Archive for September, 2010

The Economic Impact of Sports Events

September 29, 2010

Much has been said about the economic impact of sports events. “Keeping score” is an important element in competition, and it can be equally important to those engaged in attracting events to a community. If an event has developed a reputation for producing large numbers of visitors, it will attract the interest of bidders. And, at the same time, the event owner begins to ask for more incentives from potential hosts.

Difficulties arise in estimating the potential impact of an event. Savvy hosts are learning to determine the potential return on investment prior to bidding. Equally savvy event owners are emphasizing their ability to produce visitors. It is not unusual to learn that estimates vary depending on where you sit!

What can be done to make these estimates work for everyone? Perhaps the first and most important thing to remember is the simple fact that all estimates are flawed. It is never possible to predict with accuracy what might happen and just as difficult to estimate precisely what did happen. It comes down to one word: “estimate.” Why, then, are claims of economic benefit made as though they are fact? The answer probably stems from a desire to believe the best no matter where your interests may be.

Some communities have begun keeping score in terms of room nights rather than spending realized. They feel this is a more objective view, one less subject to differences of opinion. Comparisons are made from year to year or between the results in the month the event took place and the same month a year previously. This approach, too, has its weakness. Some accommodation should be made for the rooms hat would have been occupied anyway. SO the estimate of room nights must be based upon a count traceable to the event. This requires some sort of system or survey.

The establishment of a system or survey gets us closer to the central issues with the computation of economic impact estimates. Information is needed before estimates are produced.  All too often no provision is made for data collection. Surveys can be made at team registration or check-in at the hotel. They can be completed during the event itself.

So, data collection becomes the most difficult hurdle. The most common formula: the number of visitors, times the number of nights, times the amount spent by a tourist each day.

The National Association of Sports Commissions (NASC) developed an Economic Impact Template to assist its members in estimating what might take place or what did take place. Users can plug in their own data or use median numbers developed over more than 20 events.

Data collection and report preparation can be accomplished through professionally conducted studies, employment of a team from a university under the direction of a faculty member, or by a team from the organizing committee. In every situation the number of visitors, number of days spent in the market, and estimates as to amounts paid for hotel rooms, food and beverages, retail purchase etc., must be acquired.

We must also constantly deal with a recognized element in any professionally produced study. This element is called a multiplier. Economists are in agreement that a dollar spent turns over in the local community. Your restaurant purchase employs people whose wages produce additional spending. To account for this, multipliers are applied after direct spending estimates are complete.

In the sports event industry multipliers can produce inflated estimates that morph into statements of fact. It seems the larger the estimate the quicker it becomes fact. It is no longer a case of “we estimate direct visitor spending as x dollars.” It becomes instead a statement like “the total economic impact was y dollars.”

It is recommended that policies be developed within your organization on how to deal with economic impact. Be consistent, whatever you decide to do. And, explain how you arrived at a number when it is released. Please keep in mind the inability of experts to agree and use caution the next time you must announce a number because once it is out there it can not be retrieved.

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The NASC Webpage – Connecting, Guiding and Helping Us All!

September 7, 2010

One of my favorite places to connect with my sports industry peers is the NASC webpage. It is a diamond in the rough. It is a results-focused and carefully designed webpage with you in mind. It is easy to get around. The content, features and member services are all laid out for you to click and investigate what you need, at your own time and pace.

My two favorite resources are the Event Database and the Economic Impact Template. The Event Database has every open sporting event from basketball to wrestling for you to search, research, match and bid on to bring groups to your destination. The Economic Impact Template is a tool to use that helps you predict the best possible results of the event prior to bidding. It gives you spending estimates and patterns of behavior specific to that unique event. The data will help you in your bid presentation and preparation. It is a tool that gives you a rough approximation of the economic impact that will help you in the long run for planning and going after certain events. It has also been updated and improved so it’s even better than before. These ballpark figures hopefully give you the data you need for approval and funding too.

So the next time you are thinking of searching for a lead, or how to connect with that rights holder or just want a place for some help, remember to click on www.sportscommissions.org. I am confident that you will be glad you did.

Dave Headshot Picture About the Guest Contributor Dave O’Lenick, CMP, CHME, CTA, Fort Worth CVB
After spending twenty years on the hotel side, Dave has shifted his career over to the CVB side to work with the Fort Worth Convention and Visitors Bureau. He is marketing Fort Worth as a premiere sports destination for sporting events, tournaments, trade shows and special sports seminars. This is a new position at the Bureau dedicated to sports related events and a new initiative the FWCVB feels strongly about. Dave is partnering closely with rights holders, sports facilities and hotels to bring more regional and national events to Fort Worth because Fort Worth certainly has “Game” and continues to host notable and well recognized sporting events. He is currently working on his CSEE (Certified Sports Event Executive).  Dave’s wife Deann is a Speech Pathologist who is working on her PH.D. His daughter Lucy is studying for her Master’s Degree at the University of Florida in Sports Training and son Freddie will be off to college next year for a Music-Marketing degree. Dave enjoys golf, his new Bowflex, reading biographies, and motivational books and is a proud member of NASC.

 

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