austintexas.gov2017 MotoGP Economic Impact: MERP | 9 2017 MotoGP ECONOMIC IMPACT AE estimated the...

2017 MotoGP ECONOMIC IMPACT ESTIMATES:MAJOR EVENTS REIMBURSEMENT PROGRAM

January 23, 2017

Prepared for: Circuit Events Local Organizing Committee 100 Congress Avenue, Suite 1300 Austin, Texas 78701-2744

CIRCUIT OF THE AMERICAS

2017 MotoGP Economic Impact: MERP | 2

TABLE OF CONTENTS

Executive Summary…………………….……………………......................................................................................... 5

2017 MotoGP Economic Impact.................................................................................................................. 8

2017 MotoGP Detailed Economic Impact................................................................................................... 14

Methodology…………………………………………………………………………………………………………………………………………. 17

Exhibits……….................................................................................................................................................. 20


TABLE OF CONTENTS (Exhibits)

Exhibit

Approved Tax Rates……………………………………………………………………............................................................. A

Implan Accounting of Wholesale Sales of Alcohol Sales……....................................................................... B

Certified Attendance……………………………………………………………………............................................................. C

Master Tables & Input Calculations............................................................................................................. D

IMPLAN Multipliers………………………………………………………………………………………………………………………………… E


TABLE OF CONTENTS (Tables)

Table 1 – 2017 MotoGP Estimated Expenditures and Effects 5

Table 2 – 2017 Estimated Out-of-state Attendance 5

Table 3 – 2017 Estimated Total Daily Attendance 5

Table 4 – 2017 Estimated Daily Attendee Expenditures 6

Table 5 – MERP Tax Categories and Rates (2016) 7

Table 6 – IMPLAN Multipliers 7

Table 7 – 2017 MotoGP Estimated Total Expenditures 8

Table 8 – 2017 MotoGP Estimated Direct Incremental Tax Receipt Increase by Category 9

Table 9 – 2017 MotoGP Estimated Indirect Incremental Tax Receipt Increases 10

Table 10 – 2017 MotoGP Estimated Induced Incremental Tax Receipt Increases 11

Table 11 – 2017 MotoGP Estimated Incremental Tax Receipt Increases by Category 12

Table 12 – 2017 MotoGP Total Incremental Tax Gain 13

Table 13 – 2017 Estimated Sales and Use Expenditures 14

Table 14– 2017 Detailed Attendee Expenditures Estimates 14

Table 15 – 2017 Estimated Sales and Use Direct Tax Impacts 14

Table 16 – 2017 Estimated Hotel Occupancy Direct Tax Effect 15

Table 17 – 2017 Estimated Mixed Beverage Direct Tax Effects 15

Table 18 – 2017 Estimated Title 5, Alcoholic Beverage Code Direct Tax Effect 16

Table 19 – 2017 Estimated Rental Vehicle Direct Tax Effect 16

Table 20 – 2017 Estimated Hotel and Rental Car Expenditures 17

Table 21 – 2017 Estimated Daily Attendee Expenditures 17

Table 22 – Indirect and Induced Expenditure Calculations Based on IMPLAN Multipliers 19


EXECUTIVE SUMMARY

Introduction

MotoGP is the longest running motorsport championship in the world, it was

first held in 1949. Since then it has continued to captivate fans with thrilling

motorcycle road races. Despite MotoGP’s long history, the first MotoGP in

the America’s as held in 2013 in Austin, Texas. Since 2013, MotoGP has

become an annual event in Austin.

The event also has a broad international reach, in 2016 the Grand Prix held

18 circuits in 15 countries. The preliminary schedule for the 2017 MotoGP

bills 18 circuits in 13 countries. Circuit of the Americas (COTA) in Austin,

Texas will host the 2017 MotoGP, which will be the fifth year that COTA is

hosting the Grand Prix.

MotoGP’s international and national appeal attracts a vibrant crowd to Texas

for the event. These out-of-state (OOS) and out-of-country visitors increase

economic activity in Austin as part of their attendance. Attendees spend

money on lodging, food and beverages, entertainment and retail both on-

and off-site. Additionally, COTA spends significant capital to program the

event.

Attendee spending and presentation costs are critical drivers of the events’

economic impact. In 2017, it is estimated that 27,681 OOS fans will travel to

Austin to watch the MotoGP Championship. The combined expenditures of

OOS fan spending and COTA presentation costs are estimated to have a

direct impact of $88.5M on the local economy, and generate a total of

$169.6M in direct, indirect, and induced expenditures that would not have

occurred if MotoGP were no held at the Circuit of the Americas.

