Your county government invested $20 million in renovating a soccer complex to host youth soccer tournaments. The
Question:
Your county government invested $20 million in renovating a soccer complex to host youth soccer tournaments. The justification for this project was that it would generate significant economic impact for the county. The complex attracted a national showcase tournament to be staged annually for the next 5 years. One of the county commissioners that pushed for the complex's funding said that, based on a study conducted by the Visitors Bureau and tournament organizers, the economic impact from this event alone would be over $20 million. You were asked to independently evaluate the economic impact of this year's tournament as a potential way to justify the investment by the community. You conducted surveys of a valid sample of attendees and reviewed your data. You also contracted with IMPLAN to acquire multiplier coefficients to use for your analysis of money spent in the community. The data from the surveys, as well as the (Direct, Indirect, and Induced) Sales Coefficients, Personal Income Coefficients, and Job Creation Coefficients for your city are summarized below. In addition, you also know that your city's Visitors Bureau just released figures that show an average visitor spends $500 per trip to your city.
- Summary of Survey Data
Variable | Estimate | |
Total attendees (participants and families) | 20,000 | |
Attendees who are residents of your city | 6,600 | |
Amount spent on the following: | Per Person Spending Inside City (Total estimated from ALL Attendees) | Per Person Spending Inside City (Total estimated from non-residents) |
Registration Fees | $25 | $25 |
Food & Beverages | $59 | $75 |
Retail Shopping | $39 | $50 |
Lodging | $134 | $200 |
Private Auto Expenses (e.g., gas) | $20 | $25 |
Rental Car Expenses | $15 | $23 |
- Multiplier Coefficients From IMPLAN
Sales (Output) Coefficientsa | Personal Income Coefficientsb | Jobs Created Coefficientsc | |
Registration Fees | 2.39 | .65 | .00003 |
Food & Beverage | 1.91 | .35 | .00005 |
Retail Shopping | 1.17 | .44 | .00004 |
Lodging | 1.87 | .41 | .00004 |
Private Auto | 1.56 | .34 | .00003 |
Car Rental | 1.65 | .42 | .00004 |
Notes
aSales Coefficientsestimate how much sales increased in local businesses as a result of each dollar spent in a specific category. Example: These figures estimate that each $1 spent on registration fees leads to $2.39 in increased sales.
bPersonal Income Coefficientsestimate how much residents' personal income increased as a result of each dollar spent in a specific category. That is, how much spending attributable to the event actually trickled down to local residents. Example: These figures estimate that each $1 spent on registration fees leads to $0.65 in increased personal income.
bJobs Created Coefficientsestimate the proportion of jobs created by each dollar spent. Example: These figures suggest that each $1 spent on registration fees leads to the creation of .0003 jobs (or that approximately 1 job is created for each $3,333 spent on registration fees). This doesn't actually mean the creation of a full-time job with benefits. In many cases, these jobs may be part-time, minimum wage, or the addition of hours to existing workers.
Now, the tricky part.
- First, what is the estimated direct visitor spending attributable to the tournamentfor this year? To find this out, you should total up all of the money spent by visitors to your city ONLY from non-residents that came to the tournament.
- Second, using the breakdown of spending and the IMPLAN coefficients, what should you report as the annual economic impact of this tournament to the city?To estimate economic impact, multiply the dollars spent in each category by the appropriate coefficient (there is an Excel Worksheet on Moodle to help) and then total the figures up in each coefficient category. Then, you decide how you want to report the figures to be most accurate. Look over readings and lectures to determine which spending figures you should use and what estimates you should report.
- The county commissioner who predicted the economic impact of this tournament would be over $20 million was interviewed after the tournament by the local media. He argued that the attendance figures and spending estimates support his prediction. You were asked by the media to provide your results and explain whether the council member's prediction is supported by your estimates. How would you respond and why?
- Go online (See potential examples on Moodle) and research a recent announcement about the economic impact of a sporting event or facility and try to answer the following questions:
- Who conducted the economic impact study? Who is promoting the results? Is there a possibility of bias in the source?
- What are they reporting as the economic impact (e.g., the numbers)?
- Do you think their assessment of the economic impact of this event/facility is accurate? Support your answer (in addition to course materials, you might see if anyone has published either any supporting evidence or criticisms of this report).
Understanding Business Ethics
ISBN: 9781506303239
3rd Edition
Authors: Peter A. Stanwick, Sarah D. Stanwick