SEM II 4.02

Acquire information to guide business decision making.  

  

Measure economic impact of sport/event (NF:187)

Topics

a. Explain reasons for determining the economic impact of events.b. Distinguish among direct, indirect, and induced impacts of events.

c. Describe factors to consider when measuring the economic impact of events.

d. Discuss types of measures that can be used to determine the economic impact of events.

e. Explain how the results of economic impact measures can be used.

f. Demonstrate procedures for measuring the economic impact of events.

• From the X-Games to the Olympic Games, from bush league ballparks to state-of-the-art major-league stadiums, governments spend large amounts of public money to lure sporting events or host teams

• The expenditure of public money on sport facilities and events is an international phenomenon that occurs at every level of government.

• Recent spending on stadiums for top-level professional teams has generated a great deal of attention. 

• Between 2000 and 2009, 31 major-league stadiums and arenas opened across urban America at a public cost of approximately $8 billion. 

• A few were built to attract new teams, but most replaced existing facilities for incumbent teams.

• The significant investment by local governments suggests that the economic returns of sport must be quite large.

• Teams, stadiums, and events are commonly promoted as economic catalysts.

• https://www.youtube.com/watch?v=025YBECRfE8

• Direct Impact: The first round effect of visitor spending, that is, how much the restaurants, hotels, and others who received the initial amount spend on goods in the local economy and pay employees who live in the jurisdiction.

• Indirect Impact: The ripple affect of additional rounds of recirculating the initial spectators dollars

• Induced Impact: Further ripple effects caused by employees of impacted businesses spending some of their salaries and wages in other businesses in the city.

• http://agrilifecdn.tamu.edu/cromptonrpts/files/2011/06/Full-Text100.pdf

• What are Basic Economic Impacts?• Number of spectators• Number of attendees (non-spectators)• Percentage of spectators and attendees from outside the 'host economy'

• Duration of event• http://www.eventimpacts.com/economic/basic/

• What are the Intermediate Impacts?• Direct Economic Impact of an Event• The Direct Economic Impact is a measure of the total amount of additional expenditure within a defined geographical area, which can be directly attributed to staging an event. Based on visitor and organizer spending. Direct Economic Impact is an assessment of the net increase in spending as a result of the event.

• http://www.eventimpacts.com/economic/basic/

• There is broad consensus on the standard approach to measuring the economic impact of an event. 

• The spending patterns of event attendees are sampled, averaged and then upscaled to the overall 'event population'. 

• This is typically combined with an assessment of the net spending in the host economy by the event organizer to determine the Direct Economic Impact. 

• This process typically requires some primary research in the form of surveying event attendees to evaluate peoples' spending patterns at the event.

http://www.eventimpacts.com/economic/basic/

• What are the Advanced Impacts?• Total Economic Impact of an Event• Advanced Economic Impacts primarily involve making judgements about longer-term economic activity, or economic decisions that people may or may not have made were it not for the event taking place.

• The Total Economic Impact builds on the calculation made in the Intermediate Impacts section which determined the Direct Economic Impact.

• Many economic impact studies are carried out for research or public information purposes, and are not meant to be Benefit/Cost (B/C) studies. B/C Analysis is primarily relevant as an aid for decision-making. 

• There are several applicable "tests“ for this decision-making:

• Feasibility• Cost Effectiveness• Net Present Value (NPV) -- This is calculated as

follows: NPV = Present Value of Project Benefit minus the Present Value of Project Cost, where "Present Value" is the discounted value of a stream of benefits or costs

• Benefit/Cost Ratio (B/C) -- This is calculated as follows: B/C = Present Value of Project Benefit divided by Present Value of Project Cost

• Calculation of "Present Value". Both NPV and B/C tests require that costs and benefits be presented in terms of their value as of the time of the decision-making.

http://www.edrgroup.com/pdf/econ-impact-primer.pdf