Economics

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Reinvesting in the Future to Build Economic Impact

12 May, 2021

By: Mark McCarter

Think about it for a minute: Ponder how big are those little lines on our hotel portfolios, the ones to which we pay scant attention, the categories trapped helplessly between “Room Rate” and “Market Beverage.” 

Those lines on a hotel bill that note an occupancy tax or a surcharge become the fuel for a vast majority of the sports tourism world. The economic impact from teams, athletes, families and fans – with something so modest as a few cents on a dollar – can be reinvested by communities for exponential growth. 

According to Sports ETA, some $45.1 billion – that’s billion with a B – was spent by sports travelers, event organizers and venues in 2019. The indirect impact of that spending was $103.3 billion. While 2020 and 2021 will not come close to approaching those figures, there was a steady climb in the years leading up to these pandemic-paralyzed years, an increase of $6.5 billion since 2015. 

Everyone in the business of sports knows sports is good business. And everyone seems to share a confidence it will have more resilience than other aspects of the travel industry, with economic impact figures that soon will reach and surpass pre-COVID numbers. 

Certainly not all sports commissions and CVBs, or their projects, receive money from lodging taxes. Revenue sources differ across the board. Some agencies are standalone entities. Some receive support from a city’s general funds. Others create their own events that provide revenue.

But while the sources may differ, the goal is common to all: Invest it wisely, where like a blue-chip stock, the initial economic impact from sports tourism pays greater dividends.

Sports provide “a seven-day-a-week economy,” as John Hamilton, the City Administrator in Huntsville, puts it. Many cities have – in normal years – robust business travel that fill rooms and restaurants during the week. And in many of those places, hotels are able to charge premium rates. But “there is a void to fill on weekends, so sports tourism is one of the ways where you can attract people into the community and have them spend their dollars here,” Hamilton says.

Those dollars can be reinvested in myriad ways:

The Field of Dreams Syndrome: We’ve heard community leaders – or maybe even our own voices – urge facility construction, that if something new and sparkly and unique is built, a collective “they” will come. There are few examples that funds from sports tourism go directly to construction, but the potential economic impact is always a considered factor in what a city might build. 

Garrett Wagner of Visit Mobile reports the city is on Phase 1 of a Mobile County Soccer Complex. In Iowa, Greg Edwards, president/CEO of Catch Des Moines, tells of an indoor sports complex soon to open in West Des Moines, and of a new soccer and baseball complex. “There are,” Edwards says, “two sides of that story. One, they do it for the citizens that live there and two, they most definitely recognize the value of sports tourism and what it means to the community to fill hotels and go to restaurants.”

Therein lies that delicate balance in facility use. Says Hamilton, “How do we benefit our citizens but also how do we attract tourism?” 

OK, sports tourism professional: Raise your hand if that local-slash-visitor balance isn’t one of the great challenges on your weekly plate. Thought so.

Go Big Because of Small – and Vice Versa: Huntsville recently hosted the SEC Gymnastics Championships. The SEC’s motto, which is accepted religiously throughout the Southeast is, “It Just Means More.” It meant more to Huntsville’s prestige. It meant more of an investment for its Von Braun Center. 

The city was able to leverage tourism dollars amassed from a large roster of myriad smaller but room-filling competitions, just as it has also done to support the inaugural Huntsville Championship PGA Korn Ferry Tour tournament. Those are two quality-of-life events made affordable by investment in time and energy in attracting and retaining so many lower-magnitude tournaments.

“You have so much impact coming from those smaller events, it gives you the leeway to go after one of the big ones now and then,” Wagner says. Then, guess what: “When you bring in a large event, others with smaller events see that and want to bring theirs to your city.”

The Intangibles: There is also a reputational value for a DMO as it hosts a high-profile event, demonstrates imagination in its array of sports and reinvests in facilities. Cities in search of a skilled workforce or an influx of younger residents, or those looking to lure more industry and business can leverage sports success for attention, or simply to attract people who, well, want to get into the game.

But there’s another essential aspect to leveraging the investment, beyond the money and the venues and the competition. It’s telling the story. If the right people don’t hear about the ROI, there’s more reluctance to offer I to lead to an R. 

John Gibbons’ office at the Rhode Island Sports Commission is just two blocks from the governor’s office. He tries to make sure that the communication is even closer. “We measure room nights, which I know is kind of old school, and we attach the economic impact to each event we book. We do a monthly report we present to our board and an annual report we spread around with state leaders. We keep the Governor and Speaker of the House informed, as well as the mayors of Providence and Warwick since we receive funding from both communities,” Gibbons said.

Edwards said that most of the hotel taxes generated in Des Moines go into marketing and sales efforts for their 15-community initiative. That includes the usual suspects of national conferences to which sports tourism officials and planners flock, but also a local marketing effort to create awareness and attract business from a grassroots level.

“We had a conversation 12, 15 years ago about how many local people really know who we are and what we do,” he said. “We started doing a much better job locally.” That includes weekly appearances on local radio and TV, traditional advertising and maintaining strong relationships with the local print media.

His group created a “Catch Champion” program that enlists involvement of local elected officials, civic leaders and sports people. “They contact us and let us know that they’re on the board of XYZ Association and you ought to try to get their annual meeting here, and we can at least utilize their name to get in the door. That’s been a really good program for us.”

COVID left a void everywhere in travel, Monday through Friday and weekends alike. The pandemic period brought a sobering reminder of the ripple effect of sports tourism and other travel. The immediate result was that many CVBs and sports commissions suffered layoffs and furloughs. The ripples followed as we saw our partners in the hospitality industry suffer greatly. 

It was the reminder that CVBs and sports commissions should communicate to the grassroots level to foster even greater team spirit among all those involved in sports tourism. The poor devil who had to give up his Easter holiday Saturday to line off soccer fields is just as important to success as the CVB sports salesperson who got the contract signed.

“The simple fact is, sports brings people into the city and it gives people jobs,” says Mobile’s Wagner. “You heard during COVID about hotels shutting down, restaurants closing. You may have to work at a tournament on a holiday weekend, but it may mean a local restaurant owner gets to buy his kid something. A housekeeper can take their family on vacation. It reaches out a lot further than people think it does. These kids are playing sports and they’re learning structure, and as you bring in a tournament, it’s putting money in somebody’s pocket at a restaurant. People are buying gas. It directly affects a lot of people.”

It turns out maybe that the most important way to leverage sports tourism right now has nothing to do with venues and competition, with big events and raking in money. Right now, maybe the most important thing to do is leverage the impact of sports tourism to return us to a sense of normalcy, to do what we can to see kids playing sports again. SDM

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