An Assessment of the Economic Impact of the Spokane Public Facilities District in 2009 & 2010

Transcription

1 Institute for Public Policy and Economic Analysis An Assessment of the Economic Impact of the Spokane Public Facilities District in 2009 & 2010 By: D. Patrick Jones, Ph.D. Mark Wagner, MA David Bunting, Ph.D. October, 2010

2 An Assessment of the Economic Impact of the Spokane Public Facilities District in 2009 & 2010 By D. Patrick Jones, Ph.D. Executive Director, Institute for Public Policy & Economic Analysis, EWU Mark Wagner, MA Policy Analyst, Institute for Public Policy & Economic Analysis, EWU David Bunting, Ph.D. Professor, Department of Economics, EWU October, 2010

3 Acknowledgements This project was the result of several teams. The Institute team would like to thank the survey researchers at Strategic Research Associates, of Spokane, for their professionally-produced results. In particular, we would like to thank Nathan Darnell. In addition, we are grateful for the quick responses to our many questions we received from the staff of the Spokane Public Facilities District. They include Kevin Twohig, Johnna Boxley, Matt Gibson and Brittany Garwood. i

4 Table of Contents Acknowledgements i Table of Contents ii List of Tables iii List of Figures iv Executive Summary 1 Background of Study 5 Methods & Data Sources 6 Direct Impacts 17 Model Results: Economic Impact & Economic Contribution 26 Caveats and Concluding Remarks 36 Bibliography 39 Appendix 40 Endnotes 46 ii

5 List of Tables Table 3.1: Example of Value Added 7 Table 4.1: Summary of Direct Spending at or Due to the Spokane Public Facilities District In 2009/10 17 Table 4.2: Estimated Direct Spending by Out-of-County Visitors at Regional & National Events in the Spokane PFD in 2009/10 19 Table 4.3: Estimated Direct Spending by County Residents at Regional & National Events in the Spokane PFD in 2009/10 Who Indicated They Would Travel Elsewhere to Attend the Same Event 21 Table 4.4: Estimated Direct Spending by Spokane County Residents at Regional and National Events Who Would Not Travel to See the Same Event & by Attendees at Strictly Local Events 23 Table 4.5: Estimated Expenditures per Attendee Stay 24 Table 5.1: Summary of Economic Impact of the Spokane PFD in 2009/10 26 Table 5.2: Economic Impact of the Spokane Veterans Memorial Arena in 2009/10 26 Table 5.3: Economic Impact of the Spokane Convention Center in 2009/10 27 Table 5.4: Economic Impact of the INB Performing Arts Center in 2009/10 27 Table 5.5: Top 10 Sectors, by Implan s Three Measures of Economic Impact, Affected by the Spokane PFD in 2009/10 27 Table 5.6: Estimated State & Local Fiscal Impact Effects of the Spokane PFD Activities in 2009/10, in $1, Table 5.7: Comparison of Economic Impact Results 30 Table 5.8: Total Economic Impact of the U.S. Figure Skating Championship in Table 5.9: Top 10 Sectors, by Implan s Three Measures of Economic Impact, Affected by the U.S. Figure Skating Championship in Table 5.10:Estimated State & Local Fiscal Effects of the U.S. Figure Skating Championship in 2010, in $1, Table 5.11:Total Economic Impact of the Lion King 32 Table 5.12:Top 10 Sectors, by Implan s Three Measures of Economic Impact, Affected by the Lion King 33 Table 5.13: Estimated State & Local Fiscal Effects of the Lion King, $1, Table 5.14: Summary of Economic Contribution by the Spokane PFD in 2009/10 34 Table 5.15: Economic Contribution of the Veterans Memorial Arena in 2009/10 35 Table 5.16: Economic Contribution of the Spokane Convention Center in 2009/10 35 Table 5.17: Economic Contribution of the INB Performing Arts Center in 2009/10 35 iii

6 Table A.1: Strategic Research Associates Survey Results for Out-of-County Visitors at the Spokane PFD in 2009/ Table A.2: Strategic Research Associates Survey Results for County Residents at the Spokane PFD in 2009/2010 Who Indicated They Would Travel to Attend the Same Event 41 Table A.3: PFD Events in 2009 /10 Presumed to Draw Attendees from Outside the County& Their Assigned Proxy Event from the SRA Surveys 42 Table A.4: Distribution of Estimated Out-of-County Visitors to Spokane PFD in 2009/10 44 Table A.5: Distribution of Spokane County Attendees at Regional/National Events Who Would Travel Out-of-County to Experience the Same Event 44 Table A.6: Distribution of Estimated Out-of-Town Visitors into Day-Trippers and Those Staying Overnight at Spokane PFD Events in 2009/10 45 List of Figures Figure 3.1: Illustration of the Input Output Process 8 Figure 3.2: Relationship between Impact Components 9 Figure 3.3: Distribution of PFD Visitors in 2009/10 by Place of Residence 13 Figure 3.4: Estimated Distribution of All Attendee Days at the Spokane PFD in 2009/10 16 Figure 4.1: Distribution of Estimated Direct Spending Attributable to Out-of-County Visitors 18 Figure 4.2: Distribution of Estimated Spending by Spokane Residents Indicating They Would Travel to See the Same Event in Another City 20 iv

