HomeMy WebLinkAboutSubmittal-Ironman Economic ImpactTstimated Economic Umoact of UronmMan 70.3 Miami
Event tourismll!�-'bne of the fastest growing forms of tourism. |1is becoming increasingly popular asa
means to revitalize local economies. Events and festivals have been used with great success in many
such areas as a means to draw people to regions that traditionally have a seasonal tourist appeal.
The (romman 70.3 Miami is a prime example, becoming increasingly 000ular amongst athletes and
injecting extra revenue into the region inatime that isbetween the summer and winter seasons (the
race takes place at the end of October, every year),
The fixed length of events and fes tivals encourages visitors to attend; often attracting new visitors that
would otherwise not experience that particular region. This extra exposure acts as an indirect form of
marketing for the region as m whole, offering an oppurtuniMyto reach a previously untapped market.
These new tourists bring with them new money, further diversifying the market and subsequently
increasing both real and potential revenue generation. It is also important to recognize that sporting
events are attractions that have drawing power and holding power. This means that they not only bring
in new visitors, they also help to keep visitors in the region longer. This shows the importance of
measuring not just the economic impact of those that come specifically for the event, but also those
that didn't and stayed longer because nfthe event.
The fixed duration of events also creates the need for a different approach to,organization and funding
when compared to traditional attractions. This includes the need for Economic Impact Aysessment(E|A)
in order to justify scheduling of events, to attract sponsors and to act as a vital planning resource. It
should be noted however that economic impact assessments should not be sn|a|Y responsible for
assessing the success of an exemt. The extra attention gained by the host city as a direct result ofthe*
event could well reap far greater economic rewards in the future as a result of increased exposure.
This report is intended for businesses, event organizers, tourism organizations and local government
that have previously engaged limited or no event economic impact research. It is hoped that the
processes involved in Economic Impact Assessment are made clearer through the use of this report, and
that it is a useful starting point for planning government support for these types of sporting events.
Impacts that result from events are discussed, emphasizing that economic impacts are not to be
considered as the only impacts to assess when reviewing an event.
The positive flow of revenue into a region should not be the only factor considered when determining
the apparent success of an event. An event that spreads the seasonality of tourism in a region also
evenly distributes the flow of money into a city, increasing the opportunities for full time employment.
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The introduction of more full time jobs into a region causes many positive and negative flow -on effects
in that region. Smbsequemtly, these effects are measured through the use of what are termed
multipliers, which are discussed }nmore detail soon.
Other factors that may contribute to a successful event could include:
° Increasing visitor length ufstay inr 'o ;
•|ncreasmg visitor expenditure inregion/town;
• Improving destination awareness; and
• Increasing civic pride or community solidarity
These factors are all obviously beneficial to a region and its tourism industry, although the cost at which
they are obtained must be justified,
The economic impacts of events on the mnacroecononyofa region are categorized into primary and
secondary economic impacts. The primary impact is the direct economic impact of the event measured
bysurveying participants ormeasuring business sales. Secondary impacts are those that result from the
introduction of new money into the economy. A ripple in a pond is a popular metaphor for these
secondary irmpacts'A stone hitting the water surface is the direct impact, and the first ripple caused is
the indirect impact and the second ripple is the induced impact. Together these are called the secondary
impacts. As the ripple spreads out it affects more and more of the pond. This 'ripple effect' iscaused by
the spending of new money in the local region in areas such as wages or local product.
The inclusion of secondary impacts provides a more accurate assessment, as it recognizes the
interdependence of different sectors within a region and how reliant a region or town is on importing
goods and services. This is measured through the use of multipliers by calculating the leakage of new
expenditure in the area. Multipliers measure the amount of money spent that is not leaked out
of the region due to further spending on products and services not sourced from within the study
region. In some regions who are dependent on importing goods and services the amount of money
left inthe local economy is less than that spent byconsumers. This isbecause some regions and towns
are very dependent on goods and services from outside of the region and are not very self-sufficient.