2017 MotoGP Estimated Expenditures and Effects

Direct Indirect Induced Total

Expenditures $88,517,255 $31,523,076 $49,520,391 $169,560,722

Tax Effects $3,990,544 $396,255 $691,843 $5,078,642

Table 1: Estimated 2017 expenditures and effects

Sources: AE,COTA, IMPLAN, Texas Comptroller of Public Accounts

Table 2 Estimated Out-of-state Attendance: Total attendance and OOS attendance estimates based on 2016 certified numbers (see Exhibit C)

2017 Estimated Total Attendance

Total Attendance Cert. OOS Fans On-Site OOS Fans

40,768 68% 27,681

Table 3 Estimated Out-of-state Attendance: Daily attendances is estimated to evenly distributed among all three days

2017 Estimated Out-of-State Daily Attendance

Friday Saturday SundayEstimated Unique OOS Visitor Days

28,235 28,235 28,235 84,705


EXECUTIVE SUMMARY

The Model

In addition to estimated attendance, an equally important piece of data used

to estimate the 2017 MotoGP’s tax impacts was spending data from an

attendee survey that was circulated to MotoGP ticket purchasers following

the 2014 MotoGP event. The online survey was circulated via email by

COTA and received over 570 responses. The 2014 survey represents the

most recent data available and should be regarded with a high degree of

confidence as attendee demographics and event programming have not

changed significantly.

It collected information on OOS, out-of-area (but still Texas), and out-of-

country attendees’ spending patterns and average length of stay in Austin

for the event. OOS attendees average length of stay in Austin was 3.06

days. The survey informed the projected expenditures. Each category of

average daily spending was multiplied by the certified number of unique

OOS attendee days to derive the estimated direct impacts (See Table 1, p.

5). Additionally, COTA’s presentation costs were included in the model to

reflect tax impact of those expenditures on Texas’s economy.

The estimated direct expenditure calculations were sorted into a specific,

applicable tax category and its impact was multiplied by its respective tax

rate (see Table 5, p. 7). These calculations became the estimated direct tax

impacts for the 2017 MotoGP.

Indirect and induced impacts were generated based on sector specific

multipliers from IMPLAN (see Table 6, p. 7). Texas’ general tourism

multiplier is 1.81, however an itemized analysis of the event’s different

expenditure categories produced an event specific multiplier of 1.952.

The event specific multiplier is a more accurate depiction of MotoGP’s

impact on the State of Texas. It also indicates that attendees spend more

than the average Texas tourist. Due to the different spending patterns of

MotoGP attendees, it would be imprudent to apply the general tourism

multiplier to the OOS attendees.

Sources: AE, COTA

2017 Estimated Daily Attendee Expenditures per Person

Expenditure Type Average Spent/Day

Hotel $156

Rental Car $61

Mixed Beverage $52

Beer & Wine $64

Food & Non-alcoholic beverages $129

Other Retail $63

Merchandise $98

Other entertainment $140

Total $763

Table 4 Estimated Daily Expenditures: Average daily spending of OOS attendees per person


EXECUTIVE SUMMARY

The Model

The estimated tax impacts for indirect and induced were calculated with a

Retail Ratio and All Other Spending ratio. These ratios were developed

because MotoGP attendees do not follow the spending patterns of a typical

Texan. Thus the assumption that only 20% of all indirect and induced

spending would be subject to sales and use taxes is not well suited for these

circumstances. An analysis of attendees’ primary spending categories and

their corresponding impacts on other sectors in the economy was used to

develop the spending taxing ratios for indirect and induced taxes. Retail

spending is the highest expenditure category and 57% of retail spending in

Texas is subject to sales and use taxes. The Retail Ratio and All Other

Spending ratio ensures the tax estimates catch additional tax revenue

incurred due to retail spending in the secondary effects of MotoGP.

The Retail Ratio is the percent of spending that was spent on retail in the

indirect and induced impacts, 2% and 8% respectively. This meant that fifty-

seven percent of 2% of indirect impacts and 8% of the induced impacts

could be taxed at the sales and use tax rate of 6.25%. For the All Other

Spending Ratio, 20% of the indirect and induced impacts were taxed at

6.25%. This level of detail helps ensure that the following report contains

accurate estimates of the direct, indirect, and induced impacts from OOS

spending at the 2017 MotoGP.

