UFC EVENT IMPACTS: ECONOMIC STUDY FOR NEW YORK STATE UPSTATE (BUFFALO)( ) AND DOWNSTATE (NYC) NOVEMBER 10, 2008

Transcription

1 UFC EVENT IMPACTS: ECONOMIC STUDY FOR NEW YORK STATE UPSTATE (BUFFALO)( ) AND DOWNSTATE (NYC) NOVEMBER 10, 2008

2 Mixed Martial Arts by the numbers $3.0 g g million Average gate revenues for UFC fights in Television series/episodes about the sport in ban 2008 Former Olympians competing in 14 MMA 17 Former NCAA Wrestling Champions competing in MMA 2

3 UFC regulation can bring needed economic and fiscal benefits to New York State NYS Law enacted in 1997: 5-a. 2. No combative sport shall be conducted, held or given within the state of New York, and no licenses may be approved by the commission for such matches or exhibitions. UFC is regulated and recognized by 36 out of the 44 states that have athletic commissions, including California, Nevada, New Jersey, Ohio and Pennsylvania. 3

4 Attendance at UFC events has risen substantially over the last decade 180, , , , ,000 80, ,000 40,000 20, Attendance Attendance Total Source: Zuffa, LLC. Note: 2008 attendance is projected 4

5 UFC s market share has also increased dramatically 250 Increase in Pay per View Revenues (in millions) WWE HBO Boxing* UFC Est 2003 PPV Revenues Est 2006 PPV Revenues Source: USA Today, February 28, 2007; WWE 2003 Annual Report; HR&A analysis of HBO Boxing 2003 & 2006 flight lists 5

6 HR&A Advisors assesses economic impacts for events and activities across the country HR&A was retained by Zuffa, LLC. to project economic and fiscal activity for potential events in both upstate and downstate New York. States Worked In California Connecticut District of Columbia Illinois Massachusetts Maryland North Carolina New Jersey New York Ohio Pennsylvania South Carolina Selected Clients American Museum of Natural History Brooklyn Academy of Music City of Washington, DC East Baltimore Development, Inc. Habitat for Humanity New York City Economic Development Corporation New York Empire State Development Corporation New Jersey Sports and Exposition Authority Times Square Alliance Large national private real estate developers Study Areas Mixed Use Development Museums Parks Shopping Centers Sporting Events Stadiums Transit Oriented Development 6

7 Economic impact: event spending and visitor spending stimulate economic activity Local Event Spending Economic Activity Visitor Spending Local Economic Contribution Employment Employment Wages Fiscal Impacts 7

8 Summary of Findings Upstate (Buffalo) 8

9 Local event spending by Zuffa and its affiliates HR&A analyzed typical event budgets for a comparable UFC marquee event. Local spending was analyzed by line item. Event Costs Transportation ti Merchandise Food Television Production Staffing Advertising Commercials Estimated Event Spending: $1.7M 9

10 Total visitor spending of $1.4 million. 1 3,000 attendees from Buffalo Metropolitan area No additional local spending. 7,000 daytrippers. $475,000 local spending 1 6,000 overnight visitors $575,000 local spending $300,000 $ lodging Total $1.1 million in local spending $300,000 in lodging $1.4 million in total spending 10

11 $5.2 million in total economic activity for the local economy $1.7 million of direct event spending is leveraged 3 times to result in $5.2 million dollars of total activity in the local economy. Economic Output $5.2M $1.1 $1.0 $1.7 Direct Event Spending Visitor it Spending $1.4 Indirect Activity Induced Activity source: Zuffa, LLC & HR&A input output analysis using IMPLAN 11

12 A UFC event could increase direct sports related activity in Buffalo by 20% $15M of direct economic activity (including visitor spending) in Buffalo was generated from sporting events in A UFC event could add $3.1M. $16.0 $14.0 $12.0 $ $8.0 $6.0 $4.0 $2.0 $ Direct Economic Impact Comparison (in $millions) Buffalo Sporting Events UFC Event NCAA Tournament All Other Events 2007 EVENTS 2007 Men s Basketball Tournament Rounds 1 and 2 USA Hockey Tier 1 and 2 Supersite United States Bowling Congress NCAA Swimming and Diving Atlantic 10 Swim Championships NYS High School Swim Championships ESPN Bassmaster Elite Championships US Figure Skating Northeast Regionals Buffalo hosted 43 sporting events in 2007, including the NCAA Men s Basketball Tournament Rounds 1 and 2. These events generated $15M in direct economic activity. Source: Buffalo Niagara Convention and Visitors Bureau, 2007 Annual Business Review. 12

