Presentation on theme: "Sports & Entertainment Marketing II"— Presentation transcript:
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 measuredCreates goodwill, pride, and positive media coverage for an areaHave 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 eventsRaises the profile of the cityEnhances reputation encouraging tourismBuilds community cohesionDraws more residents & investors
4 Economic Impact of Sports Events Recent spending on stadiums for top-level professional teams has generated a great deal of attentionBetween 2000 and 2009, 31 major league stadiums and arenas opened across urban America at a public cost of approximately $8 BILLIONA 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 IndianaSouth 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 others2004 Summer Olympics in Athens Greek government spent $12.8 billion to hostBeijing 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 millionAverage cost of a basketball or hockey arena built during this period is $276 millionPublic 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 largeTeams, stadiums, and events are commonly promoted as economic catalysts
8 Economic Impact of Sports Events Direct ImpactThe 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 areaIndirect ImpactRipple effect of additional rounds of recirculation the initial spectator dollarsInduced ImpactFurther 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 spectatorsNumber 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 eventBased on visitor/organizer spendingAn 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 builtProfessional baseball players go on strikeA popular music group comes to townGolf 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 builtProfessional baseball players go on strikeA popular music group comes to townGolf tournament organizers solicit volunteers
13 Why do sport/event organizations maintain sales and accounting records? To measure economic impactTo prepare promotional materialTo calculate salary informationTo determine household income
14 Why do sport/event organizations maintain sales and accounting records? To measure economic impactTo prepare promotional materialTo calculate salary informationTo determine household income
15 Which of the following indicates a positive economic impact for a city that hosts a professional golf tournament:Higher restaurant salesFewer hotel reservationsIncreased traffic congestionDecreased tax revenues
16 Which of the following indicates a positive economic impact for a city that hosts a professional golf tournament:Higher restaurant salesFewer hotel reservationsIncreased traffic congestionDecreased tax revenues
17 4.02 ActivityYour 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!