In sum, as a result of MotoGP related spending from OOS attendees, the

event will generate impressive tax impacts to state and local economies.

The following presents a detailed analysis of the estimated tax impacts of

the 2017 MotoGP Red Bull Grand Prix of the Americas, held at COTA in

Austin, Texas from April 21-23, 2017.Sources: AE, COTA, Texas Comptroller of Public Accounts

Table 5 2016 Tax Rates: Approved MERP taxes and their 2016 tax rates

MERP Tax Categories and Rates (2016)

Category State Tax Rate

Hotel Occupancy 6%

Sales and Use 6.25%

Car Rental 10% (under 30-days)

Mixed Beverages6.7% - Gross receipts8.25% - Sales Tax

Table 6 IMPLAN Multipliers: Sector specific multipliers

IMPLAN Multipliers

Tax Category Direct Indirect Induced Total

Sales & Use* 1.0000 0.5058 0.4816 1.9875

Rental Car 1.0000 0.3759 0.3209 1.6968

Hotel 1.0000 0.4162 0.3880 1.8042

Title 5, ABC 1.0000 0.3809 0.7539 2.1348

Mix Beverage 1.0000 0.3809 0.7539 2.1348

OverallMultiplier

1.0000 0.4119 0.4505 1.9516

* - For this table the average of the sales & use multipliers is displayed


2017 MotoGP ECONOMIC IMPACT

Based on the online attendee survey, it is estimated that OOS attendees will spend $75.5 million in Texas because of the 2017 MotoGP at COTA. Table 7,

demonstrates that the total spending at the event should be approximately $169.6 million, this includes direct, indirect and induced effects.

2017 Total Estimated Impacts to Texas

2017 MotoGP Estimated Total Expenditures†

Direct Expenditures Indirect Expenditures Induced Expenditures Total Expenditures

Sales & Use* $75,457,207 $27,505,501 $41,864,149 $144,826,857

Rental Car $1,064,763 $303,319 $353,725 $1,721,806

Hotel $5,792,881 $1,907,435 $2,431,407 $10,131,722

Title 5, ABC $3,860,184 $1,124,510 $3,031,629 $8,016,323

Mixed Beverage $2,342,220 $682,312 $1,839,482 $4,864,014

Total $88,517,255 $31,523,076 $49,520,391 $169,560,722

Table 7: Estimated direct, indirect and induced expenditures used to estimate incremental tax receipt increases due to 2017 event

Sources: AE, COTA, IMPLAN

† - Summations may not be exact due to rounding

* - Expenditures includes air travel, however, air travel is not included in the direct impact’s tax effects



AE estimated the direct tax gains to the State of Texas for the 2017 MotoGP based on MERP qualified expenditures by OOS attendees and presentation

costs. This is the one-for-one tax gain the State will see based on the projected spending increase in Texas due to the event. As seen in Table 8, the estimated

direct expenditures from OOS attendees and presentation costs will add almost $4 million in tax gains to the State. Estimates indicated that sales & use

expenditures will be the most impactful, they should account for 78% or $3.1 million of the tax gains, and approximately $75.5 million in direct

expenditures.

2017 Estimated Direct Tax Gain to the State of Texas

2017 MotoGP Estimated Direct Incremental Tax Receipt Increases by Category

Expenditure State Tax Rate Tax Effect

Sales and Use* $75,457,207 6.25% $3,114,391

Rental Car $1,064,763 10% $106,476

Hotel $5,792,881 6% $347,573

Title 5, ABC $3,860,184 6.1% $235,471

Mixed Beverage (Gross Receipts) $425,858 6.7% $28,532

Mixed Beverage (Individual Beverage) $1,916,361 8.25% $158,100

Total $88,517,255 - $3,990,544

Table 8: Estimated direct incremental tax receipt increase by tax category and effect type for 2017

Sources: AE, COTA, IMPLAN* - Expenditures includes air travel, air travel is not included in direct impacts tax effects



The 2017 MotoGP will also have indirect tax impacts, these capture the benefits to vendors that support or supply MotoGP, as well as retail stores. Increased

direct spending generates increases in revenues for local businesses; those vendors, stores and businesses may need to grow employment and/or payroll to

accommodate the changes. As seen in Table 9, the estimated indirect tax increases due to MotoGP should bring $396,255 in taxes into the State of Texas for

the 2017 event.

