the sport tourism economic assessment model
TRANSCRIPT
The Sport Tourism Economic Assessment Model
Tony Fisher Director of Research
Canadian Sport Tourism Alliance
Before we begin…
Questions are encouraged!
• The STEAM model – what it is and how it
works
• How to use STEAM
• Interpreting and understanding the results
• STEAM / STEAM PRO and on-site analysis
Motivation
• One of the objectives of the CSTA is to raise the profile of the economic benefits associated with hosting sport events
• When we began, we quickly realized that there were many sources of error associated with measuring economic impact: – Number of visitors
– Spending of visitors
– Multipliers used
History of STEAM
• Research on developing a model began in 2001
• Engaged a number of partners including
– Sport Canada
– Canadian Association of Convention and Visitors Bureaus
– Canadian Tourism Commission
– Skate Canada
STEAM – the Solution
• STEAM addresses these issues in two ways:
– The model uses a consistent set of visitor profiles
• Specific to sport
• Calibrated based on more than 10,000 on-site surveys collected at 50+ events across Canada
• Expenditure profile varies based on location of event, age of participants, distance traveled, etc.
– STEAM has a nationally consistent set of multipliers
• Developed for CSTA by Conference Board of Canada
• Regularly updated based on changes in Tax / I-O structures (i.e. HST, introduction of NAICS)
STEAM - Structure
Event Projections
• Visitor Estimates
• Operational Expenditures
• Capital Costs
STEAM
• Visitor Spending Profiles
• Economic Impact Multipliers
Economic Impact
• GDP
• Jobs
• Wages & Salaries
• Taxes
Unique Features
– Web based tool
– Specifically developed to estimate economic impact of sport events
• Future Events
• Past Events
– STEAM can be used for a variety of sports events, from small (30 participants) to large (20,000 spectators)
STEAM - Background
Why Use STEAM?
• Feasibility Tool – Does hosting the event make financial sense?
• Accountability – Did it deliver on its promise?
• Due Diligence – Did you consider all aspects associated with the event?
• Partnership Development – Help persuade financial/non-financial partners
Using STEAM – Required Information
• To use STEAM, start with the minimum information about your event:
• Required to project number of out of town
visitors and participants attending event
Visitor Estimates
• Need to have an estimate as to aggregate cash expenditures broken down by type of spending
Operational Expenditures
• Projected total cost of all capital construction and major renovations
Capital Expenditures
• Proceed to www.canadiansporttourism.com
• Sign in to the members section using your member username and password
Signing In
• Select Access STEAM under the Members Home tab on left
• Choose the appropriate province
• Note the User’s Guide is available to download from this page as well
Signing In
Challenges With Signing In
• If you have problems signing in (i.e. you don’t see anything), 99% of the time it is because of a pop-up blocker
• Pop-up blockers need to be disabled from:
– Web browser (Under Tools menu in IE)
– Many ‘Toolbars’ such as Google, Yahoo, etc., also have pop-up blockers; we recommend you disable these
– Note that STEAM works best using IE
STEAM – Main Menu
STEAM – Adding Projects
1) Type Name
3) Click Close
STEAM – General Input
Visitor Estimates
What is an out-of-town visitor?
• Don’t want to include spending of local residents as their money is a transfer, they would likely be spending money within host city
• Old definition: – 80km one-way, or overnight away from home, except
40km in Ontario
• New definition: – Outside of your usual spending environment
• Important to establish a definition and stick with it!
Define your local area
STEAM – Visitor Attendance
• In using STEAM, all figures should refer to out-of-town visitors
• Information regarding expected attendance can be derived from a number of sources: – Historical attendance at annual events
– Attendance of similar events in host community
– Marketing plan (e.g. are you marketing locally or nationally)
– Capacity of venue (and accommodation capacity of host region)
STEAM – Participant Input
Visitor Input Ontario STEAM - Participant Input
Number of unique out of town participants 0
Percentage of out of town participants staying overnight (0-100) 100
Overnight participants (0-100) Participants from Canada (%) 10 Participants from U.S. (%) 10 Participants from Overseas (%) 80
Canadian overnight visitor origin(0-100) Out of town up to 320km, regardless of province of origin (%) 10 More than 320km and the same province as the event (%) 10 More than 320km and a different province as the event (%) 80
Average overnight length of stay (nights) 7.0
Age of participants (0-100) Participants under 19 (%) 80 Participants 19-44 (%) 10 Participants 45 and over (%) 10
Participants under 19 who are staying in commercial accommodation (%) 100
Same Day participant Average number of day trips taken by each participant 3.0
• Data entry is similar to that of Participants with the addition of a question about the importance of the event in the travel decision
– In most cases, this will be 100%
STEAM – Spectator Input
• When people travel and are not responsible for final bill, they tend to spend more
• Last visitor category includes those who are usually sponsored, members of media and VIPs
STEAM – Media/VIP Input
Capital Expenditures
STEAM – Capital Expenditures
• Need to ensure that all capital expenditures are directly associated with the event
• Changes to physical structures (permanent) – Clubhouse renovation $150,000
– Driveway repaving $100,000 • Paving was originally scheduled for September 2012, but
was accelerated to take place before the event, therefore we do not include the driveway expenditure, as it would have occurred anyways
STEAM – Capital Input
British Columbia STEAM - Capital Input
Enter Capital Spending on:
Buildings and Renovations $0
Machinery and Equipment $0
Furniture and Fixtures $0
Transportation Equipment $0
Other Supplies $0
Other Services $0
Total (calculated) $0
Enter the % of construction costs that are attributed to local firms
100
Operational Expenditures
STEAM – Operational
Input
A full description of the categories can be found in the user’s guide IMPORTANT You must enter revenues that are equal or greater than your expenses
STEAM – Operational Expenditures
• Need to classify budgetary expenses into STEAM categories
• Examples:
– Operations $20,000
• Actually comprised of the following components:
– Rent $ 10,000
– Insurance $ 500
– Security $ 5,000
– Renovations $ 4,500
STEAM – Operational Expenditures
• Administration $40,000
– Components
• Salaries $ 10,000
• Rent $ 10,000 – (Donated)
• Office Supplies $ 2,000
• Advertising $ 10,000
• Communications $ 8,000
STEAM – Operational Expenditures
• Need to classify budgetary expenses into STEAM categories
• Major categories are: – Salaries, Fees, etc.: paid positions of host society,
tournament managers, etc
– Rent: venues, tents, fencing, TV’s, other AV, etc.
