Economic Impacts. Government Investment. Why invest? Impact Model. Economic Impact Model. Sport and Recreation Victoria VicHealth

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1 Economic Impact Model Sport and Recreation Victoria VicHealth Developed by SGS Economics & Planning Economic Impacts Australian Masters Golf Tournament - Economic Impact >$34 million in 2009 Formula One Australian Grand Prix Economic Impact increased Gross State Product between $32.04 and $39.34 million in 2011; - generated between 350 to 411 EFT Stawell Gift generates $2.6 million in direct economic impact for the region Government Investment Since 2000, over $200 million invested to LGAs through the CFFP contributing to over 2,000 community sport and recreation facilities How do we know whether the benefits outweigh the costs of investing in these facilities? Why invest? Impact Model Increasing physical activity has obvious direct health benefits Also encompass wider societal benefits including health & wellbeing, economic, social and environmental benefits Nexus between demand and supply Low participation rates = inadequate active open space & built facilities A theoretical model that, using accepted benchmark data and user input data, calculates the economic, health, and social impact of sport and recreational facilities on local communities These impacts / benefits are calculated for the lifetime of the facility 25 years and for any given year of that facility 1

2 User Input Data Key to the model and calculations are variable input data Input data includes: Estimated market share Annual visitations current & new Additional participants New volunteers (EFT) Total travel time Admission fee (at door or registration/length of season/ times per week) Benchmark Data Sources: CERM Performance Indicators from 2007 National Benchmarking Survey for Sports & Leisure Centres and Golf Courses, Vol 16 Another 15 benchmarks are used ranging from average annual salary to avoided health cost per hour of physical activity Sources include ERASS, DOT, ABS, Medibank Economic benefits represent: Calculates the benefit to cost ratio and economic impact of these facilities; Avoided government health costs due to people moving from a sedentary to active lifestyle; and Avoided absenteeism costs due to people being more active and healthy Impact Model Applies to the development of a new facility or an extension/ upgrade of an existing community sport and recreation facility Applies to: Aquatic Indoor recreation Sports fields Multi-use Economic benefits = number of new regular working age participants (estimated) multiplied by annual value of avoided absenteeism (i.e. the productive value of avoiding sick days) (benchmark) plus number of hours of physical activity per year by new regular visitors (both working and non working age) (estimate) multiplied by an avoided health cost value per hour of physical activity (benchmark) 2

3 Health benefits represent: Direct user benefits from participating in sport ie health improvement Health benefits = total revenue for facility (or total visits multiplied by admission fee) (benchmark) plus average travel time and in facility time for participants (estimate) multiplied by a time value (estimate) Social benefits represent: Non-user benefits which are assumed to be commensurate with user benefits; and Social value from volunteering (EFT jobs) Social benefits = Number of new volunteers (EFT) (estimate) multiplied by by an average annual salary (benchmark) plus all non user benefits (which are assumed to be equal to user benefits) 3

4 Cost Benefit Framework Case Study 1 Provision of Community Sport and Recreation Facilities -Indoor recreation -Outdoor field -Aquatic Costs of Provision -Infrastructure capital cost - Recurrent funding spend Outcomes -New or increased participation in physical activity Impact of Sports Fields Benefits of Provision -Direct User Benefits -+ -Indirect User Benefits -+ -Non-User Benefits Growth Areas Net Cost or Benefit Value of Open Space 8 ha parcels = 2 AFL / Cricket ovals or 3 soccer pitches = 1 new AFL club + 1 new cricket club or 1 new soccer club To be within 1km of 95% of residences Can be refitted over time Urban areas problematic Value of Active Open Space 2 AFL / Cricket ovals = 2 new clubs New clubs = 480+ participants Train 2 times per week and play 1 time per week over 23 week season Juniors = 370 participants x 2.25 (train/play per week) x 46 (2 seasons) = 38,295 (annual visitations) Seniors = 110 x 2.25 x 46 = 11,385 TOTAL = 480 x 2.25 x 46 = 49,680 visitations 4

