona in the best possible way,” she said. “Utilizing the Super Bowl and other major events gives us an opportunity not only to talk about the business climate in Arizona but our quality of life.”
And how many of the firms that the ACA has claimed it has landed also have gotten financial incentives to come to Arizona?
“All companies are eligible for incentives,” Watson acknowledged, including tax breaks and outright grants. She had no immediate list of how many did seek or get them.
The audit report says that between 2018 and 2023, the Commerce Authority hosted CEOs from 118 different companies, with the ones before this year linked to the annual Waste Management Open golf tournament. But the report questioned how effective these events have been at actually generating new business.
Auditor General Lindsey Perry said her staff found at least two instances where the Commerce Authority invited executives to a CEO Forum when it had already awarded the company a grant or approved a tax incentive prior to the event. Perry said authority staff responded that it sometimes invites executives whose firms already made commitments because they made be considering additional projects.
What the authority told auditors is all the events produced from 2018 through the time the report was prepared this year were nearly 15,000 jobs from 23 companies.
But the report lists all of this as “proposed, potential, non-binding jobs.” Watson, however, said those are reliable numbers and that the 23 companies “have made a commitment to Arizona.”
“Some of those are already shovels in the ground or who have leased space, bought property, and are moving forward, starting to hire employees,” she said.
“There are a few that have announced and are now gearing up,” Watson said. And she said that these are real commitments and not just promises.
Anyway, she said, just because the CEO Forums with 118 companies produced only 23 commitments does not mean they are not worth the time and expense.
“In some cases, we’re talking about a project maybe in two or three years from now,” Watson said.
Anyway, she noted, of those 118 company executive entertained, close to 70 of this were just this year, meaning the expenditure has yet to bear fruit.
Michael Bidwill, owner of the Arizona Cardinals — whose stadium was used for three of the last four Super Bowls in Arizona — echoed that point, saying he believes the 2023 numbers are premature. He predicting this year’s event will land between 35,000 and 50,000 permanent new jobs.
“I feel really good about what we’re doing,” he said.
“I think the dollars that were spent here, both public and private, are all about return on investment,” Bidwill said. “This is a big win for our state.”
He said the 2015 Super Bowl — not included in the new audit — proved that, with the state entertaining more than 50 CEOs.
One of those in attendance, he said, was from Lucid Motors, founded in 2007 as a company making batteries which later sought to expand into electric cars.
“Today, I drove my Lucid Motors car to this press conference,” Bidwill said. “It was made here in Arizona at Casa Grande, by Arizonans, high-paying jobs.”
That, however, still leaves the question of whether putting public dollars into this kind of program is legal.
Perry said state law exempts the Arizona Commerce Authority from the rules that govern other state agencies about things like travel and sponsorship requirements. She said it even allows the authority to spend money for alcohol, something strictly off limits for other agencies.
But that, Perry said, does not resolve the whole issue. She pointed out that the Arizona Constitution requires the payment of public funds be for a public purpose and that the value of the benefit received by the public exceed the cost.
Watson said she is not worried.
“We have our own internal and a third party attorney actually giving us guidance on all of our programming,” she said. “I’m confident that our programming meets the constitution.”
Perry, however, said she is referring the question to the attorney general, calling that “consistent with our standard practice for assessing the applicability of the Arizona Constitution’s gift clause.”
“We’re investigating the situation,” said Richie Taylor, an AG spokesman.
That is only part of the fallout that remains from the Super Bowl.
As part of its own $1 million sponsorship of the Super Bowl, the Arizona Office Of Tourism got a dozen tickets to the game that it gave to Hobbs.
That is not unusual and is similar to what happened in 2015 when the governor’s office got a block of 20 tickets for the Super Bowl that year.
But then-Gov. Doug Ducey directed that the tickets to to the Military Assistance Mission, which helps active-duty military, their families and wounded soldiers, according to Daniel Scarpinato who was Ducey’s press aide at the time. And he said the governor purchased his own ticket to the game.
This time Hobbs’ office gave away half to educators and a veterans’ assistance organization. AzFamily TV, which broke the story, reports that others went to Allie Bones who was Hobbs’ chief of staff at the time along with five other staffers.
“Just like any other sponsor, the governor’s office was a sponsor,” the governor said.
“We had discretion over how those tickets were used,” Hobbs said, saying they were just a benefit of that taxpayer-financed sponsorship. “Some were used for staff appreciation.”
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