2017 Estimated Indirect Tax Gain to the State of Texas

Table 9: Estimated indirect incremental tax receipt increases for each tax category for 2017


* - See Methodology for more retail and all other spending ratio tax effects

2017 MotoGP Estimated Indirect Incremental Tax Receipt Increases†

Retail Ratio Tax Effect* All Other Spending Ratio Tax Effect* Total Indirect Tax Effect

Sales & Use $18,918 $325,259 $344,177

Rental Car $216 $3,716 $3,932

Hotel $1,359 $23,366 $24,725

Title 5, ABC $801 $13,775 $14,576

Mixed Beverage $486 $8,358 $8,844

Total $21,781 $374,475 $396,255




Induced tax effects are those that impact Texans at the household level, due to the projected increase in spending from the 2017 MotoGP. As seen in Table

10, Sales and Use had the most dramatic tax impact to the State with an increase of close to $582,000. Overall, the event is projected to increase induced tax

revenue to the State by $691,843.

2017 Estimated Induced Tax Gain to the State of Texas

Table 10: Estimated induced incremental tax receipt increases due for 2017

Sources: AE, COTA, IMPLAN* - See Methodology for more retail and all other spending ratio tax effects

2017 MotoGP Estimated Induced Incremental Tax Receipt Increases†

Retail Ratio Tax Effect* All Other Spending Ratio Tax Effect* Total Induced Tax Effect

Sales & Use $115,584 $466,392 $581,976

Rental Car $1,008 $4,068 $5,076

Hotel $6,930 $27,961 $34,891

Title 5, ABC $8,640 $34,864 $43,504

Mixed Beverage $5,243 $21,154 $26,397

Total $137,404 $554,439 $691,843




The total estimated tax benefit for the 2017 MotoGP is made up of the estimated OOS attendee expenditures, and event presentation expenditures. In 2017,

the State of Texas is projected to receive approximately $5.1 million in total tax receipts from the MotoGP, as demonstrated in Table 11. The total tax

impacts will come from the direct, indirect and induced tax effects created by the estimated $88.5 million in OOS attendee spending and COTA presentation

costs associated with the event.

2017 MotoGP Estimated Total Tax Gain to the State of Texas

2017 MotoGP Estimated Incremental Tax Receipt Increases by Category†

Direct Tax Effect Indirect Tax Effect Induced Tax Effect Total Tax Effect

Sales & Use $3,114,391 $344,177 $581,976 $4,040,544

Rental Car $106,476 $3,932 $5,076 $115,484

Hotel $347,573 $24,725 $34,891 $407,189

Title 5, ABC $235,471 $14,576 $43,504 $293,552

Mixed Beverage $186,632 $8,844 $26,397 $221,873

Total $3,990,544 $396,255 $691,843 $5,078,642

Table 11: Estimated incremental tax gains to the State for 2017





MERP enables incremental tax increases from statutorily approved taxes (Table 5, pg. 7), which are attributable to the event, to be deposited into a trust fund

to reimburse a local government or local organizing committee for certain eligible costs associated with conducting the event. In order to qualify for

reimbursement, the beneficiary of the trust fund provide a local match based on the incremental tax revenues generated by the event. The match is $1 for

each $6.25 the state contributes to the fund. Using that formula, the local match is $812,583 ($5,078,542 / 6.25).

Based on the total incremental tax gain to the State of Texas, Circuit Events Local Organizing Committee requests that the Office of the Governor

certify a deposit of $5,891,225 into a MERP account established for the 2017 MotoGP.

2017 MotGP Estimated Total Tax Gain to the State of Texas


2017 MotoGP Total Incremental Tax Gain

Total Tax Effect

Sales & Use $4,040,544

Rental Car $115,484

Hotel $407,189

Title 5, ABC $293,552

Mixed Beverage $221,873

Total Incremental Tax Gain to Texas $5,078,642

Local Match $812,583

Total Incremental Tax Gain $5,891,225

Table 12: 2017 MotoGP Total Incremental Tax Gain


2017 MotoGP DETAILED ECONOMIC IMPACT

2017 Estimate Direct Tax Impacts

2017 Estimated Sales and Use Expenditures

Expenditure Category Amount

OOS Attendee $38,665,521

Presentation Costs $11,164,733

Total $49,830,254

Table 13: Estimated total expenditures of OOS spending and event presentation costs for 2017

2017 Estimated Sales and Use Direct Tax Impacts

Expenditure Amount Tax Rate Tax Effect

Direct $49,830,254 6.25% $3,114,391

Sales & Use Tax

Sales and use tax is estimated to be the most impactful of all the taxes

generated due to the 2017 MotoGP. On- and off-site attendee expenditures

were included in the direct expenditure estimates. Table 13 is the total

estimated direct expenditures from OOS attendees and presentation costs.