Multipliers work by considering the amount of leakage from an area and expressing the amount of
retained revenue as a ratio. The greater the magnitude of the ratio then the less the amount of leakage
from the region or 1um«n. For instance, 'Sources of leakage from an area include taxation, foreign
ownership and investment, savings, and the spending of money on products and services not sourced
from the local region. The main multipliers used in economic impact assessments are the output,
employment and value-added or income multipliers, The output multiplier measures the increase in
level of economic activity in the region as a result of direct tourist expenditure. It focuses on the changes
in levels of production, not sales or income. left after leakages have been accounted for. The
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employment multiplier is the ratio of the direct and secondary employment created by extra tourist
expenditure. While the value-added or income multiplier measures the total amount of income left after
leakages (such as savings, imported goods and services, taxes etc.) have been accounted for. This is the
most accurate level as it measures the income left in the region after the increase in economic activity
due totourist expenditure.
The two methods for the collection of data collection for examining the macroeconomic impact of
events and festivals at the destination level are consunner/oarticipantsunveys and/or business sector
sumeys.
The direct impact measures the direct oractual revenues generated by the activity- including the local
spending byparticipants throughout the community. |tisimportant tnnote where the revenues come
from as well as where the revenues are expected to go.
Directing consideration to only revenues generated by event patrons or spectators, only those patron
purchases from visitors outside of the community should be considered as producing a direct effect.For
simplicity, we will denote those visitors from outside the local community as tourists generated by the
event. These tourist -related purchases represent an influx of wealth to the community, while revenues
generated from local, residents represent a recirculation of existing wealth within the community.
Hence purchases of tickets, restaurant meals, groceries and souvenirs, for ex ample, should be
delineated between purchases by tourist and purchases by local residents. Local residents who spend
money outside of their home community produce o leakage by transferring wealth away from the
community. Therefore events that entice local residents to remain inthe community also contribute to
the community's economy.
Turning to events that draw in tourist exhibitors, the analyst should take similar note from where these
vendors arrive. Outside vendors will make local purchases of goods and services during their stay.
These local purchases oftourist'wendors represent wealth transfers from outside the region to the local
community.
Vendor revenues should also be considered. Revenues earned by vendors who live outside of the
community are likely to leave the region, having little impact on the local economy. Alternatively, sales
by vendors residing within the community are likely to produce a measurable impact on the local
economy. These direct revenues, representing net wealth inflows, will drive second impact known
as the indirect impact. The indirect impact represents additional input purchases made by local
businesses (not necessarily involved in the event) as a result ofthe direct impact. To exernp|ify, tourist
participants purchase meals in local restaurants that in turn prompt local restaurant owners to purchase
more inputs from suppliers and hire more workers. A proportion of the revenues will go toward the
purchase mfinputs supplied by local businesses. These local businesses simni|mr|yre'spend a proportion
oftheir revenues within the community. This process continues until the amount re -spent diminishes.
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The final impact is the induced impact, which is created when local business owners, suppliers, and
employees spend the additional income that they earned as a result of the direct and induced impacts.
Similar to the indirect impact, only a portion of their income will be re -spent in the local economy.
These direct revenues, representing net wealth inflows, will drive asecond impact known amthe indirect
impact. The indirect impact represents additional input purchases made by local businesses (not
necessarily involved inthe event) asaresult ofthe direct impact.
To exemplify, tourist participants purchase meals in local restaurants that in turn prompt local
restaurant owners to purchase more inputs from suppliers and hire more workers. A proportion of the
revenues will go toward the purchase of inputs supplied by local businesses. These local businesses
similarly re -spend a proportion of their revenues within the community. This process continues until the
amount re -spent diminishes.
The final impact is the induced impact, which is created when local business owners, suppliers, and
employees spend the additional income that they earned as a result of the direct and induced impacts.
