Broadway did NOT contribute $5.1 billion to New York economy

Variety had a report up talking about how Broadway contributed $5.1 billion to New York's economy, which is up from $5.09 billion last year. These reports, according to Broadway league's biennial report, are misleading and a gross exaggeration that anyone who's ever taken a basic economics class can counter. The report got that number based on "sums paid out by producers and theater owners as well as ancillary spending -- hotel, restaurant and transportation costs, for instance -- by visitors who reported seeing a Broadway show as their primary reason for visiting New York. Total also figures in the indirect after-effects of this spending as it circulates through the economy."

To be fair, this report is slightly more accurate than most reports of this type, as it focuses on tourists who primarily visited for Broadway. But the number is a still an exaggeration for a number of reasons. For one, it assumes that if Broadway didn't exist, Broadway producers, realtors, and visitors would not contribute to New York for another reason, including what could theoretically be there instead of theater. It adds hotel, restaurant and transportation costs as if the rooms in hotels or the tables at restaurants wouldn't be filled by visitors in New York for other purposes. Secondly, I'm deeply suspicious of what those "indirect after-effects" were, as the report was basically able to make up any figure it wanted for that. It also doesn't consider the costs that hotels, restaurants, and transportation went through. Instead it just considered the costs of Broadway (and the Variety report was unclear if those were figured into its contributions to the economy), which went up by $111 milliuon dollars.

The more telling sign is that even as visitor spending for New York tourism increased overall, Broadway visitor spending was actually down. This basically means that Broadway has actually contributed less to the overall economy than a conceivable substitute—for instance, stores for international shoppers looking to capitalize on the weak dollar—would be able to contribute. So not only is Broadway not contributing $5.1 billion to NYC, it's actually costing the city money through unrealized revenue with conceivable substitutes.

This is not to say that all Broadway theaters should fold and be replaced with more Disney stores. I'm just saying that this report should be taken with about a pound of salt.