Table 14 contains the estimated direct incremental tax receipt increases in

sales and use taxes due to the 2017 MotoGP. Lastly, Table 15 details total

OOS attendee expenditure estimates by type.

Table 15: Estimated detailed sales and use tax impacts from 2017


2017 Detailed Attendee Expenditure Estimates*

Expenditure Type Amount

Apparel $8,212,371

Fan Merchandise $4,181,822

Other Retail $1,343,516

Other Entertainment $11,752,328

Food & Non-alcoholic beverages $11,128,265

Taxis $2,047,219

Total $38,665,521

Table 14: Estimated total OOS attendee expenditures for 2017

* - Attendees provided information about airfare expenditures, these are not reflected in the direct effects, but are carried through in the indirect and induced effects



Hotel Occupancy Tax

The hotel occupancy tax is projected to have the second largest tax impact

for Texas during the 2017 MotoGP weekend. Driving this is that an estimated

82% of OOS attendees will spend an average of 3.06 days in a hotel for the

event.

Both state and local governments apply hotel occupancy taxes to lodging.

For the purpose of this report, however, only the state rate of 6% was applied

to calculate the direct, indirect and induced tax effects. Table 16 estimates

the direct tax receipts increase to the State for the 2017 MotoGP.

Mixed Alcoholic Beverages Tax

Mixed alcoholic beverages taxes are distributed differently than other taxes.

First there is 6.7% gross receipt tax on all mixed beverages sales. Effective

in 2014, there is also a 8.25% tax on individual mixed alcoholic beverages.

Table 17 calculates the estimated direct tax effects of both tax rates on the

state’s economy for the 2017 event.


Table 17: Estimated tax effects of OOS mixed beverage gross tax receipt and individual mixed beverage tax impacts for 2017

2017 Estimated Mixed Beverage Direct Tax Effects

Tax Type Amount Tax Rate Tax Effect

Gross Receipt* $425,858 6.7% $28,532

IndividualBeverage

$1,916,361 8.25% $158,100

Total $2,342,220 - $186,632


Table 16: Estimated OOS hotel occupancy direct tax effects for 2017

2017 Estimated Hotel Occupancy Direct Tax Effect


Direct $5,792,881 6.0% $347,573

* - The average markup on mixed beverages is 450%, to generate the grossreceipts for mixed beverage purchases, the individual beverage tax wasdecreased by 450%. The tax effects were captured by applying the gross receipttax rate to the gross receipts expenditure.


Title 5, Alcoholic Beverage Code Tax

Title 5 of the Alcoholic Beverage Code establishes a tax by volume for non-

mixed alcoholic beverages, such as beer, wine, champagne, and malt

liquors*. The precise amount of alcohol by volume sold by vendors to OOS

attendees during the 2017 MotoGP would be extremely difficult to estimate

since it would require a high level of coordination with vendors to understand

the quantity of eligible beverages sold throughout the city, the corresponding

alcohol by volume, and whether or not the beverage was purchased by an

OOS attendee of a MERP eligible event. Off-site bars and restaurants do not

maintain records with such a high degree of detail.

Due to the high degree of difficulty and complexity involved in calculating

Title 5 taxes, a surrogate rate of 6.1% is used. This rate is based on the

comptroller’s review of numerous historical MERP studies. Due to the

comptroller’s continued recognition of and compliance with this rate, it is

assumed to be a good approximation to derive Title 5 tax estimates. As seen

in Table 18, this report uses the approximated tax rate to estimate the tax

increase from beer and wine sales for the 2017 MotoGP.

Rental Car Tax

An estimated 39% of OOS visitors will rent a car while visiting Texas for the

2017 MotoGP for an average of 3.06 days. The Texas Tax Code Section

152.026 establishes a tax rate of 10% for car rentals that last less than 30-

days. The direct expenditure estimates were developed based on from the

surveys relative to average rental rates, average rental length, number of

people per car (see Exhibit E for full calculation). The 10% rate was applied

to the direct expenditures, as seen in Table 19, to calculate the estimated

direct expenditure tax effects from the 2017 MotoGP.



