IUPUC Researchers Debut New Tool for Evaluating Economic Impact
4 Nov, 2015By: Tracey Schelmetic
Before proposing a new event – a sports event, a convention or an arts-related happening – municipalities and the task forces and organizations responsible for cohosting those events are tasked with accurately quantifying the economic benefits that will be generated from visiting and local attendees. Planners often turn to economic benefit calculators on which to build destination marketing events and predict the economic value of meetings, conventions, and trade shows.
Indiana University—Purdue University Columbus (IUPUC) is now offering a new option to calculate benefits. The new method, developed by Ryan Brewer, assistant professor of finance at IUPUC, and Kayla Freeman, a doctoral student in finance in Indiana University’s Kelley School of Business, was requested by the Columbus Area Visitors Center at it evaluates options for sports tourism in the metropolitan area. The new tool has determined that sports tourism programs in the city had an economic impact of about $9.2 million in 2012, $9.8 million in 2013 and $10.9 million in fiscal year 2014, according to local news source The Republic. The findings were published in the Indiana Business Review.
“They’re getting a fantastic return,” Brewer told The Republic, noting that the city utilizes facilities originally built for use by residents.
“That’s the beauty of sports tourism in a community like ours — utilizing public and municipal facilities to bring outside dollars into the community that participants can use and enjoy. That’s really the benefit of the community hosting events,” said Karen Niverson, executive director of the Columbus Area Visitors Center.
Columbus hosts a variety of sports tournaments each year, including soccer, golf, softball and baseball. In years past, Columbus has hosted 80 or more tournaments. The Columbus Area Visitors Center, however, felt it lacked an accurate tool for calculating economic impact. According to Brewer, traditional methods for calculating returns on a sporting event were labor intensive and involve event-specific surveying, which can be time consuming and expensive, particularly for a small community. Brewer and Freeman used prior surveys of comparable-size cities with similar sporting events that have outlined expenditures by type to determine average spending per visitor and found a way to use historical data to estimate the number of tourists expected, particularly nonlocal tourists.
“Adjustments for cost-of-living differences between communities also is factored into the nine-step process,” wrote The Republic’s Kirk Johannesen. “What results is the economic cash flow — an estimation of the net infusion of money into a local economy as a result of the initial direct spending of tourists over a specified time period.”
The result, according to the Columbus Area Visitors Center and the tool’s developers, is an accurate way to create a picture of economic return for a city. According to Brewer, testing of the tool has found it to be within 10 to 15 percentage points of traditional surveys.
The new tool joins others already in popular use by the sports event planning industry. The Destination Marketing Association International (DMAI) currently offers an Event Impact Calculator that is considered by some to be the official industry standard for measuring the economic value of an event and calculating its return on investment to local taxes. In addition, the National Association of Sports Commissions (NASC) also offers an economic impact tool that is specifically geared toward how sports events contribute to the local economies of their host cities.