7 Executive Summary T he Spokane Public Facilities District (PFD) oversees three venues in the middle of the City of Spokane that host sports and entertainment events as well as conventions. To better understand the economic effects of the activities in its facilities, the PFD board contracted with Eastern Washington University s Institute for Public Policy & Economic Analysis (IPPEA) to analyze the most recent year. The 12 month period chosen began in February 1, 2009 and ended in January 31, The study area was the Spokane metropolitan statistical area, which is the same as Spokane County. Data from the analysis first came from intercept surveys carried out by Strategic Research Associates of Spokane, who posed a set of questions to attendees. The questions covered residence, likely expenditures on several categories of goods and services, and for Spokane County residents, whether they would travel to another locale to attend the same event. Data also came from PFD monthly accounts for the study year. Seven events were surveyed, chosen by PFD and IPPEA staff to represent a typical set of event types over all three buildings. The surveyed events were: Lion King, Nutcracker, National Veteran Wheelchair Games, Spirit Convention, Disney on Ice, Keith Urban and the U.S. Figure Skating Championship. The survey data were then applied to all events deemed to be regional or national in character, that is, capable of attracting out of county patrons in the study year. The allocation of the survey results was carried out jointly by PFD and IPPEA staff and covered 140 events. Fan spending at the Spokane Chiefs (hockey), Spokane Shock (arena football) and the Washington State B High School Basketball tournament was not surveyed, however, and was derived from both internal PFD data and averages of the surveyed events. Estimates of convention center booth vendors spending were based on a similar approach. Calculations based on surveys and PFD reports led to estimated direct spending by two types of attendees, out-of-county visitors and locals who would travel elsewhere to attend the event, as well as vendors. Spending of local residents not among the above set was approximated in two ways: 1) locals attending regional or national events who would not travel out of county to attend the same events, and 2) locals at strictly local events. The latter generally consisted of consumer shows, high school or university graduations, and some meetings. Expenditures from these attendees were much more limited, and were estimated from receipts of the PFD from concessions & parking, as well as from average per capita per day food expenditures of the surveyed events. The study employs two concepts of economic effect: impact and contribution. Impact calculations rest on the effects of new dollars injected into the Spokane economy from events at the PFD. Impact analysis consequently examines the spending by visitors as well as locals who would leave to attend the event elsewhere. The latter group is not always included in economic impact calculations. However, the defensive role played by an organization or business in keeping this spending in the local economy can be important, as this study illustrates. 1

8 Calculations of economic contribution count impact, and then add spending of two types of local activity. These latter two spending streams are associated with local dollars that might have been spent elsewhere in the local economy. The incremental economic effect might be one of simply substituting dollars spent on goods and services of the organization of interest (PFD) for spending elsewhere in the local economy. It is difficult to know whether this substitution effect occurs, although economic theory leads one to assume it does. Nonetheless, these activities are accounted for in the study as a parallel calculation, and since it is the sum of impact plus strictly local spending, contribution yields a larger result. The analysis uses an input-output (I-O) model. Such a model measures the subsequent rounds of spending, once a good or service is purchased. It exploits detailed knowledge of inter-industry relationships that specify which sectors are input suppliers to other sectors. As a result, an initial round of spending, known as direct effects, leads a final accounting of spending, known as total effects. The ratio of total to direct effects yields the multiplier. The study team employs a well-known national I-O model, Implan. The model provides users with county-level descriptions of the interindustry relationships as well as fiscal (tax) rates. It is based on 440 sectors, not all of which might be present in any given county. Implan evaluates economic effects via four measures: Employment (part-time or full-time jobs), Labor Income, Output (final sales) and Value Added. The latter metric is the difference between the selling price of a good or service and the sum of its input costs. In addition, Implan calculates the tax impacts. Total attendee days for the study year were 1,285,622. Estimates of the distribution of attendee days over that period at the Spokane PFD are: Out-of-county visitors: 385,917, or 30% Locals who would travel out of town to attend the same event: 111,689, or 8.7% Locals who would not travel out of town to attend the same event: 494,447, or 38.5% Locals attending strictly local events: 293,569, or 22.8% The estimates of direct spending over the study year are: Out-of-county visitors: $47.2M Local who would travel out of town to attend the same event: $31.5M Locals who would not travel out of town to attend the same event: $24.5M Locals attending strictly local events: $7.3M Via the I-O model, spending by the first two categories of attendees led to an estimated total impact of $63.0M in the Spokane economy over the study year, as expressed by Value Added. Impacts, measured by Employment and Labor Income, were 1,411 (full- or part-time) and $38.9M, respectively. The estimated impact of activities at the PFD as measured by Value Added represents slightly more than 0.4% of the U.S. Department of Commerce advance report of the size of the Spokane MSA private economy in that year. Resulting impact multipliers were 1.81, 1.77 and 1.42 for Value Added, Labor Income and Employment, respectively. The size of the results depends critically on the implied spending by locals who would travel to 2