Table 18: Estimated direct OOS tax impacts from beer and wine purchases for the 2017

2017 Estimated Title 5, Alcoholic Beverage Code Direct Tax Effect


Direct $3,860,184 6.1% $235,471

* - See appendix for specific taxes by volumeSources: AE, COTA, IMPLAN

Table 19: Estimated direct OOS tax impacts on rental vehicles for 2017

2017 Estimated Rental Vehicle Direct Tax Effect


Direct $1,064,763 10% $106,476


METHODOLOGY

Out-of-State Spending

Attendee Spending

General spending patterns by out-of-state attendees were based on an

online survey of MotoGP ticket holders and attendees conducted by COTA

for the 2014 event (See Table 23). Overall, the survey inquired about:

attendee’s primary residence (from Texas or OOS)

travel patterns

car rental expenditures

group/party size

hotel stays

average daily expenditures on merchandise at COTA

average daily expenditures on other retail

average daily expenditures on food & non-alcoholic beverages

average daily expenditures on mixed drinks

Average daily expenditures on beer and wine

Based on survey responses, daily spending is applied on a per capita basis

based by type of expenditure. Total expenditures were calculated based on

the per capita expenditure for each attendee that participated in the

expenditure type. Table 20 and Table 21 show the spending patterns for

OOS attendees.

2017 Estimated Hotel and Rental Car Expenditures

Expenditure TypeAvg.

Spent/day%

ParticipationAvg. days

Hotel $156 82% 3.06

Car Rental $61 39% 3.08

2017 Estimated Daily Attendee Expenditures

Expenditure Type Average Spent/Day

Mixed Beverage $52

Beer & Wine $64

Food & Non-alcoholic beverages $129

Other Retail $63

Merchandise $98

Other Entertainment $140

Table 20: Attendee spending patterns on hotels and rental cars

Table 21: Daily attendee expenditures for 2017

Sources: AE, COTA


METHODOLOGY

Out-of-state Spending

Presentation Costs

The presentation costs for the 2017 MotoGP are also included in the impact

estimates, but only those costs that fall within the purview of the statute (see

Exhibit E). Presentation costs were placed under the sales and use tax

category since the event is considered an amusement service by the tax

code, and therefore it is the most appropriate tax category.

The 2017 model utilizes financial information provided to AE from COTA on

the costs associated with the event. Each cost was assigned to an IMPLAN

industry category based on the expenditure type. By categorizing each

expenditure into its specific type, IMPLAN then uses an industry specific

multiplier to provide an accurate picture of the expenditures’ effects on Texas’

economy.

Below are the categories of expenditures associated with presenting the

2017 MotoGP:

Advertising and related services

Legal and permitting fees

Facilities support services

AE extracted the multipliers for indirect and induced effects from the IMPLAN

model and then applied each multiplier to the direct expenditures to calculate

the respective indirect and induced expenditures (see Table 22 on the

following page).

After careful analysis, it was determined that the indirect and induced tax

effects from the sales and use tax category would have the largest impact by

a substantial margin. Due to this, AE chose to limit the indirect and induced

tax impact to the sales and use category. The sales and use tax covers both

retail/sales services and entertainment services.

In order to conduct this analysis, AE identified the most impactful sector of

the 2017 MotoGP, which was retail. The impact of the total spent during the

event was analyzed and it was determined that 2% of indirect spending goes

back into retail (retail ratio) and 98% flows to all other sectors of the economy

(all other), for induced spending the ratios are 8% retail and 92% all other

spending. Of the retail ratio spending, 57% of its indirect and induced

spending is subject to the sales and use tax rate (6.25%). Only 20% of the all

other ratio indirect and induced spending is subject to the sales and use tax

rate. This formula yielded the incremental sales and use tax receipt increase

attributable to the indirect and induced effects of the MotoGP.

By way of example, if there is a $1 million indirect impact, 2% will be spent

on retail ($20,000). Of that $20,000, 57% will be subject to sales taxes

($11,400). The sales tax rate of 6.25% can then be applied to get the total

incremental tax gain from the indirect impact ($11,400 x 0.0625 = $712.50).

