Economic-Impact Study

By Steve Yeskulsky

Often in these challenging times, parks and recreation professionals are asked to quantify the economic viability of an event or program. By grading an event primarily on customer surveys, participation and profit margin, it is conceivable such an event could be marginalized. Economic-impact analysis, while highly contested by some economists, can be an invaluable tool in depicting the validity of a program to officials and governing boards. Although it does require some research and social-science aptitude, an economic-impact study is very much approachable, and can produce tangible numbers. In its most pure and basic form, an economic-impact analysis seeks to measure the potential change in a local economy by an event, facility or new program. According to Daniel Rascher, President of SportsEconomics and co-author of Financial Management in the Sports Industry, “The key is to measure what the local economy would look like with the event and without the event. The net gain (or loss) is the economic impact. In other words, without the event having occurred (or facility having been built), what would the local economy look like?” In general, an analysis is performed by estimating attendance at an event and then surveying a segment of attendees as to their spending habits while at the event, labeled direct spending. Most economic-impact studies go on to add a multiplier to the equation, which accounts for money circulating through the economy after the event is over (indirect spending).    

What It Does

The first important question is, What does an economic-impact study do for an organization? First, it is an invaluable public-relations tool, laying out for the public and decision makers the social, economic and community benefits of proposed events and/or athletic facilities. Second, it can show areas within a community that need and will benefit from potential athletic and leisure projects. Finally, an economic-impact study defines how a project has affected a community. Rascher states that an analysis “can show to what extent the event, facility, etc., provides economic value to the locality. As a result, local governments can determine which events to bid on; owners can use the information to market their event, possibly getting some public funding for their event. The study can also be used to determine where the patrons come from (and how to market to them in the future). Sponsors can use the information to determine the demographics and psychographics of the attendees.”

© Can Stock Photo Inc. / Paha_L

Many times, a study is associated with large sporting events, such as the Super Bowl, college bowl games and the World Cup. Conversely, a study can be just as valuable for intermediate and smaller events and facilities. Traveling carnivals, adult/youth athletic tournaments and a new recreation center all have a direct and indirect economic value. While a weekend youth baseball tournament may not have the immediate economic impact on a local community as a Major League All-Star game, a thorough analysis can reveal its ripples across an economy.

The Formula  

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