13 An event would produce substantial local employment One time event activity, including over 300 staff working on the event, is equivalent to the creation of 57 local jobs. Employment 57 Jobs 9 7 Direct Indirect 41 Induced Source: Zuffa, LLC & HR&A analysis using IMPLAN model 13

14 Direct revenue benefits for both local and state governments $0.4 M of total fiscal impacts to Buffalo and the State of New York. Buffalo $30k NYS $320k $25,000 $20,000 $15,000 $10, $5,000 $120,000 $100, $80,000 $60,000 $40,000 $20,000 $0 $ Sales Tax Hotel Occupancy Tax* $0.4M could fund an additional 5 police officers in Buffalo * Taxes fund the Buffalo Niagara Convention and Visitors Bureau. 14

15 Significant net gain in Western New York hotel occupancy Hot tel Su upply 12,000 available rooms Peak occupancy of 85% Average occupancy of 65% l Dem mand Hote 3,400 estimated t visitor room nights 700 estimated room nights ih for event staff Represents additional occupancy of 11%* Source: HR&A analysis of Smith Travel Research Market Trends Report * over any given weekend period 15

16 Summary of Findings Downstate (NYC) 16

17 Local event spending by Zuffa and its affiliates HR&A analyzed typical event budgets for a comparable UFC marquee event. Local spending was analyzed by line item. Event Costs Transportation ti Merchandise Food Television Production Staffing Advertising Commercials Estimated Event Spending: $5.3M 17

18 Total visitor spending of $1.4 million 10,000 LOCAL ATTENDEES NYC TRANSIT No additional local spending 5,100 DAYTRIPPERS Amtrak Metro-North LIRR $600,000 local spending LOCAL SPENDING $1.0 million LODGING $0.4 million NJT TOTAL SPENDING $1.4 million 1,900 OVERNIGHT VISITORS $345,000 local spending $380,000 lodging Source: HR&A analysis of NYC & Company visitor spending data. 18

19 $11.3 million in total economic activity for the local economy $5.3 million of direct event spending is leveraged 2 times to result in $11.3 million dollars of total activity in the local economy. Economic Output $11.3M $2.4 $2.2 $0.4 Direct Event Spending $5.3 Visitor Spending Lodging $1.0 Indirect Activity Induced Activity Source: Zuffa, LLC & HR&A input output analysis using IMPLAN. 19

20 $11.3 million in total economic activity for the local economy $68.6 million in economic activity was generated by the New York City Waterfalls public art work over 108 days in A UFC event could generate $11.3 million, or 15% of the economic activity over a single weekend. Source: Appleseed and Audience Research & Analysis, The New York City Waterfalls: Economic Impact of a Public Art Work, October

21 An event would produce substantial local employment One time event activity, including staff working on the event, is equivalent to the creation of 81 local jobs. Employment 81 Jobs Direct Indirect Induced Source: Zuffa, LLC & HR&A analysis using IMPLAN model 21

22 Direct revenue benefits for both local and state governments $0.9 M of total fiscal impacts to New York City and State. NYC $400k NYS $517k $175,000 $150,000 $125,000 $100,000 $75,000 $50,000 $25,000 $ Sales Tax Personal Business Hotel Income Tax Income Tax Occupancy Tax $250,000 $200,000 $150,000 $100,000 $50,000 $0 $0.9 M can fund textbooks for over 15,000 NYS/NYC children

23 Activity is substantially net new Cit ties hos sting UF FC Even nts Las Vegas Atlanta London Dublin Chicago Los Angeles Montreal Newark Anaheim Houston Atlantic City Miami New Orleans Denver Mohegan Sun Columbus/Cincinnati The New York market is relatively underserved by UFC events. NYC Regional Area 134 UFC Events Nov 1993 to Jan within NYC regional area Only 1 event within the last 3 years 23

24 Activity is substantially net new Attendance at Madison Square Garden boxing & wrestling events has fallen 20%. 120,000 Attendance at MSG Boxing / Wrestling Events* 100,000 80, ,000 40, , Source: HR&A analysis of Madison Square Garden event data,; based on assessment of average attendance and capacity figures for time periods in question. 24

