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

2. 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?

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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!