+ Major Event and Festival Impacts Lecture 4: Economic Impacts Jenny Flinn

+ The Value of Events The city of Glasgow attracts 2.3 million visitors per annum who generate £600 million for the local economy. GCMB’s Convention Bureau secured £131 million in conference sales in the financial year ending March 2010, which equated to 494,150 delegate days. Events supported – or managed by – GCMB in 2009/10 achieved an economic impact of £28.4 million for Glasgow. The Scottish Government awarded Homecoming Scotland £5million in November 2007 with a target ROI of 8:1. With this investment, Homecoming Scotland is aiming to generate an additional £40million in tourist revenue for Scotland.Homecoming Scotland UCI Mountain Bike and Trials World Championships 2007: 20,000 visitors to the Lochaber area from outside Scotland £1.5 million Economic impact for Scotland generated from overseas visitors 65 million generated for Scotland’s economy through mountain bike tourism in 2007

+ The Importance of Economic Impact When talking about event impacts more often than not the first thing that we consider is the economic impact Major events and festivals are often viewed primarily as economic generators The projected economic impact can be a major determinant in the decision to proceed with a bid or development of an event As such, economic impact studies are often undertaken not to provide an accurate assessment of the impact but rather to legitimise the decision to invest in the event

+ Defining Economic Impact According to Agha (2002) economic impact is based on the theory that money flowing into an area from outside the local economy will benefit the local economy Economic Impact can be broken down into three areas: Direct impact – the first economic effect of new money spent by visitor (e.g. food, accomodation, transport) Indirect impact – relates to subsequent effects of the newly injected money to the economy (e.g. the additional money spent in the area by a restaurant due to increased business) Induced impact – relates to the proportion of household income that is respent in other businesses in the economy (e.g. if the restaurant take on a new member of staff how much of their wages they then respend into the local economy)

+ Measuring Economic Impact Generally speaking, economic impact is measured using a relatively simple input/output or ROI measure The eventIMPACTS toolkit suggests that at a basic level we may measure: The number of spectators The number of attendees (non spectators) Percentage of spectators and attendees from outside the ‘host economy’ Duration of the event 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’

+ Measuring Economic Impact Establishing the indirect economic impact of event can be more problematic as it primarily involve making judgements about longer-term economic activity It can therefore be difficult to establish a robust link between the event and the stated impact The most common way to measure indirect economic impact is to apply a multiplier to the direct economic impact This is relatively straightforward, the difficulty lies in calculating what the multiplier should actually be

+ Additional Impacts When considering economic impact we may also wish to consider: Media and sponsorship evaluation Place marketing effects Sports/cultural development

+ Critiquing Economic Impact As previously stated, economic impact studies are often conducted to justify expenditure Benefits are often overstated and costs understated Studies are usually commissioned by proponents of the event so may be biased Economic impact studies may be conducted in various different ways so it can be difficult to compare events

+ Critiquing Economic Impact Hosting major events and festivals may disperse potential visitors to other locations Not all money spent will stay in the local area Events may incur high construction costs, infrastructure costs and cause temporary congestion City authorities often lose money by hosting events even through the city more widely may benefit Do the population believe that investment should be made in events in the current economic climate?