Sports & Entertainment Marketing II 4.02 Acquire information to guide business decision making.

Economic Impact of Sports Events Benefits from hosting major events cannot be measured Creates goodwill, pride, and positive media coverage for an area Have to look at the opportunity cost of hosting an event  What are you giving up? What are you getting? How much money would the area have brought in without the event?

Economic Impact of Sports Events One of the greatest benefits from a major sporting event may not be the event itself but the potential it creates for future events Raises the profile of the city Enhances reputation  encouraging tourism Builds community cohesion Draws more residents & investors https://www.youtube.com/watch?v=kRfYpuCJCZU

Economic Impact of Sports Events 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

Economic Impact of Sports Events Some examples… Portugal spent $732 million to host the Euro 2004 (European Soccer Championship)  public money paid for SEVEN new stadiums in a country about the size of Indiana South Korea & Japan co-hosted the 2002 World Cup  South Korea spend $2 billion on 10 new facilities & Japan spent $4.5 billion building 7 new stadiums and renovating 3 others 2004 Summer Olympics in Athens  Greek government spent $12.8 billion to host Beijing games in 2008  Chinese spent over $43 billion

Economic Impact of Sports Events Some examples… The average cost of a football or baseball stadium built since 2000 is $528 million Average cost of a basketball or hockey arena built during this period is $276 million Public money generally covers about 2/3 of these costs

Economic Impact of Sports Events The significant investment by local governments suggests that the economic returns of sports must be quite large Teams, stadiums, and events are commonly promoted as economic catalysts https://www.youtube.com/watch?v=025YBECRfE8 Who measures the impact: Generally the Convention and Visitors Bureau of a community measures the economic impact of an event. The “CVB” is made up of individuals whose goal is to raise tourism profits for a community.

Economic Impact of Sports Events Direct Impact The first round effect of visitor spending  hotels, restaurants, etc. that received the initial amount spent of goods/services in the local economy  pays employees in the area Indirect Impact Ripple effect of additional rounds of recirculation the initial spectator dollars Induced Impact Further effect caused by employees of impacted businesses spending some of their salaries and wages in other businesses

Economic Impact of Sports Events What are the basic economic impacts? Number of spectators Number of attendees (non-spectators) Percentage of spectators and attendees from outside the “host economy” Duration of the event

Direct Economic Impact A measure of the total amount of additional expenditure within a defined geographic area, which can be directly attributed to staging an event Based on visitor/organizer spending An assessment of the net increase in spending as a result of the event

Which of the following sport/event situations is most likely to have a negative economic impact on a local community? New college football stadium in being built Professional baseball players go on strike A popular music group comes to town Golf tournament organizers solicit volunteers

Which of the following sport/event situations is most likely to have a negative economic impact on a local community? New college football stadium in being built Professional baseball players go on strike A popular music group comes to town Golf tournament organizers solicit volunteers

Why do sport/event organizations maintain sales and accounting records? To measure economic impact To prepare promotional material To calculate salary information To determine household income

Why do sport/event organizations maintain sales and accounting records? To measure economic impact To prepare promotional material To calculate salary information To determine household income

Which of the following indicates a positive economic impact for a city that hosts a professional golf tournament: Higher restaurant sales Fewer hotel reservations Increased traffic congestion Decreased tax revenues

Which of the following indicates a positive economic impact for a city that hosts a professional golf tournament: Higher restaurant sales Fewer hotel reservations Increased traffic congestion Decreased tax revenues

4.02 Activity Your city wants to build a new venue. It can be a professional sports stadium or a multi-purpose facility. Citizens of your community must pass a bill to levy an 11% tax on hotels and rental cars (hospitality tax) to help pay for the new facility. You are in charge of the promotional campaign for convince voters to pass the extra tax. Your main goals is to influence the vote. How will you convince voters that the new venue is a great idea? How will it be beneficial to the local economy? Troubleshoot potential negative outcomes. Present this however you feel comfortable as long as it is professional!