9 attend the same event elsewhere. Omitting the spending effects of this group leads to substantially lower results, for example $41.3M in Value Added. The calculation of total contribution of activities at the PFD on the Spokane economy led to $173.2M in Output, 2,277 in Employment and $58.3 in Labor Income. Multipliers were similar. As calculated by economic impact, the sectors in the local economy most affected by events at PFD were: Food Services & Drinking, Promoters of Performing Arts & Sports, Hotels & Motels, Real Estate Establishments and Retail Stores. The rank of these and a few other sectors shifted slightly, depending on the measure. In sum, 15 sectors constitute the field of top 10 sectors over the three I-O measures. The impact calculation led to an estimate of total of state and local taxes raised by activities at the Spokane PFD over the study year of approximately $6.4M. At $3.7M, sales takes made up the bulk of total state and local taxes. Property taxes was the other large category effected, showing an increase of $1.8M in the economic impact calculations. At least $3.1M of the total went to state government. Comparing the Spokane PFD results to those of facilities elsewhere in the U.S. is not straightforward. Among of the dozens of economic impact/contribution studies, few cover an operation as diverse as the Spokane PFD. Two recent examples, however, were found in the literature. These studied the economic effects of the Charleston, SC, Area Convention Center Complex and the Portland, OR, Metropolitan Exposition Recreation Commission. Generally, the results, as expressed by multiplier values, were similar to those in this analysis. The U.S. Figure Skating Championships was one of the marquee events at the PFD over the recent past. Due to its high profile and size, the study calculated its own economic impact. Total attendee days were approximately 160,000, and 77,000 of those were attributed to attendees with residences outside of Spokane County. Based on the specific survey of its attendees, the Championship led to an economic impact of $20.9M in Valued Added to the county s economy. $12.9M In Labor Income and 477 jobs (full- or part-time) were also attributable to the Championship. The list of top five affected sectors of the economy was similar to the list of the PFD s overall impact. State and local taxes attributable to the Championship were estimated to be $2.1M, with the preponderance in sales and property taxes. Similarly, the Best of Broadway production of Lion King was one of the highest profile events to take place in the INB Performing Arts Center in the recent past, so its impact was calculated as well. Based on its own survey, the Lion King was estimated have created an economic impact of $6.5M in Valued Added to the Spokane economy. An estimated $4.1M In Labor Income and 161 jobs (full- or part-time) were created as a result of the show. The list of top five affected sectors of the economy was also identical to the list of the PFD s overall impact, with a switching of a few places by sector. Taxes attributable to the Lion King were estimated to be approximately $0.64M, with the same weight of local and state sales and property taxes as in the total PFD impact. As in any study of this nature, there are ample opportunities for error. Most occur around the surveys. For example, how accurate are the spending responses generally, and of those from local residents to the question whether 3

10 they would travel to attend the same show elsewhere, specifically? Some have to do with sample size. While the total number of attendees interviewed was generally large, the numbers for sub-samples, especially for locals willing to travel, were small. In addition, errors can occur in the fit of the survey results to nonsurveyed events. The study team has evaluated the possible biases and is of the opinion that they run both negatively and positively; hence, we did make any attempt to adjust the results. Interpretation of the economic results must be couched as associated with the PFD because the presence of the events in the facilities owes much to the promoters of sports and entertainment. In sum, the results can be regarded as a good first approximation of the economic effects of the Spokane PFD. Should future studies be undertaken, this one will serve as a baseline. Further studies will also help answer the question of how representative this study year was of any given year of activity of the PFD. 4

11 2. Background of Study T he Spokane Public Facilities District (PFD) is a quasi-public entity whose function is to manage three buildings that provide core venues for sports, entertainment and conventions in Spokane County. These are the Veterans Memorial Arena, the INB Performing Arts Center and the Spokane Convention Center. The District was formed out of successful campaign in 1989 to re-build the county s largest indoor sports arena, now the Veterans Memorial Arena. In 2003, it greatly expanded its purview when it took over the responsibility of owning and operating the opera house (now INB Performing Arts Center) from the City of Spokane, and of a voterapproved expansion of the convention center. Under state law, the Spokane PFD receives a funding stream until 2027 from the state of Washington of 0.033% of the sales taxes raised annually in the County. i Its five member board is appointed by the governments of the City of Spokane and the County of Spokane. One member must be from the lodging industry. capture the effects of the U.S. Figure Skating Championship in January of this year. To estimate spending by visitors to the various events, surveys were required of patrons. The PFD board approved surveys covering five major events that were chosen by IPPEA and PFD staff to be broadly representative of all events that 12 month period. iii The surveyed events were distributed among the three buildings. A Spokane-based survey research firm, Strategic Research Associates, was engaged by the PFD to carry out the surveys, compile the data and present the results to the IPPEA. This report consequently represents the first comprehensive accounting of the effects of activities held on the premises of the Spokane PFD on the Spokane economy. The geography of interest by the PFD board is the Spokane metropolitan statistical area, which is equivalent to the county. Of the slightly more than 20 public facilities districts in Washington State, the Spokane PFD is unique in the breadth of its operations. ii Most, but not all, are single purpose, overseeing the operation of a convention center or a sports complex. Since its expansion, the PFD board had not undertaken an analysis of the broad economic effects of its operations. In 2008, it contracted with the EWU Institute for Public Policy & Economic Analysis (IPPEA) to provide such analysis. The year of analysis consisted of the last 11 months of 2009 plus January of An adjusted calendar year was chosen to 5