Indirect and Induced Effects


METHODOLOGY

Indirect and Induced Effects

Indirect and Induced Expenditure Calculations Based on Implan Multipliers

Direct Expenditures

IndirectMultiplier

Indirect Expenditure

Induced Multiplier

Induced Expenditures

Total Expenditures

Sales & Use $75,457,207 0.5058* $27,505,501 0.4816* $41,864,149 $144,826,857

Rental Car $1,064,763 0.3759 $303,319 0.3209 $353,725 $1,721,806

Hotel $5,792,881 0.4162 $1,907,435 0.3880 $2,431,407 $10,131,722

Title 5, ABC $3,860,184 0.3809 $1,124,510 0.7539 $3,031,629 $8,016,323

Mixed Beverage $2,342,220 0.3809 $682,312 0.7539 $1,839,482 $4,864,014

Total $88,517,255 - $31,523,076 - $49,520,391 $169,560,722

Overall Multiplier 1.0 0.4119 0.5397 1.9516

Table 22: Indirect and induced expenditure calculations based on IMPLAN multipliers

* - this is an average of each multiplier in the Sales & Use Category, a full list of the multiplies in each category can be found in Exhibit F


EXHIBIT A

Tax Categories and Rates

MERP Tax Categories and Rates (2016)

Category Expenditure type Tax Rate

Hotel Occupancy Hotel 6%

Sales and UseGeneral merchandise; clothing; other entertainment; food and non-alcoholic beverages

6.25%

Car Rental Rental Cars 10% (under 30-days)

Mixed Beverages Mixed beverages6.7% - Mixed Beverage Gross receipts8.25% - Mixed Beverage Sales Tax

Title 5, ABC Tax Beer & Wine 6.1%

Sources: Texas Comptroller of Public Accounts


EXHIBIT B

Accounting of Wholesale Sales of Alcoholic Beverages

*

* - given this difference, AE elected to

use 450% as the given mark up for

mixed beverages

Mixed Drinks: Gross Receipt Total

Tabulation

Total Mixed Drink Spending $1,916,361

Average Mark Up 450%

Total Gross Receipt Expenditure $425,858


EXHIBIT C

Certified Attendance


EXHIBIT D

Suite Attendance


Estimated Out-of-State (OOS) Attendance

2016 Cert. Attendance

Source

Total 3-Day Attendance 109,000 Exhibit C

Final Day Attendance 40,768 Exhibit C

OOS Fans 67.9% Exhibit C

Average Length of Stay 3.06

Total Unique OOS Fan Days 84,705 Exhibit C

Attendance

Master Tables & Input Calculations

EXHIBIT E


Since the projected total number of visitor person days is project to be the same as 2016 (84,705), general fan person days is the difference

between total OOS person days and Suite person days (4,717).

Suite person days are calculated on p. 26

Visitor Person Days

OOS Visitor Person Days by Type

Visitor Person Days

Total OOS Attendance in Austin 84,705

Suite Visitor Days 760

Total General 83,945

EXHIBIT E


OOS Suite Visitor Person Days

Tabulation Source

Suite Attendance 540 Exhibit D

% of OOS Attendees 46% Exhibit D

Total OOS Suite Attendance 248

Average Length of Stay 3.06 Online Survey

Total OOS Visitor Person Days 760

Visitor Person Days

EXHIBIT E


OOS Hotel Expenditures General

Tabulation Source

Estimated Attendance (Sunday) 40,768 Exhibit C

% of OOS Attendees 67.9% Exhibit C

% OOS Fans Renting Hotel Room 82.0% Online Survey

Average Length of Stay in Austin 3.06 Online Survey

Total Persons in Hotel Rooms 69,458

People per Hotel Room 1.94 Online Survey

Total Hotel Room Rentals 35,675

Average Daily Price of Hotel Room $156 Table 22

Total Hotel Room Expenditure $5,573,541

Hotel

EXHIBIT E


OOS Suite Hotel Expenditures

Tabulation Source

Total OOS Visitor Person Days 760

People Per Hotel Room 1.94 Assumed to be the same as general attendance

Total Hotel Room Rentals 392

Average Daily Price of Hotel Room $665 See Below

Total Hotel Room Expenditure $260,547

Hotel

EXHIBIT E

As of 12/5/2016 the following rates were listed for suites during the weekend of the 2017 MotoGP:

Average Suite Night Price/person

Average Suite Night Cost Source

Van Zandt $2,500 http://www.hotelvanzandt.com/

Stephen F. Austin $448 http://austin.intercontinental.com/

The W $1,766 http://www.whotelaustin.com/

The Omni $447https://www.omnihotels.com/hotels/austin-

downtown

People Per Hotel Room 1.94 Assumed to be the same as general attendance

Average suite night $1,290

Average per person $665


OOS Rental Car Expenditures

Tabulation Source


% of OOS Attendees 67.9% Exhibit C

% OOS Fans Renting Cars 39.0% Online Survey

Average Length of Car Rental 3.08 Online Survey

People per Rental Car 2.1 Online Survey

Total Car Rental Person Days 17,341

Average Daily Price of Rental Car $61 Table 22

Total Rental Car Expenditure $1,064,763

Rental Cars

All attendees are assumed to have the same expenditure rates for rental cars.

