UFC EVENT IMPACTS:ECONOMIC STUDY FOR NEW YORK STATEECONOMIC STUDY FOR NEW YORK STATE

UPSTATE (BUFFALO) AND DOWNSTATE (NYC)( ) ( )

NOVEMBER 10, 2008

Mixed Martial Arts by the numbers

• Average gate revenues for UFC $3.0  g gfights in 2008million

ban • Television series/episodes about the sport in 200811

• Former Olympians competing in MMA14 MMA

• Former NCAA Wrestling 17

2

gChampions competing in MMA17

UFC regulation can bring needed economic and fiscal benefits to New York Stateand fiscal benefits to New York State

NYS Law enacted in 1997:

§ 5-a. 2. No combative sport shall be conducted, held or given withinthe state of New York, and no licenses may be approved by thecommission for such matches or exhibitions.

UFC is regulated and recognized by 36 out of the 44 states that have athletic commissions, including California, Nevada, New Jersey, Ohio and Pennsylvania.

3

Attendance at UFC events has risen substantially over the last decade

Attendance

substantially over the last decade 

140,000 

160,000 

180,000 

80 000

100,000 

120,000 

,

20 000

40,000 

60,000 

80,000 

‐

20,000 

2001 2002 2003 2004 2005 2006 2007 2008

4

Source: Zuffa, LLC.

Attendance Total

Note: 2008 attendance is projected

UFC’s market share has also increased dramaticallydramatically

Increase in Pay per View Revenues

250 

Increase in Pay per View Revenues 2003‐2006 (in millions)

150 

200 

50 

100 

‐

WWE HBO Boxing* UFC

5

Source: USA Today, February 28, 2007; WWE 2003 Annual Report; HR&A analysis of HBO Boxing 2003 & 2006 flight lists

Est 2003  PPV Revenues Est 2006  PPV Revenues

HR&A Advisors assesses economic impacts for events and activities across the countryevents and activities across the countryHR&A was retained by Zuffa, LLC. to project economic and fiscal activity for potential events in both upstate and downstate New York.

States Worked In•California•Connecticut

Selected Clients•American Museum of Natural History

Study Areas•Mixed‐Use Development•Museums•Connecticut

•District of Columbia•Illinois•Massachusetts•Maryland

History•Brooklyn Academy of Music•City of Washington, DC•East Baltimore Development, Inc.

•Museums•Parks•Shopping Centers•Sporting Events•Stadiums•Maryland

•North Carolina•New Jersey•New York•Ohio

•Habitat for Humanity•New York City Economic Development Corporation

•New York Empire State 

•Stadiums•Transit Oriented Development

•Ohio•Pennsylvania•South Carolina

Development Corporation•New Jersey Sports and Exposition Authority

•Times Square AllianceL i l i l•Large national private real estate developers

6

Economic impact: event spending and visitor spending stimulate economic activityspending stimulate economic activity

Local Event 

SpendingEconomic Activity

p g

Local EconomicEconomic 

ContributionEmployment Employment Wages

Fiscal Impacts

Visitor Spending

7

Summary of Findings( ff l )Upstate (Buffalo)

8

Local event spending by Zuffa and its affiliates 

HR&A analyzed typical event budgets for a comparable UFC marquee event.  Local spending was analyzed by line item. 

Event Costs

T t ti

Merchandise

F d

Television ProductionTransportation

Staffing

Food Production

Advertising

Commercials

9

Estimated Event Spending: $1.7M

Total visitor spending of $1.4 million.

• 3,000 attendees from    Buffalo Metropolitan area

1

.• No additional local spending

2.

• 7,000 daytrippers• $475,000 local spending

1

2

• 6,000 overnight visitors• $575,000 local spending• $300 000 lodging

1

23

• $300,000 lodging

• $1.1 million in local spending

3Total

10

$1.1 million in local spending• $300,000 in lodging• $1.4 million in total spending

$5.2 million in total economic activity for the local economylocal economy

$1.7 million of direct event spending is leveraged 3 times to result in $5.2 million dollars of total activity in the local economy.