12 3. Methods & Data Sources 3.1 Methods Introduction T he term economic impact is commonly used to describe the economic contributions of an organization or activity in some geographically defined study area such as a county or metropolitan statistical area (MSA). Depending on circumstances, economic contributions can produce three different types of impacts: (1) direct impacts arising from the expenditures and employment by the organization; (2) indirect impacts arising from the income earned by businesses and their employees that supply or support the organization; and (3) induced impacts arising from the spending of incomes paid to employees who directly or indirectly support the organization. Economic impacts are estimated using inputoutput analysis, a basic method of quantitative economics that portrays economic activity as a system of interrelated goods and services. The technique considers some economic activity in terms of the inputs of materials and services which are processed to produce outputs of finished or semi-finished goods and services. Input-output analysis is most associated with the work of Wassily Leontief ( ) who was awarded the 1973 Nobel Prize in Economics for his pioneering efforts. Leontief once explained input-output analysis as follows: "When you make bread, you need eggs, flour, and milk. And if you want more bread, you must use more eggs, flour and milk. There are cooking recipes for all the industries in the economy. And hence, one industry's output is another's input, and the chain continues. During the 1940s Leontief developed a table for the US showing the inter-industry relations of 50 sectors which was later expanded to 200 sectors [King, nd] Input-output (I-O) accounts have become an important analysis tool because they show both interactions among producers as well as between producers and final users in the economy. These accounts have been used to estimate the direct and indirect effects of a strike or a natural disaster, or, supplemented with additional information, to estimate the effects of an increase in U.S. exports on employment *BEA, The great attraction of I-O analysis is its versatility and strong grounding in empirical evidence.... Unlike some areas of economics, input-output analysis does not come with a great deal of theoretical baggage that is hard to prove in real life. While susceptible to distortions from measurement error or inaccurate modeling, its underlying strength lies in being driven by real data [King, nd+. Currently the I-O accounts and tables for the US are maintained by the US Bureau of Economic Analysis (BEA). Two sets of tables are prepared. Annual tables include information on 65 industries while benchmark tables, prepared roughly once every 5 years and covering more than 425 industries, are based on detailed data from the Economic Census conducted by the Census Bureau. The most current benchmark table, for 2002, was released in October 2007 [BEA 2009]. 6

13 The US input-output accounts have been augmented and expanded by various academic and private research groups to conduct specialized studies, usually involving county level analysis. For this study, economic impacts are estimated using the IMPLAN system. According to the IMPLAN Group (MIG), developers of the system, the IMPLAN (IMpact Analysis for PLANing) program was originally developed by the US Department of Agriculture (USDA) Forest Service, in cooperation with the Federal Emergency Management Agency and the USDA Bureau of Land Management, to assist in land and resource management planning *MIG, In 1993 MIG was formed to privatize the development of IMPLAN data and software. Its software performs the necessary calculations to create models and to provide an interface to study changes in a region s economic conditions, create impact scenarios and to introduce local changes. IMPLAN data and accounts closely follow BEA conventions used to develop the US I-O model as well as formats recommended by the United Nations [MIG, 2000] Measuring Economic Impacts Economic impact is measured by the effects of some activity on overall indicators of economic activity such as employment or labor income. Following the bread making example of Leontief, if the inputs of eggs, flour and milk cost $1 and bread sells for $2, then the value added by the baker to the inputs is $1. If the bread is purchased by a wholesaler who sells it for $2.50 to a hotdog vendor, the wholesaler has added 50 cents to the value of the bread. If the vendor sells the bread to some person who wants to feed pigeons for $2.75, then the vendor has added another 25 cents to the value of the bread. At each production stage from original baking to final purchase, the difference between cost and selling price represents the value added or a payment to undertake some production activity. In summary: Table 3.1: Example of Value Added Production Stage Cost Selling Price Value Added Baker Wholesaler Hot dog Vendor Totals For the entire United States, employee compensation as wages and benefits constitute about 80 percent of value added with the remainder consisting of proprietor income and other property income such as rents and royalties. In the example, total value added is $1.75, largely representing payments for labor services. It should be noted that total sales of $7.25 and costs of $5.50 have little economic significance because they simply represent the cascading effects of successive purchases and re-sales or are incorporated in various selling prices. 7