– Communications: cell phone, internet, etc.
– Merchandise: goods you are selling, volunteer uniforms, etc.
– Transportation and Storage: bus rentals, etc
Operations – Misc. Goods & Services
• If some expenses don’t easily fit into the STEAM categories, use the catch all categories of other goods & other services
– Goods: trophies, decorations, etc.
– Services: garbage disposal, security, etc.
STEAM – Operational Expenditures
• In order to accurately capture the true economic benefits of the event for the host city, some adjustments to operational budgets are also necessary
– Exclude all value in kind donations
– Exclude all transfers (i.e. TV rights and fees for other organizations)
– Exclude all inter-city transportation
Operations Food & Bev and Accommodation
• STEAM has 3 categories for Food & Bev and Accommodation – Organizing committee: expenditures made and consumed
by event organizers (e.g. food for volunteers)
– Participants: expenditures made on the behalf of participants
– Media / VIP: expenditures made on the behalf of media / VIP members
• If you use the participants and media / VIP categories, you need to let STEAM know what proportion of these groups are being sponsored (enter as % between 0-100)
Case Study
Case Study - Assumptions
• BC U14 Boys Basketball championship, hosted in Richmond
• Remember, in using STEAM, all figures should refer to out-of-town visitors
• In this case, we are using team registration information
• Estimate that there are an average of 13 players and 2 coaches / trainers / managers per team (15 total)
• A total of 117 teams, 82 teams from out-of-town
• Doing the math = 1,230 out of town participants
• Assumed 1.5 family members for every player, thus an additional 1,845 spectators
Visitor Input
• Once you have determined number of visitors, figure out proportion who are staying overnight (provincial championships, so almost everyone ~90%)
• Overnight length of stay (in nights) = 2
• Number of day trips – most play on Friday and Saturday, about 1/3 of teams make the playoff rounds on Sunday, so number of day trips is 2.3
Operations Input Enter Operating Expenditures on: Salaries, Fees and Commissions $14,790 Advertising Services $0 Professional Services $0 Financial Services $0 Rent $20,000 Laundry and Cleaning Services $0 Other Services $0 Communication $100 Energy and Other Utilities $0 Office Supplies $125 Other Supplies $0 Repairs $0 Food and Beverages – Prepared $350 Accommodation $500 Merchandise and Retail $0 Personal Travel $1,480 Transportation and Storage $300
Total Expenditure $37,645 Total Event Revenue $52,650
Operating Surplus $15,005
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B C A
Presenting your results
•The combined expenditures of visitors, event operations, and capital expenditures as a result of hosting the U14 Boys Provincial Basketball Championship were estimated to reach (1a) $646,000 in the Province of BC.
•The event is estimated to have generated (2a) $709,000 in GDP in BC (net economic activity), of which (2b) $454,000 occurred in the City of Richmond.
•A total of (3b) $329,000 in wages and salaries were paid in Richmond, with an additional (3c) $132,000 paid throughout the rest of the BC; supporting an estimated (4b) 10 jobs in the city, and an additional (4c) 2 jobs in other areas of the province.
Presenting your results
• In summary, the spending generated an estimated (6a) $1,419,000 in economic activity, of which (6b) $980,000 occurred in the City of Richmond.
• The event supported (5.4a) $333,000 in taxes; of which (5.1a) $148,000 accrued to the federal government. Additionally, (5.2a) $120,000 in tax revenue was supported in the province with (5.3a) $66,000 in municipal taxes supported, of which (5.3b) $54,000 accrued to the City of Richmond.