Economic Output ‐ $5.2M

$1.7 $1.0 Direct Event Spending

Vi it S di

$1.4 

$1.1 Visitor Spending

Indirect Activity

Induced Activity

11

source:  Zuffa, LLC & HR&A  input‐output analysis using IMPLAN

A UFC event could increase direct sports‐related activity in Buffalo by 20%related activity in Buffalo by 20%$15M of direct economic activity (including visitor spending) in Buffalo was generated from sporting events in 2007.  A UFC event could add $3.1M.

2007 EVENTS

2007 Men’s Basketball Tournament – Rounds 1 and 2

USA H k Ti 1 d 2

Direct Economic Impact Comparison (in $millions)

USA Hockey Tier 1 and 2 Supersite

United States Bowling Congress

NCAA Swimming and Diving$10 0

$12.0 

$14.0 

$16.0 

Atlantic 10 Swim Championships

NYS High School Swim Championships$4.0 

$6.0 

$8.0 

$10.0 

NCAA Tournament

All Other Events

ESPN Bassmaster Elite Championships

US Figure Skating Northeast Regionals

$‐

$2.0 

Buffalo Sporting Events UFC Event

12

Regionals

•‐ Buffalo hosted 43 sporting events in 2007, including the NCAA Men’s Basketball Tournament Rounds 1 and 2. These events generated $15M in direct economic activity.  Source: Buffalo Niagara Convention and Visitors Bureau, 2007 Annual Business Review.

An event would produce substantial local employmentemployment

One‐time event activity, including over 300 staff working on the event, is equivalent to the creation of 57 local jobs.

Employment ‐ 57 Jobs

7

9

Direct

41

Direct

Indirect 

InducedInduced

13

Source:  Zuffa, LLC & HR&A analysis using IMPLAN model

Direct revenue benefits for both local and state governmentsstate governments

$0.4 M of total fiscal impacts to Buffalo and the State of New York.  

$25,000 

Buffalo ‐ $30k

$100 000

$120,000

NYS ‐ $320k

$10 000

$15,000 

$20,000 

$40,000

$60,000

$80,000

$100,000

$‐

$5,000 

$10,000 

Sales Tax Hotel Occupancy

$0

$20,000

$0 4M could fund an additional 5 police officers in Buffalo

Sales Tax  Hotel Occupancy Tax*

* Taxes fund the Buffalo Niagara Convention and Visitors Bureau.

$0.4M could fund an additional 5 police officers in Buffalo

14

Significant net gain in Western New York hotel occupancyoccupancy

y 12 000 il bl d 3 400 ti t d

upply • 12,000 available 

rooms• Peak occupancy of 85% m

and • 3,400 estimated 

visitor room nights• 700 estimated 

i h f

tel Su 85%

• Average occupancy of 65% l D

em room nights for event staff

• Represents 

Hot

Hote additional 

occupancy of 11%*

15

Source:  HR&A analysis of Smith Travel Research Market Trends Report

H

* ‐ over any given weekend period

Summary of Findings( )Downstate (NYC)

16

Local event spending by Zuffa and its affiliates 

HR&A analyzed typical event budgets for a comparable UFC marquee event.  Local spending was analyzed by line item. 

Event Costs

T t ti

Merchandise

F d

Television ProductionTransportation

Staffing

Food Production

Advertising

Commercials

17

Estimated Event Spending: $5.3M

Total visitor spending of $1.4 million

• No additional10,000 

NYC TRANSIT

• No additionallocal spendingLOCAL 

ATTENDEES

LOCAL SPENDING

5,100 DAYTRIPPERS

• $600,000 local spending

LOCAL SPENDING$1.0 million 

LODGING$

LIRRMetro-North

Amtrak

DAYTRIPPERSlocal spending

$0.4 million 

TOTAL SPENDING$1.4 million

NJT

1,900 OVERNIGHT

• $345,000 local spending• $380,000 lodging

$1.4 million 

VISITORS

18

Source:  HR&A analysis of NYC & Company visitor spending data.