14 Below is a schematic depiction of the process whereby some production activity converts inputs into outputs with resulting measureable economic impacts. Figure 3.1: Illustration of the Input Output Process Finally, economic impacts can be measured in terms of total sales, employment or various components of value added such as labor income, employee compensation, proprietor income or other property income. The most meaningful measures are employment and value added in some form because employment represents changes in the number working while value added represents actual income increases. Economic impacts can directly arise from some activity but also result indirectly or from spending of incomes generated by the original activity. Direct impacts are the initial result of some increase in spending; indirect impacts arise from business to business transactions, ancillary and supportive activities that arise from the initial activity while induced impacts rise from the spending of incomes earned either directly or indirectly. For example, a visitor buys a hotdog at a Spokane Shock game. The direct impact is the visitor spending; the indirect impact is the increased sales by a Spokane food service supply company while the induced impact is the increased income earned from offering services related to Shock games and from additional food service sales. While the 8

15 example is trivial for one visitor, an additional five thousand or so visitors for each of ten home games could have significant employment and labor income effects on activities related to Spokane Shock games, food supply services and the spending on other goods and services from income earned as either a Shock or food services employee. Each of these impacts adds to Spokane income, jobs and proprietor income and represents the total economic impact of the visitor spending related to attending Shock games. Also, the related sales and re-sale of items associated with this spending represents the total contribution to the Spokane economy of the visitor spending. The inter-relationships of these impacts are shown in the chart below. Figure 3.2: Relationship between Impact Components 9

16 3.2 Data sources & compilation The economic effects of any organization depend first on the level of spending per person associated with that organization and then on the number of persons attracted to its activities. Spending associated with activities in Spokane PFD buildings can be associated with four groups of attendees and vendors. Attendees, in turn, can be grouped into two large categories: 1) those who are either from out of county or locals who would travel out of county for certain events, and 2) local residents who either attend strictly local events or indicate that they wouldn t travel outside of the county for certain events. The spending by these various groups provides the basis of the two essential calculations of economic effects, covered above in section 3.1, so they must be accounted for separately. The first category is responsible for the calculations of economic impact, while the second category is associated with economic contribution. The study developed several ways to arrive at estimates of spending and attendance for each group Data from groups that contribute to impact Spending data from the first category is based on a series of intercept surveys conducted by Spokane-based Strategic Research Associates at seven events on the grounds of the Spokane PFD. The list included three events at the Veterans Memorial Arena, two at the INB Performing Arts Center and two at the Convention Center. Originally, the list of events was five but was expanded over the course of the year to provide a large enough sample in each of the event types. The events were: Disney on Ice, Keith Urban, Lion King, the Nutcracker, the National Veterans Wheelchair Games, the Spirit Convention and the U.S. National Figure Skating Championships. The goal of the SRA intercept surveys was to estimate spending of two groups: visitors from outside the county and county residents who indicated that they would travel to another city to view the same event. SRA largely used faceto-face surveys with these attendees to determine the amount that each party thought they would spend on the following categories: tickets, eating and drinking, lodging, shopping, other entertainment and recreation, ground transportation and all other. Each of these categories represents a different industry, with different multipliers used by the model to calculate the final effects of the events on the Spokane economy; consequently, the study team needed this level of detail to provide as accurate a calculation as possible. At three events, SRA invited attendees to take an on-line survey via a postcard. Besides an estimate of spending, the survey also asked about residence, the number of people in the party, the number of nights planned to stay in Spokane, and in the case of the latter group, which Western U.S. cities they would travel to attend the same event were it not offered in Spokane. Tables A.1 and A.2 in the Appendix depict the average responses from the SRA surveys. To briefly summarize, the total number of surveyed patrons at each of the five separate or combined events was about 325. Forecasted spending per visitor per stay ran from a high of approximately $757 for the U.S. Figure Skating championships to a low of approximately $126 for the Nutcracker. Of the seven events, the two conventions claimed the highest share of out-of-county attendees, at 85%; the 10