Similar to the indirect impact, only a portion of their income will be re -spent in the local economy.
Recipients of this income will, in turn, re -spend m portion ofitlocally until the total amount re -spent
The indirect and induced impacts replicate throughout the local economy, creating a multiplicative
effect Hence, the total local impact is a multiple of the direct effect This multiple impact always takes
avalue greater than one and represents the sum ofthe direct, indirect, and induced impacts or,
TOTAL Direct Indirect Induced
IMPACT = Impact + Impact + Impact
|mpractice, the total impact iscalculated asnmultiple ofthe direct effect as,
TOTAL
IMPACT
Multiplier w Direct
Impact
Fora more simplistic approach, an economic multiplier will be used for this analysis. For this particular
study (Economic Impact of |nonman 70.3 Miami) a multiplier of 1.4wiN be used. This means that for
every $100 of direct income introduced to the city's economy, the final economic impact would be $140,
which in6udesthe original $100.
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TYPES OFPOSITIVE IMPACT
E[QNO[N|[
* Increased expenditures
* Creation of employment
° Increase in labor supply
* Increase in standard of living
TOURISM /COMMERCIAL
* Increased awareness ofthe region asatravel/tourism destination
• Increased knowledge concerning the potential for investment and commercial activity in the region
° Creation qfnew accommodation and tourist attractions
° Increase inaccessibility
PHYSICAL /ENV|RONN4ENTAL|MPACT
*Construction mfnew facilities
pImprovement oYlocal infrastructure
* Preservation ofheritage
5OCIAL/[ULTURAL
• Increase in permanent level of local interest and participation in types of activity associated with event
* Strengthening ofregional values and traditions
PSYCHOLOGICAL
° increased local pride and community spirit
° Increased awareness ofnon-local perceptions
POLITICAL
° Enhanced international recognition mfregion and values
° Development ofskills among planners
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Description of the Event
In 2005 World Triathlon Corporation instituted the |nonnnan 70.3 race series. This shorter course, also
known asa Half |ronnnan,consists ofa 1.2'mi|e(1.9km) swim, 56'ni|e(gOkm) bike ride, and 13.1-rn||m
(21.1km) run. As with the |ronmanseries, it consists ofanumber of qualifying races at various locations
vvmMdm/de' culminating in a world championship race with athletes drawn largely from top finishers in
the qualifying events. The vvmr|d championship is held in Clearwater, FL Some 70.3 events also act as
qualifiers for the full |nmnmam VVmr|d Championships in Hawaii. Since 2009 |nonmnan 70.3 is being also
held in Miami.
|nonnnan7O.3 Miami bathree (3)day event. |tconsists ofregistration day, bike check in, exhibition expo
and race day. Most athletes, coaches, friends and families attend the event typically for 5 days since
many have to adjust themselves to the new environmental conditions (altitude, temperature and
humidity). Athletes respond different to different racing conditions.
I.rmman70.3 Miami hosts athletes from fifty eight countries(58) from every continent. Atotal of 3,000
athletes are expected to compete of which 56% are from the U3 and 44% from other countries.
Additionally, surveys have shown that given the local attractions and the international destination that
Miami is, the event brings an average of 2.7 additional companions to the athletes.
Visitation Pw8*ernm-RohtoUrmmmmmm70.3Miami 2021 Demographics
Country of Origin of Ironman 70.3 Miami Registrants
Brazil 437
Mexico 190
Argentina 09
Canada 64
Venezuela 62
Colombia SO
Chile 46
Italy 45
United Kingdom 45
Costa Rica 43
Ecuador 34
Germany 19
Switzerland 19
Guatemala 17
Panama 17
France 16
Peru 14
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Spain 14
Iceland 9
Netherlands Antilles 9
Puerto Rico Q
Cayman islands 7
Belgium 6
Guadeloupe 6
Australia 5
Honduras 5
Denmark 4
Portugal 4
Martinique 3
Netherlands 3
Russian Federation 3
Austria 2
Bermuda 2
Czech Republic 2
Finland 2
New Zealand J
Singapore 2
South Africa 2
Sweden 2
Bahamas 1
Dominican Republic 1
France 'Metropolitan 1
Mauritius 1
Norway 1
Philippines 1
Romania l
Saint Kitts and Nevis 1
Slovakia 1
St. Pierre 1
Thai/and 1
United Arab Emirates 1
Uruguay 1
Total Other Countries 1,322
Total athletes from other States within the United States =772
The remaining amount ofathletes, 906,are from Florida.