$11.3 million in total economic activity for the local economylocal economy

$5.3 million of direct event spending is leveraged 2 times to result in $11.3 million dollars of total activity in the local economy.

Economic Output ‐ $11.3M

$5.3 

$2.2  Direct Event Spending

Visitor Spending

$1.0 $0.4 

$2.4 Lodging

Indirect Activity$ Indirect Activity

Induced Activity

19

Source:  Zuffa, LLC & HR&A  input‐output analysis using IMPLAN.

$11.3 million in total economic activity for the local economylocal economy$68.6 million in economic activity was generated by the New York City Waterfalls public art work over 108 days in 2008. 

A UFC event could generate $11.3 million, or 15% of the economic activity over a single

20

Source: Appleseed and Audience Research & Analysis, “The New York City Waterfalls: Economic Impact of a Public Art Work,” October 2008.

A UFC event could generate $11.3 million, or 15% of the economic activity over a single weekend.

An event would produce substantial local employmentemployment

One‐time event activity, including staff working on the event, is equivalent to the creation of 81 local jobs.

Employment ‐ 81 Jobs

12

14

Direct

56

12Direct

Indirect 

InducedInduced

21

Source:  Zuffa, LLC & HR&A analysis using IMPLAN model

Direct revenue benefits for both local and state governmentsstate governments

$0.9 M of total fiscal impacts to New York City and State.  

$175,000 

NYC ‐ $400k

$250,000

NYS ‐ $517k

$75,000 

$100,000 

$125,000 

$150,000 

$100,000

$150,000

$200,000

$‐

$25,000 

$50,000 

Sales Tax  Personal Income Tax

Business Income Tax

Hotel Occupancy Tax

$0

$50,000

$0 9 M can fund textbooks for over 15 000 NYS/NYC children

Income Tax Income Tax Occupancy Tax

$0.9 M can fund textbooks for over 15,000 NYS/NYC children

Activity is substantially net new

The New York market is relatively underserved by UFC events. 

134 UFC Events Nov 1993 to Jan 2009

nts

Las VegasAtlantaLondon

NYC Regional Area

12 within NYC regional areaFC Even

DublinChicagoLos AngelesMontreal

Only 1 event within the last 3 sting UF Montreal

NewarkAnaheimHouston

years

ties ho

s

Atlantic CityMiamiNew OrleansDenver

23

Cit Denver

Mohegan SunColumbus/Cincinnati

Activity is substantially net new

Attendance at Madison Square Garden boxing & wrestling events has fallen 20%.

Attendance at MSG Boxing / Wrestling Events*

80 000

100,000 

120,000 

40 000

60,000 

80,000 

‐

20,000 

40,000 

24Source: HR&A analysis of Madison Square Garden event data,; based on assessment of average attendance and capacity figures for time periods in question.

2001 ‐ 2004 2005 ‐ 2008

Activity is substantially net new

HR&A utilized conservative local e ent spending impacts

$5.3Mevent spending impacts

Visitor spending for 39% daytrippersand 23% overnight visitors

Average visitor spends $119/day on non‐lodging: retail, food & $1.4Mand 23% overnight visitors

We assume lodging spending may not be “net new”

beverage, transportation

NYC lodging is substantially at 

$1.4M

$0.4Mnot be “net new”

Indirect and Induced impacts

capacity at 86% average

$

$4 6MIndirect and Induced impacts

Over 90% of activity is $

$4.6M

25

likely “net new” $10.9M

Source:  HR&A analysis of NYC & Company visitor spending data.

Combined Findings: Upstate d D t t A ti itand Downstate Activity

26

$16.5 million in total economic activity for local economieslocal economies

$7.0 million of direct event spending is leveraged 2.3 times to result in $16.1 million dollars of total activity in the local economy.

Economic Output ‐ $16.1M

$7.0 $3.6 

$3.3 Direct Event Spending

$2.3 

Visitor Spending

Indirect Activity$

Induced Activity

27

Source:  Zuffa, LLC & HR&A input‐output analysis using IMPLAN.