17 Nutcracker participants revealed the lowest number from outside the county, at 33%. The average party size ranged from 2.33 for the U.S. Figure Skating Championships to 3.73 for the combined sample from Disney on Ice and the Keith Urban concert. Mean stays (in nights) ranged from 4 in the case of the U.S. Figure Skating Championship to 1.42, in the case of the Lion King. In the case of local residents who indicated they would travel outside of Spokane to attend the same event, the U.S. Figure Skating Championship again produced the highest per person per stay spending estimate, at $394. (The survey did not ask about, hence the result do not include, tickets or travel expenditures.) The primary reason behind the cost difference between the estimated categories reported by visitors and residents traveling elsewhere to attend the event lies in the differential costs of lodging. iv Interestingly, the events that yielded the lowest per person per stay projected spending at a different venue were the two conventions, National Veterans Games and Spirit, at $149. With one exception (Disney on Ice/Keith Urban), projected average party size was not very different from those of the visitors for the same events. Similarly, average projected stay (in nights) was similar to visitors. When residents were asked how many would be willing to travel to Seattle to attend the same event, of those who answered yes, over 80% of those said that they would be willing to travel there for all events; the response was much more varied for their willingness to travel to next most favorite venue, Portland, ranging from 55% to 86%. v With one exception (Disney on Ice/Keith Urban), respondents in this group overwhelmingly stated that they would travel by auto. The samples of this type of attendee were particularly small. The response total ranged from a high of 67 in the case of the U.S. Figure Skating Championship to 29 for the two conventions. As a result, the study team has less confidence in the ability of the average response on projected spending to represent true intentions of local residents who would travel to see the same event. At the same time, responses by local residents about their projected spending yielded broadly plausible results to the research team. Consequently, the responses were used, since this is an important, but often neglected, component of economic impact calculations for entertainment and sports studies. The study team calculated spending per day per person in each of the seven categories. It then applied the results of these seven representative events to all events that took place in the PFD over the 12 month period that were deemed to attract attendees from outside the County, henceforth considered regional/national. The remaining events were labeled local and are taken up below. Both the study team and PFD staff agreed on this list. The number of regional/national events over this period was 26 at the INB Performing Arts Center, 79 at the Veterans Memorial Arena and 35 at the Convention Center, or a total of 140. Many events lasted several days, such as the Lion King, State B basketball, the US Figure Skating Championships and nearly all of those at the Convention Center. Assigning the seven surveyed events to all the regional/national that took place over the year was based on the estimated share of total 11

18 attendees that came from outside the County for that particular event. These shares were: Disney on Ice/Keith Urban: 47% Lion King: 57% National Veterans Wheelchair Games/Spirit Convention: 85% Nutcracker: 33% U.S. Figure Skating Championship: 48% vi Some of the events that fell into the Disney on Ice/Keith Urban category were: Fiddler on the Roof, George Lopez, Skillet with Hawk Nelson and Brad Paisley. Lion King was in a category of its own. All regional and national conventions were assumed to follow the spending patterns of the two surveyed conventions. Among Nutcracker like events were: Spokane Symphony at the Pops, Monster Jam, Larry the Cable Guy and the Ronald McDonald Charities Classic basketball game. The U.S. Figure Skating Championship was treated as a one of a kind category. The presumption of these assignments was that if the distribution of attendees was largely the same, then spending patterns were also similar. The assignment applied to all expenditure categories, except tickets, which are taken up shortly. Along with the assignment of presumed spending, this step estimated the number of attendees who came from out of county and the number of local residents who would travel to the event in another city. The estimated number was simply a product of the percentage from out of county in the assigned event times the total attendance figure for that event. As a result, subsequent tables will refer to events that were like the Nutcracker. In this way, the second component of the estimate of total expenditures, attendee days, could be calculated. Spending at three key activities at the Veterans Memorial Arena, however, fell outside this process of assigning events to the surveyed ones. These were the Chiefs hockey games, the Shock arena football games and the Washington State B basketball tournament. In conjunction with PFD staff, the study team first estimated the number of out-of-county visitors to these events as follows: 15% for the Chiefs and the Shock; and 80% for the State B championship. Since no spending survey of these three activities had been conducted, some estimate of the amount per person per day then had to be provided. In lieu of additional information, the study team s solution was to use a simple average of the spending for each category by visitors at each of the surveyed events, excluding the U.S. Figure Skating Championship. Similarly, the study team did not have a strong sense of the share of local visitors who would be willing to travel to attend these events in other locales. In the end, we decided on a 5% share. For a typical Shock game of approximately 8,000 attendees, that implies 400 fans; for a typical Chiefs game of 7,000, that implies 350 fans. Table A.3 in the Appendix events deemed to be regional/national events shows over the study year, along with their reported attendance. Tables A.4 and A.5 lists the assignment by event type for visitors and locals would travel out of town, respectively. Via this procedure, attendance due to visitors ( visitor days ) was estimated to be 385,918 at all regional/national events. The estimated count of attendee days from residents who would have traveled to attend the same event numbered 111,

19 A further dimension of visitors should be mentioned. SRA asked attendees from outside the county whether they intended to spend the night. An extension of the survey responses to all assigned events led to the result of approximately 52% of visitors who would spend the night. Table A.6 in the Appendix lists the estimated distribution of overnight visitors by event or event type. This estimate -- about half of all visitors as day trippers -- is consonant with the SRA summary of residences of visitors, captured in Figure 4.3 below. That is, one can readily imagine that Figure 3.3: Distribution of PFD Visitors in 2009/10 by Place of Residence visitors from eastern Washington and northern Idaho would return home after an event. Day-trippers typically will not spend as much as those who book a room at a hotel, if only for that reason. Consequently, average spending by visitors, with this kind of mix, will be lower than for those locations which attract a higher share from further away. A significant expenditure, as seen in Table A.1, is the amount spent on tickets. For the five surveyed events charging admission, estimated ticket expenses were known from the respondents. (Convention Center events had no admission charges.) However, instead of applying estimated ticket expenses from the assigned surveyed event to all events, the study team used actual ticket revenues in nearly all regional/national events. Total ticket revenue for each event, confidential information, was received from the PFD and converted to a per person basis. In addition to the implied average ticket price, a service charge of 12% was 13