25 Activity is substantially net new HR&A utilized conservative local event entspending impacts Visitor spending for 39% daytrippers and 23% overnight visitors $5.3M $1.4M Average visitor spends $119/day on nonlodging: retail, food & beverage, transportation We assume lodging spending may not be net new Indirectand Inducedimpacts Over 90% of activity is likely net new $0.4M $4.6M $10.9M NYC lodging is substantially at capacity at 86% average Source: HR&A analysis of NYC & Company visitor spending data. 25

26 Combined Findings: Upstate and Downstate t Atiit Activity 26

27 $16.5 million in total economic activity for local economies $7.0 million of direct event spending is leveraged 2.3 times to result in $16.1 million dollars of total activity in the local economy. Economic Output $16.1M $3.6 $3.3 $7.0 Direct Event Spending Visitor Spending $2.3 Indirect Activity Induced Activity Source: Zuffa, LLC & HR&A input output analysis using IMPLAN. 27

28 Direct revenue benefits for state government $0.8 M of total fiscal impacts for New York State. NYS $836k $250,000 $200,000 $150,000 $100, $50,000 $0 $0.8 M can fund textbooks for over 12,000 students

29 Summary Local Jobs Over 300 event jobs 138 jobs created in total $5.6M in compensation Local Taxes $836,000 in taxes to NYS $400,000 in taxes to NYC $30,000 in taxes to Buffalo $7.0M in direct event spending $2.3M in visitor spending $6.9M in indirect/induced benefits $16.1M in net new economic activity Local Economy / Local Impacts 6,000 room night stays Tourism exposure Media exposure 29

30 Detailed Methodology 30

31 HR&A studied the economic impacts of UFC events in New York Data Inputs Analysis Outcome Event Financials Visitor spending Tax Sources & Rates Economic Aggregation Input Output Modeling Fiscal Analysis Total Activity Fiscal Impacts Net Impacts 31

32 HR&A determined existing level of activity at selected venues Madison Square Garden and HSBC Arena have 40 50% availability on weekend dates. HSBC MSG 3% 4% 30% 14% 50% Available Circus Hockey Lacrosse Concert 2% 7% Available 13% 39% Basketball Hockey Boxing Concert Bull Riding 35% 3% Source: HR&A analysis of MSG and HSBC Arena event schedules. 32

33 HR&A analyzed spectator origin data from comparable events to project local spending Attendance origin: 80% from outside Buffalo region, 11% from outside NYC region 16,000 Buffalo Spectators 17,000 NYC Spectators Spectators by Origin Spectators by Origin 11% 19% 34% Total Canadian Non NYS New York State 36% Buffalo Metropolitan Area 50% 11% 39% NYC Residents Residents within Metropolitan Area Other 33

34 Multiplier effects of direct spending were assessed HR&A used input output modeling to determine the multiplier effects of direct event and visitor spending. IMPLAN (IMpact Analysis for PLANning) is a widelyrecognized modeling tool. IMPLAN traces the pattern of commodity purchases and sales between industries that are associated with each dollar s worth of a product or service sold to a customer, analyzinginteractionsamong 528 industrialsectors. IMPLAN is used for the preparation of economic impact analyses by many public and private entities throughout the U.S. Industry data is updated annually and would be specifically customized to the study area. 34

35 Three types of activity can be measured based on models of economic behavior IMPLAN measures indirect and induced activity resulting from calculated direct activity. Direct Activity Direct activity resulting from event and visitor spending Indirect Activity Activity by suppliers of goods and services as a result of the direct activity Induced Activity Activity in the local economy due to spending by employees of direct spending providers 35

36 Measures of impact include activity, employment, and wages IMPLAN provides economic activity, employment and wages impacts. Economic Atiit Activity Total spending onevent event, by visitors, and from indirect and induced activity Employment Total direct, indirect and induced jobs created (equivalent e to annual jobs) Employment Wages Estimated wages of jobs added in the local economy due to increased ceased spending 36

37 UFC EVENT IMPACTS: ECONOMIC STUDY FOR NEW YORK STATE UPSTATE (BUFFALO)( ) AND DOWNSTATE (NYC) NOVEMBER 10, 2008