Measuring the Effects of Sports and Tourism on a Regional Economy

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MARK D’AMATO Senior Economist

• Four distinct quantitative methodologies

Model Features

• Impacts are measured over time (to 2050)

Integrated Dynamic

• Built specifically to user needs by regions

Customized Structural

• Transparent theories and relationships

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Integration

Input-Output Econometric General Equilibrium

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REMI PI+ New Economic Geography

Structural Model

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New Economic Geography Model Structure

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Dynamic

2 600 000 2 400 000 2 200 000 2 000 000 1 800 000 1 600 000 1 400 000 1 200 000 1 000 000 800 000 Control Forecast

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Alternative Forecast

Model Studies

Site Selection Travel & Tourism • Economic Analysis of Casino Applicants for Missouri‘s Gaming License • Missouri Department of Economic Development • The Travel and Tourism Industry in Vermont • The Vermont Department of Tourism and Marketing Mixed-Use Stadium • St. Louis Ball Park Stadium & Village • MCRIC, MDEC & the State of Missouri Ballpark Reconstruction Franchise Acquisition • New Fenway Park Proposal • The Boston Redevelopment Authority • New England Patriots Franchise Acquisition • Connecticut Department of Economic Development

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Fenway Park

Current Park Economic Impact New Ballpark Economic Impact

Supports 1,608 jobs through Greater Boston Economy Intangible factors important, yet difficult to quantify Large initial affects from construction Long-term fiscal obligations and lack of “net new” economic growth

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Fenway Park

• Existing annual economic impact of Fenway Park (in 2000 dollars) – $127 million in output to the greater Boston economy – $78 million of which contributed towards growth of GRP – Supports 1,608 jobs – Generates $15 million in state and local taxes, produced $93 million in personal income

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• • •

New Fenway Park Construction Efforts

Creation of 3,900 jobs over four years and generation of $209 million of new GRP Would require a $240 million public subsidy for a construction cost of $422 million Regardless of the impacts created from building a new stadium, would the project spin off enough benefits to justify the financing of this project?

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Evaluating the Alternative

• Eight alternative scenarios discussing: – High attendance – Moderate attendance – Conservative attendance – Worst-case attendance – All with constant and high spending constraints

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Results

• • • • Large attendance increases may not materialize and is dependent on future team success Fans tend to have a fixed entertainment dollar they are willing to spend and will not be able to take full advantage of services in and around the ballpark Not all of the additional revenue would be “net new” to the economy Building a new park would require the Red Sox to spend an additional $19 million annually in debt service, compared to their current minimal maintenance costs

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• • •

St. Louise Ballpark Stadium & Village

Ballpark stadium would replace existing Bush Stadium Ballpark village would be a mixed-use development surrounding the ballpark, including office, retail, restaurant space, parking and entertainment attractions. Financing assumed by State, County & City Government

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Results

• • • • • By 2005, near-complete construction would result in a 0.02% gain is GSP ($35.64 mil).

By 2008, there is a drop in GSP due to phase-out of massive construction.

By 2011, construction and operation of Phase One would result in a 0.04% gain in GSP ($90.14 mil).

By 2014, full operation of the ballpark village would result in a 0.06% gain in GSP ($153.77 mil).

By 2034 the economic impact levels off, with the gain of 0.04% in GSP ($134.78 mil).

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GDP

Employment

• • • • • By 2005, near-complete construction would result in 765 new jobs and $38.84 mil in wages.

By 2008, there is a drop in employment due to phase out of massive construction.

By 2011, construction and operation of Phase One would result in 2,195 new jobs and $116.49 mil in wages.

By 2014, full operation of the ballpark village would result in 3,549 new jobs and $204.28 mil in wages.

By 2034 the economic impact levels off, resulting in 3,092 new jobs and $201.73 mil in wages.

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Employment

Tax Impacts

• • • • Between 2005-2010 the State of Missouri would experience a net tax cost due to bond payments.

By 2011 the State of Missouri would experience a net tax benefit due to partial ballpark operation.

At full operation between 2014-2034, the State of Missouri would experience a net tax benefit of $12.99 million per annum.

The ballpark project would generate a net tax benefit of $61.68 million NPV between 2002-2034.

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Tax Impacts

Summary

Sound methodology • Well-established economic impact model • Understanding of industry and geographic structure Creditable assumptions • Academic literature, secondary data, benchmarks from similar scenarios • Clear economic theory • Straightforward assumptions structured by a consistent argument Context • Provide background synopses of legislation or issues • Narratives on the development of the project • Relevant socio-economic information

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Regional Impact of Super Bowl XLVI

Michael Hicks Director, Bureau of Business Research Ball State University 765-285-3398 [email protected]

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