20 applied, along with a $1 for handling fees. vii In the case of the U.S. Figure Skating Championship, ticket revenues were unavailable from the PFD; as a result, the study team applied the mean reported by out-ofcounty visitors. viii A final, and smallest, source of spending that contributes to impact on the County economy by the PFD comes from the spending by vendors. At conventions, spending by those who staff booths is not insignificant, especially for multi-day shows. Data from the PFD provided the study team with the number of booths per convention. To arrive at the number of people staffing those booths, the study team multiplied the booth count by 1.5, on the assumption that, on average, more than one person was necessary to staff a booth over the course of a show. The study team further relied on the PFD data that indicated the number of exhibiting firms that came from beyond a 100 mile radius. All those that did, in particular their associated staff, were counted as those contributing to economic impact. The spending of those vendors from within a 100 mile radius was counted differently: The study team assumed that one half of these participants consisted of day trippers, or essentially local residents. Spending by local vendors is taken up in section Spending by these out-of-county vendors was unknown, since they had not been surveyed. Based upon a presumption that the stays of most of the vendors were financed by the companies that sent them, the study team used the per capita per day spending estimates from the Lion King attendees, except for hotel expenditures. Hotel expenditures were based on an average of all intercept surveys minus figure skating. ix Attendee spending counted in economic contribution only As noted in Section 3.1, economic contribution is based on the sum of spending by the groups that are counted in economic impact calculations, plus the spending this is deemed strictly local. Such spending might or might not have occurred in the local economy in the absence of these events. For example, was some shopping done by a local resident before an event at one of the three PFD buildings uniquely associated with the local event, or would it have taken place in any case? It is difficult to know. As a result, spending by three types of attendees to PFD events were not surveyed since the motivation for their spending is ambiguous. Nonetheless, these people did register some unique spending, on the premises of the PFD, for tickets, parking, concessions and food and drink in one of the three buildings. These expenditures were counted in the broader measure of economic contribution. In addition, the study team decided to count spending on food, outside of the PFD grounds, as part of spending associated with an event at the PFD. x The first, and by far the largest, of the three groups in this category consisted of those local visitors to regional/national events who indicated that they would not travel outside of Spokane if the event were held elsewhere. Generally, this share was much larger than the one composed of residents who indicated that they would travel. As in the case of the calculations of the estimates of the residents who would travel, the number for each event is derived from this share from the assigned surveyed event, times the total number of local 14

21 residents. This group was the largest of all six groups; our estimate was 494,448 attendee days. The second group consisted of those attendees at events that the study team and PFD staff deemed strictly local. The largest contributor to this class of events were graduation ceremonies, both high school and university. Here, we assumed that all attendees were from within the County and therefore a tally of their expenditures outside the PFD facilities would be ambiguous. But they did purchase services at the PFD and these sums were counted. Also, as in the case of local residents at regional/national events who said that they would not travel, the study team counted food and drink. Per person amounts were the same. The total in this category came to 293,569 attendee days. The final group consisted of local vendors. Their numbers, as indicated above, were estimated as one half of the number of vendors from within 100 miles, from PFD internal data. As with the estimation of out-of-county vendor staff, the study team assumed 1.5 people per booth. Spending was assumed to equivalent to that of out-of-county vendors, without the lodging costs. A final note about the data concerns the time period. The length was 12 months, as most studies are done on an annual basis. However, it was a slightly modified year, running from February 1, 2009 to January 31, This was done to be able to measure the economic effects of the U.S. Figure Skating Championship. The estimated distribution of all attendees, not including vendors, is shown in the chart below. 15

22 Figure 3.4: Estimated Distribution of All Attendee Days at the Spokane PFD in 2009/2010 Out of county attendees 22.8% 30.0% Local residents who would travel 38.5% 8.7% Local residents who would not travel Local residents at strictly local events 16

