Inexpensively estimating the economic impact of sports tourism programs in small American cities.

• Author: Brewer, Ryan Matthew

Because of the perceived positive impacts such programs can have on local economies, sports tourism bundled as a multi-event annual program is thought by some to be an effective tool for economic stimulation in small cities. Yet, how do we measure to see whether this assumption is true?

Because community sports tourism programs commonly span numerous events and event types each year, estimating the annual economic impact using traditional event-specific surveying and local economic multiplier modeling is expensive--particularly for small communities. This article outlines an alternative method communities can use to estimate the economic impact of annual sports tourism programs using existing event studies alongside relevant free economic data that is readily available.

Measuring the economic impact of a single event is quite different from measuring the annual economic impact of a comprehensive sports tourism program spanning numerous event types located at various places and times throughout the year, the latter being considerably more complex and challenging. Traditionally, visitor spending patterns are calculated event-by-event, using surveys of event attendees. Thus, estimating the total economic impact of an entire annual sports tourism program with dozens of sporting events using surveys would become expensive. Beyond that, the need for an economic multiplier model arises. In fact, for small communities, conducting event surveys and hiring economists is often financially infeasible.

Absent costly event-specific data and an economic model, community planners currently have no clear method of estimating the economic impact of an annual multi-event sports tourism program. Currently, the literature on economic impact studies focuses on survey approaches for specific events, rather than on estimating the economic impact of annual sports tourism programs, which community leaders need.

Here, we offer a procedure for estimating economic impact which differs from the traditional, relatively labor-intensive models in two ways:

1. Our procedure allows community leaders to estimate the economic impact of an annual sports tourism program comprising dozens of events and several event types, rather than an individual event.

2. Our procedure requires neither event-specific surveys nor economic models, providing community leaders a relatively cost-effective way to determine the impact of their entire annual program.

   Economic Impact 101

   Economic impact analyses attempt to answer the questions of how many external dollars enter a host community for a given event, and how much the new money benefits members of the host community. (1) The general formula for calculating economic impact is given by the product of number of tourists, average spending per tourist, and appropriate multipliers. (2)

   In the inevitable absence of perfect information, economic impact analyses are complicated by the process of estimating the required inputs where facts are unknown. This study simplifies the process by detailing a procedure using specific economic data, whereby users can effectively deal with imperfect information yet produce reasonable estimates of economic impact.

   Required Inputs

   The first required input is the number of tourists. Estimating the number of tourists requires finding or calculating not only estimates of total event attendees, but also an estimate of the percentage of nonlocals attending the event. Including only attendees from outlying regions is critical because local spending cannot be considered new spending in the community. For this procedure, prior surveys of similar events also held in small or mid-sized cities will reflect a reasonable estimation of the percentage of nonlocals in attendance.

   The second formula input is average spending per visitor. This, too, is estimated by relying on prior surveys, which have outlined expenditures by type, generally including lodging, dining, shopping/ retail, entertainment, transportation and number of days spent in the region.

   Finally, the appropriate multiplier and capture rate are needed to translate total spending to the measure of final demand. Afterward, the result is local final demand, the net monetary infusion to the local economy as a result of the initial tourist direct spending over a specified period of time. We refer to this as "economic cash flow."

   Applying the Method to the Columbus, Indiana, Sports Tourism Program

   We applied our method to estimate the economic impact of the Columbus, Indiana, sports tourism program for 2012, 2013 and 2014. This article walks through the details of the 2012 analysis, while results are presented for all three years.

   To calculate the economic impact, total nonlocal attendance, average daily spending, multipliers, and capture rate were needed. Starting with primary data from the events, we estimated the required inputs using...