Direct revenue benefits for state government

$0.8 M of total fiscal impacts for New York State.  

$250,000

NYS ‐ $836k

$100 000

$150,000

$200,000

$0

$50,000

$100,000

$0.8 M can fund textbooks for over 12,000 students

Summary 

• Over 300 event jobs• 138 jobs created in totalLocal Jobs j• $5.6M in compensation

Local Jobs

• $836 000 in taxes to NYSLocal • $836,000 in taxes to NYS• $400,000 in taxes to NYC• $30,000 in taxes to Buffalo

Local Taxes

• $7.0M in direct event spending• $2.3M in visitor spending• $6.9M in indirect/induced benefits

Local Economy /

• $16.1M in ‘net new’ economic activityEconomy

• 6,000 room night staysLocal

29

• Tourism exposure•Media exposure

Local Impacts

Detailed Methodology

30

HR&A studied the economic impacts of UFC events in New Yorkevents in New York

Data Inputs Analysis Outcome

• Event Financials

• Economic Aggregation

• Total Activity• Fiscal Impacts

• Visitor spending

• Tax Sources &

• Input‐Output Modeling

• Fiscal Analysis

• Net Impacts

• Tax Sources & Rates

• Fiscal Analysis

31

HR&A determined existing level of activity at selected venuesselected venues

Madison Square Garden and HSBC Arena have 40‐50% availability on weekend dates. 

MSGHSBC

39%

2% 7%

4%

Available

14%

3%

Available39%13% Basketball

Hockey

Boxing

Concert

Bull Riding

50%

30%

Circus

Hockey

Lacrosse

Concert

35%

3%

32

Source:  HR&A analysis of MSG and HSBC  Arena event schedules.

HR&A analyzed spectator origin data from comparable events to project local spendingcomparable events to project local spending

16,000 Buffalo Spectators 17,000 NYC Spectators

Attendance origin: 80% from outside Buffalo region, 11% from outside NYC region 

11%

Spectators by OriginSpectators by Origin

Total Canadian

39%

50%

11%NYC Residents

Residents within Metropolitan Area 

Other

34%

11%

19%

Non‐NYS

New York State

36% Buffalo Metropolitan Area

33

Multiplier effects of direct spending were assessedassessed

HR&A used input‐output modeling to determine the multiplier effects of direct event and visitor spending.

IMPLAN (IMpact Analysis for PLANning) is a widely‐recognized modeling tool.

p g

IMPLAN traces the pattern of commodity purchases andsales between industries that are associated with eachdollar’s worth of a product or service sold to a customer,analyzing interactions among 528 industrial sectorsanalyzing interactions among 528 industrial sectors.

IMPLAN is used for the preparation of economic impactanalyses by many public and private entities throughout theU.S. Industry data is updated annually and would bespecifically customized to the study area.

34

Three types of activity can be measured based on models of economic behavioron models of economic behavior

IMPLAN measures indirect and induced activity resulting from calculated direct activity.  

Direct Activity 

Indirect Activity 

Induced Activity 

• Direct activity resulting from event and visitor 

• Activity by suppliers of goods and 

• Activity in the local economy due to spending 

spending services as a result of the direct activity

by employees of direct spending providers

35

Measures of impact include activity, employment, and wagesemployment, and wages

IMPLAN provides economic activity, employment and wages impacts.

Economic A ti it Employment Employment 

WActivity

• Total spending on event by

p y

• Total direct, indirect and

Wages

• Estimated wages of jobs added inon event, by 

visitors, and from indirect and induced 

indirect and induced jobs created (equivalent to 

of jobs added in the local economy due to increased 

activity(equ a e t toannual jobs)

c easedspending 

36

UFC EVENT IMPACTS:ECONOMIC STUDY FOR NEW YORK STATEECONOMIC STUDY FOR NEW YORK STATE

UPSTATE (BUFFALO) AND DOWNSTATE (NYC)( ) ( )

NOVEMBER 10, 2008