INTERPRETING YOUR RESULTS
Economics 101
Induced
Indirect
Direct
• The economic impact of an event can be measured at three levels as the money flows through the economy – Direct
– Indirect
– Induced
• The bottom line… most results report all 3 of these
• Some Stats Can I/O models do not have induced EI
Economics 101
• Among the detailed outputs, the model reports two types of economic measures: – Total Output
• The total amount of economic activity in generated as a result of the initial expenditure (could involve double-counting)
– Gross Domestic Product (GDP) • The amount of net economic activity as a result of the
initial expenditure
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B C A
An Example
Tanner sells basketball pieces to manufacturer for $10
Value of Output = $10
Cost of Inputs = $0
Net Value Added = $10
• The example on the right illustrates the difference between the two measures
Manufacturer sells ball to Nike for $20
Value of Output = $20
Cost of Inputs = $10
Net Value Added = $10
Nike adds Swoosh and sells ball for $40
Value of Output = $40
Cost of Inputs = $20
Net Value Added = $20
Total Economic Activity
= $40 + $20 + $10 = $70
Total Value Added
= $10 + $10 + $20 = $40
• Models such as STEAM use input-output modeling as the basis for evaluation, and in the resultant reports include revenues from three sources
– New tax revenues created by the event
– Direct & Indirect taxes supported by event
– Induced taxes from the re-spending of wages & salaries
Taxes in STEAM
• The STEAM results report new revenues that arise from:
– User fees in support of the event (e.g. liquor license, building permits, etc)
– Destination marketing fees (i.e. hotel room tax) arising from the total room nights sold
– Any other taxes levied by municipalities that are profit sensitive
Tax Revenues - New
• Direct: • For example, a hotel has revenue of $1 M
per year.
• The event generates $50 K in revenue for the hotel (5% of annual total)
• The hotel employs 10 people and pays $20K in taxes annually
• The event has supported 1/2 job and $1K in taxes
Tax Revenues – Direct & Indirect
Tax Revenues – Direct & Indirect
• Sources:
– Hotels
– Restaurants
– Other front line businesses
• Note, this method is not just for municipal property taxes, but Provincial & Federal as well (i.e. GST / HST, Payroll taxes, Income Tax, etc.)
• The induced effect measures the re-spending of wages and salaries earned in the local economy
• Surveys conducted by Statistics Canada reveal the average percentage of a workers wages and salaries that are spent on taxes (including property tax, GST/ HST, etc.)
Tax Revenues - Induced
• While some argue that ‘supported’ revenues are not new revenue and are consequently irrelevant, sports events are very important to many business in host communities. Examples are clearly evident
– Sport travellers complement business travellers, allowing for greater occupancy of hotel rooms on weekends
– Restaurants contacting recreation centers to inquire about upcoming events in order to manage staffing
Tax Revenues – Indirect & Induced
Support of Taxes & Jobs
• Saanich Commonwealth Pool was built for 1994 Commonwealth Games
• Hotel was built in 2001
Support of Taxes & Jobs
• Other hotels have developed their existing facilities to support sport tourists
Troubleshooting
Troubleshooting
1) Turn off your pop-up blocker! – Installed Yahoo/Google toolbar
– Recent upgrade on your system
2) On Operations Input screen, ensure revenues are greater than expenses – You will get incorrect results if revenues are less
than the total expenses
Troubleshooting
•Do – erase cell completely while entering data • Don’t – insert cursor to the right of the ‘$’ sign unless erasing completely (i.e. don’t insert cursor here: $|0
Fully Erase Cells
Troubleshooting – other
1. Ensure that you are using the correct STEAM Scenario (Workbook) as well as the correct STEAM model
2. Refer to the STEAM user’s guide
3. Contact the CSTA ([email protected])
OTHER INFORMATION
Things you need to be cognizant of
• If you are receiving STEAM inputs for funding consideration:
– Ensure only visitors are used
– Unique individuals vs. total attendance
– Inflation of total attendance figures
– Seeing output sheets only – crucial to see how the results were produced and if they are reasonable assumptions
Other EI Models
• Economic Impact models are generally not comparable – STEAM / STEAM PRO / TEAM are consistent
– STEAM (direct and indirect) is quite close to Stat Can I/O Model
• Other models available – TREIM (Ontario only) – developed in 2006? And
hasn’t been updated
– Statistics Canada I/O
STEAM vs. STEAM-PRO
• Pre event EI projections
• Limited information
• Post event analysis
• On-site electronic survey
• Full EI assessment of event
What STEAM PRO Includes
• Customized electronic survey instrument
• PDAs
• Customized survey plan consistent with ‘Guidelines’
• Training for surveyors
• Full analysis of data
• Accurate visitor estimates
• EI projection and report
Unconventional things you can do with STEAM & STEAM PRO
• Baseline analysis – what is the event / program worth before we invest in it
• Annual program / venue analysis – what is the program worth for the year as a whole
• Basic market research – what do people like / not like, who is coming, etc.
• Note that surveys / MR is integrated across mobile, email and web
The Sport Tourism Economic Assessment Model
Tony Fisher Director of Research
Canadian Sport Tourism Alliance