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MEASURING DIRECT IMPACT
Emplovment Impact
S full time employments are generated that are specifically linked to this event, with an estimated
impact of $415,000 per year. Indirectly, 10 jobs are created that are linked to this event.
' Direct employment =
- Indirect employment =$27O,00Q
During the event, the following people are employed:
- 860 Police officers /3 to Grnunicipa|bies plus Florida Highway Patrol)
o Officers make $48/h
o SerQeants$54/h
o Lieutenant$6O/h
o The event requires 1Dhours ofpolice =$M0,8O8
30 Paramedics (Emergency services) =$17,88O
35 Life Guards =$8,OOO
25 Security guards during the event =$7,OOO
15Operational crew are employed =$5,DD8
' T,afficControl =$65,OOO
- Subcontracting services (timing services, electricity, etc) =$5C\ODO
Sponsorships and vendors temporary employment (40peop|e) =$13,808
Total Employment Economic Impact =S2^050.000
Lodging Impact
Average amount of night stay in hotels = 4` Average amount of dollars spent per night = $190.
Additionally, it is estimated that 40 to 50% of local athletes will stay at least one night at a hotel, since
the race start is usually very early (5amn athletes must be inthe transition area). This brings an estimate
of839additional nights.
Foreigners Staying at Hotels =1,32Ix4(Night Stays) x$19O(per night) =$1�04,720
Athletes from other States (US) =77Ix4x$19D = $586,720
Local Athletes Hotel Expenditures =@3B (5Q%nflocal athletes) x$19O =$ 159,410
Total Lodging Impact =$1^967/*50
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Restaurant Impact
It is estimated that for each athlete that comes from outside the USA, 2.7 additional people come with
him (coaches, friends and/or family). Given the stay length and 3 meals per day, an estimated 46,248
meals were served directly to event participants, visitors or sponsors.
2,094 (Foreigners + athletes from other States) x 3.7 (athletes + companions) = 7,748. Additionally 285
(sponsors, referees, etc) 8,033 people visiting the city for the event.
Restaurant Expenditures = 8,033 x 3 (meals) x 4 (days) x$30 (avg. meal) = $2.891.880
Tips for Services Rendered = $433.782
Transportation Impact
American Airlines has one of its main hubs in Miami. A direct economic impact of the athletes flying
from abroad, along with their companions, must be assessed.
Airfare (athletes) 1,322 x 2.7 x $900 (average ticket price)
Airfare (772 + Companions, Sponsors & Referees from other States) x $400
Rental Car / Taxi (2,094 x $60 dollars per day x 4 days)
= $4,402,260
= $893,600
= $502,560
Total Transportation Impact = $4,608.620
Business Impact
The company receives revenues of $1,000,000 from registrations and sponsorships = 51.000,000
Local Government
Permits & Licenses
Bayfront Park Rental + Incidentals
Sales Taxes
Hotel Taxes
Gas Tax
= $8,740
= $35,000
= $232,796
= $118,047
= $15,415
Total Local Government Fees & Taxes = $409.998
Total Estimated Direct Economic Impact = $13,411.930
TOTAL ECONOMIC IMPACT = Direct Impact x Multiplier (1.41 = 518.776.702
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City Clerk
JERRY STAPEL
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