Friday, October 7, 2011

When Big Isn't Big Enough - OP/ED

This is an opinion/editorial from the desk of Shelly Green, President and Chief Executive Officer of the Durham Convention & Visitors Bureau.

I read a great article yesterday in Forbes by Patrick Rishe, Director of Sportsimpacts and an Associate Professor of Economics at Webster University in St. Louis, MO., entitled "Educating Sports Commissions and CVBs about the Economic Impact of Sports."  He was summarizing a presentation that he made earlier in the week at a conference of the National Association of Sports Commissions (of which DCVB is a member.)

In the article, Rishe does a great job outlining in simple language the basics associated with measuring the impact of sports events.  He bemoans the fact—as do I—that there are still people and organizations out there inflating the economic impact of events for either political, financial or public relations reasons.  

Some just blindly take the impact amount reported by the city that hosted the event the prior year and mark it up 5 or 10%.  Some just do the math in their heads, i.e., “Let’s see.  I’ll bet each person spent about $1,000; times 50,000 people; equals…” with no basis to substantiate the numbers.

Rishe advises organizations to do the type of things that DCVB has espoused for 20-some years:
·       Don’t include spending by local residents.  If residents hadn’t spent money at this event, they would have likely spent it elsewhere in the local community. 
·       Report the net income of the event.  That includes the direct spending, the indirect and induced impacts (sometimes referred to as multipliers) but it also includes SUBTRACTING the amount of leakage that occurs when local businesses and vendors buy their supplies outside the community or when national and regional suppliers send a portion of the proceeds back to their corporate headquarters.
·       Consider displacement and how that impacts the bottom line, particularly when looking at mega events.  If a huge sporting event is supposed to bring 50,000 people to the community, it will have much less impact if it displaces any of the community’s existing business.  Think Super Bowls and Olympic events.  If hotels are typically 70% occupied during that time frame, the true impact is only the difference between the typical occupancy and the total occupancy achieved during the event (which is rarely 100%.)
As I noted in the comment section at the end of the article, the bottom line is, a CVBs job is to stimulate economic activity in its community AND generate tax revenue for local governments.  This reaps great rewards.  There is no reason to inflate these numbers...unless of course you need to cover up the fact that the huge incentive you ponied up (using public money, of course) actually made the event COST your community more money than it reaped.  But don't get me started on that...

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