5 Value of Open Space Economic Impact Assessment Benefit to cost ratio = 16.8 Net present value is $2.3 MILL Health benefit = $15.8 MILL Economic benefit = $1.3 MILL Social benefit = $21.4 MILL Total output = $2.6 MILL Flow on - $4 MILL TOTAL = $6.6 MILL Total employment = 1 job Value of Open Space When planning developments, essential we get provision of active open space right If not, lack of provision results in lack of participation opportunities and over utilisation of existing facilities Melbourne Metropolitan Mean = 1.57ha/1000 Mean lowest participation 4 municipalities mean = 1.25ha/1000 For a municipality of 100,000 pop that is 32ha or 8 senior AFL/ Cricket ovals or facilities for four new clubs Added cost of purchasing land to meet demand plus the financial impacts outlined Cost of Getting It Wrong At the time of development, the regulations currently in place were not. Currently, there is a shortfall of active open space of 74 Ha. This equates to 18 AFL ovals (construction cost = $8.2 MILL) or 25 soccer pitches. Knowing that over 7,000 juniors were turned away from soccer in 2009 due to lack of facilities, the impact of this shortfall becomes immense. Had the land been purchased at the time of development, the cost was $223 MILLION; purchase costs today is $341.7 MILLION. Case Study 2 Bellarine Aquatic Centre (BAC) Facility upgrade 5

6 BAC Project BAC development included: an 8 lane 25m pool Warm water program pool Water play zone Attached to Surfside Sports Centre Details Project benefits Total cost = $8.422 MILL (SRV = $2.5 MILL) Facility catchment = 40,000 residents Existing Centre = 36 members BAC increased membership to 1,337 in 9 months new visit card holders Learn to swim program = 4,500 participants, 50% new Created 40 new jobs 10.5 EFT Community cohesion through birthday parties and meeting place Environment savings sustainable design Cost Benefit Analysis Economic Impact Analysis Benefit to cost ratio = 10.2 Net present value is $280 MILL Health benefit = $137.5 MILL Economic benefit = $16.6 MILL Social benefit = $154.1 MILL Total output = $18.2 MILL Total employment = 81 jobs Total Value Added = $6.4 MILL Government investment = $2.5 MILL 6

7 Case Study 3 Camberwell Junction Tennis Club Courts Redevelopment Tennis Court Redevelopment Project Details Redevelopment included: Resurfacing of 3 tennis courts from en-tout-cas to a synthigrass (sand filled artificial grass) surface Improved access to primary school next door Fencing replaced by Council Total cost = $109,755 (SRV = $50,000) Catchment = local people from Camberwell East, Camberwell, Hawthorn & Glen Iris Project benefits Cost Benefit Analysis Increased participation (particularly youth) as coaching has increased from 1 day/week with 15 people to 4 days/week with 50 people Increased/induced participation by allowing court hire Significant reduction in water usage (and reduced cost to club) due to change in surface (no watering required) Benefit to Cost ratio = 33.9 Net present value = $4.4 MILL Health benefit = $1.9 MILL Economic benefit = $47,175 Social benefit = $2.6 MILL 7

8 Economic Impact Analysis Total output = $363,324 Total employment = 2 jobs Total value added = $147,427 Government investment = $50,000 Ascot Vale Leisure Centre Project Case Study 4 Ascot Vale Leisure Centre Redevelopment and expansion Redevelopment & expansion included: Expansion of gymnasium Development of a learn to swim pool and warm water pools Development of a café Expansion of change room facilities Development of child care space New reception area Increased car parking New storage rooms Details Total cost = $13 MILL (SRV = $0.5 MILL) Facility catchment = 130,000 8

9 Project Benefits Cost Benefit Analysis Membership increase from 5,339 (2004/05) to 6,627 (1008/09) Increased visitations as broader groups (including older adults & people with disabilities) to use facility due to warm water pools Additional water spaces allows single sex activities (due to cultural beliefs) Created additional 50 casual staff jobs Environment savings sustainable design Benefit to cost ratio = 3.2 (conservative as only membership and not casual visits were used) Net present value = $47.7 MILL Health benefit = $37.9 MILL Economic benefit = $3.8 MILL Social benefit = $41.7 MILL Economic Impact Analysis Impact Model Total output = $42.99 MILL Total employment = 90 jobs Total Value Added = $ MILL Government investment = $0.5 MILL Allows us to quantify the financial impact the provision of sport and recreation facilities have on local communities and economies Applies to aquatic, multi purpose, upgrades of existing facilities and sports fields 9