23 4. Direct Impacts 4.1 General Findings T his chapter presents the results of the data assembly and calculation described in the prior chapter. In the context of input output modeling, the numbers in the following tables are the input for the determination of economic impact or contribution. They are known, in most cases, as direct impacts or spending. Table 4.1 presents the summary of estimated direct spending by the four types of attendees over the 2009/10 year at the PFD and includes spending by vendors. The table also includes a column for the spending on rent and parking paid to the PFD by event organizers and attendees. xi The four spending group totals are then combined into activities causing economic impact and the additional activities that sum to economic contribution. Table 4.1: Summary of Direct Spending at or Due to the Spokane Public Facilities District in 2009/10 Attendee Ticket Food & Retail & Hotel & Transprtn PFD Attendee Type Days Sales Drink Misc. Motel & Other Revenues Total ---$(M)-- $(M) Out of County 385, Locals willing to travel 111, Economic impact totals 497, Locals not willing to travel at 494, regional/national Attendees at local events 293, Economic contribution totals 788, Total 1,285, As can be readily observed, direct spending that that led to economic impact was estimated at nearly $84 million. Lodging was the largest expenditure category, followed by tickets, then food and drink. Total spending by these two groups was split at 56% and 44% between outout-county visitors and local residents willing to travel to attend the event elsewhere, respectively. Nearly 500,000 attendee days were counted in these two categories. Spending from residents considered to be local, and therefore only counted toward economic contribution, is shown in the latter half of Table 4.1. The two categories sum to nearly $32 million. Here, spending on food and drink is the largest type, followed by ticket purchases. None of the other categories, besides PFD revenues, is very large. Spending by local residents at regional/national events who indicated they 17

24 would not travel to the same show dominated the local spending, at 77% of the total. The following sections in this chapter take up the components of Table 4.1 in some detail. This closer scrutiny allows a better understanding of those event types, as well as of the relative importance of the three PFD buildings in calculations of economic effects of the PFD in 2009/ Estimated Direct Spending Attributable to Out-of-County Visitors This group was estimated to spend slightly more than $47 million in 2009/10. As can be seen in the chart below, the largest expenditure category was ticket sales, followed by food & drink, with lodging the third highest. Revenues received by the PFD for parking and rent made up the second-smallest category but one that still registered approximately $1.8 million. Figure 4.1: Distribution of Estimated Direct Spending Attributable to Out-of-County Visitors 3.8% 2.7% 22.2% 19.5% 28.2% 23.6 Ticket sales Food & drink Retail & miscellaneous Hotel & motel PFD revenues Transportation & other Table 4.2 offers the detail of this spending, by event type and building. The building contributing the most to direct spending by visitors was the Arena, with an estimated $29.3 million, or 62% of the total. The INB Performing Arts Center was estimated to account for $9.3 million in spending, while the Convention Center was associated with $8.6 million. The share of attendance claimed by the Arena for out-of-county visitors was nearly the same as spending, at 60%. Attendance share at the INB, at 17%, was lower than its spending share, at 20%, indicating that INB patrons were estimated to spend slightly more, on average, than those at the other two facilities. 18

25 Table 4.2: Estimated Direct Spending by Out-of-County Visitors at Regional & National Events in the Spokane PFD in 2009/10 Attendee Ticket Food & Retail & Hotel & Transprtn PFD Facility Event Type Days Sales Drink Misc. Motel & Other Revenues Total --$(M)-- $(M) Arena Chiefs & Shock 53, Arena State B 20, Arena Disney/K. Urban 46, Arena Nutcracker 34, Arena Wheelchair/Spirit 1, Arena Figure Skating 77, Total 232, Con. Ctr Disney/K. Urban 2, Con. Ctr Nutcracker Con. Ctr Wheelchair/Spirit 82, Con. Ctr Vendor Days (18,465) Total 85, INB Disney/K. Urban 12, INB Lion King 33, INB Nutcracker 17, INB Wheelchair/Spirit 4, Total 67, Grand Total 385, The largest event type, as measured by attendee days, consisted of conventions, with a total of nearly 83,000. Conventions also summed to the second highest spending level among all events or event types. However, the U.S. Figure Skating Championship clearly created the largest direct spending single event, or type, by visitors, at nearly $15 million. That event also brought in an estimated 77,000 visitor days. In third place was the Lion King, with estimated direct spending of slightly over $5.5 million from visitors. Finally, note the contribution of vendors at the Convention Center. Using the method described in Chapter 3, the study team arrived at nearly 18,500 vendor days. Based on the spending assumptions, vendors at regional/national conventions were estimated to spend $2.1 million, or slightly more than 4% of the total. 19

26 4.3 Estimated Direct Spending by County Residents Who Indicated They Would Travel Elsewhere to Attend the Same Event This group of attendees was far less numerous, as mentioned in Chapter 4, at an estimated 111,689 attendee days. Nonetheless, their estimated direct spending was not small, at over $36.8 million. In this case, the largest expenditure category was transportation, followed by lodging, with food and drink in third place, as the chart below depicts. Transportation or travel expenditures Figure 4.2: Distribution of Estimated Spending by Spokane Residents Indicating They Would Travel to See the Same Event in Another City 34.5% 29.6% 14.3% 10.0% 11.5% Ticket sales Food & drink Retail & miscellaneous Hotel & motel Transportation & other were not asked in the survey of this group, although destination was. Since a very large percentage share of respondents indicated that Seattle was the overwhelming alternative venue for the event and since most reported that auto would be the preferred method of travel, driving costs of a round-trip to Seattle make up the calculations for the transportation category. xii All other expenditure category totals were derived from the survey responses. The table below offers the detail by building & event type. 20