EXHIBIT E


Travel to Austin

OOS Air Travel Expenditures

Tabulation Source


% of OOS Attendees 68% Exhibit C

% OOS Fans Who Flew 100% Online Survey

Total OOS Fans Who Flew 27,681

Average Cost of One Way Plane Ticket $463 Online Survey

Total Air Travel Expenditures $25,626,953

EXHIBIT E

For the purpose of tax calculations, the $25.6 million was excluded from direct impacts.

However, this amount was carried over to indirect and induced impacts.


Other Daily Expenditures

OOS General Fan Other Daily Expenditures

Average Daily Spend

Estimated OOS

Attendance

Total Expenditure

Source for Average Daily Spend

Food & Non-Alcoholic Beverages $129

40,768

$10,900,008 Table 23

Mixed Drinks* $52 $1,808,239 Table 23

Beer & Wine† $64 $3,736,610 Table 23

Event Merchandise $98 $8,264,953 Table 23

Retail $63 $5,310,650 Table 23

Entertainment Outside COTA $140 $11,823,967 Table 23

Total $546 $41,844,428

EXHIBIT E

† - 69% of survey respondents indicated they consume beer or wine during the event (on and off-site)

* - 41% of survey respondents indicated they consumed mixed drinks during the event (on and off-site)


Other Daily Expenditures

OOS Suite Other Daily Expenditures at COTA

Average Daily Spend

Suite OOS Person Days

Total Expenditure

Source

Food & Non-Alcoholic Beverages $258 760 $196,198

Assumed to be two times the daily expenditure of general fans

Mixed Drinks $104 760 $79,385

Beer & Wine $128 760 $97,476

Event Merchandise $196 760 $148,768

Total $686 $521,827

OOS Suite Other Daily Expenditures Outside COTA

Average Daily Spend

Suite OOS Person Days

Total Expenditure

Source

Food & Non-Alcoholic Beverages $129 760 $98,099

Assumed to same as general fan expenditures

Mixed Drinks $52 760 $39,693

Beer & Wine $64 760 $48,738

Retail $126 760 $95,591

Total $371 $282,121

EXHIBIT E


OOS Total Expenditures by Fan Type

General Fan Expenditures Suite Fan Expenditure Total Expenditures

Hotel $5,532,333 $260,547 5,792,881

Rental Car $1,064,763 - 1,064,763

Air Travel to Austin $25,626,953 - 25,626,953

Food & Non-Alcoholic Beverages $10,833,968 $294,297 11,128,265

Mixed Drinks $1,797,284 $119,078 1,916,361

Beer & Wine $3,713,971 $146,214 3,860,184

Event Merchandise $8,214,877 $148,768 8,363,645

Retail $5,278,474 $95,591 5,374,065

Entertainment Outside COTA $11,752,328 - 11,752,328

Transportation $2,047,219 - 2,047,219

Wholesale Alcohol Purchases $425,858

Total $76,288,028 $1,064,494 $77,352,522

Totals

EXHIBIT E

Total MERP Qualified Spending from 2017 MotoGP

Totals

Total Attendee Spending $77,352,522

COTA Presentation Costs $11,164,733

Total $88,517,255


EXHIBIT F

IMPLAN: Multipliers

Model MultipliersIMPLAN Code Description Direct Effects Indirect Effects Induced Effects Total

403 Apparel 1.00 0.4288 0.3829 1.8117

404 MotoGP Merch 1.00 0.3838 0.5071 1.8909

405 Other Retail 1.00 0.3805 0.4368 1.9909

412 Taxis 1.00 0.5755 0.5248 2.1002

442 Rental Car 1.00 0.3759 0.3209 1.6968

466 Air Travel to Austin 1.00 0.5638 0.4620 2.0258

490 Race Operations 1.00 0.8261 0.4332 2.2593

496 Other Entertainment 1.00 0.4637 0.4176 1.8813

501 Food and Bev 1.00 0.4085 0.5313 1.9398

499 Hotel 1.00 0.4162 0.3880 1.8043

503 Mixed Beverages 1.00 0.3809 0.7539 2.1348

503 Mixed Beverage Gross Receipts 1.00 0.3809 0.7539 2.1348

503 Beer and Wine 1.00 0.3809 0.7539 2.1348

402 Gasoline 1.00 0.3880 0.5136 1.9016

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