Sports & Entertainment
Marketing II
4.02 Acquire information to guide business decision making.
Economic Impact of Sports Events
Benefits from hosting major events cannot be
measured
Creates goodwill, pride, and positive media
coverage for an area
Have to look at the opportunity cost of hosting
an event  What are you giving up? What are
you getting?
How much money would the area have
brought in without the event?
Economic Impact of Sports Events
One of the greatest benefits from a major
sporting event may not be the event itself but
the potential it creates for future events
Raises the profile of the city
Enhances reputation  encouraging tourism
Builds community cohesion
Draws more residents & investors
https://www.youtube.com/watch?v=kRfYpuCJC
ZU
Economic Impact of Sports Events
Recent spending on stadiums for top-level
professional teams has generated a great deal
of attention
Between 2000 and 2009, 31 major league
stadiums and arenas opened across urban
America at a public cost of approximately $8
BILLION
A few were built to attract new teams, but most
replaced existing facilities for incumbent teams
Economic Impact of Sports Events
Some examples…
 Portugal spent $732 million to host the Euro 2004
(European Soccer Championship)  public money
paid for SEVEN new stadiums in a country about the
size of Indiana
 South Korea & Japan co-hosted the 2002 World Cup
 South Korea spend $2 billion on 10 new facilities
& Japan spent $4.5 billion building 7 new stadiums
and renovating 3 others
 2004 Summer Olympics in Athens  Greek
government spent $12.8 billion to host
 Beijing games in 2008  Chinese spent over $43
billion
Economic Impact of Sports Events
Some examples…
The average cost of a football or baseball
stadium built since 2000 is $528 million
Average cost of a basketball or hockey arena
built during this period is $276 million
Public money generally covers about 2/3 of
these costs
Economic Impact of Sports Events
The significant investment by local
governments suggests that the economic
returns of sports must be quite large
Teams, stadiums, and events are commonly
promoted as economic catalysts
https://www.youtube.com/watch?v=025YBECR
fE8
Economic Impact of Sports Events
Direct Impact
 The first round effect of visitor spending  hotels,
restaurants, etc. that received the initial amount
spent of goods/services in the local economy 
pays employees in the area
Indirect Impact
 Ripple effect of additional rounds of recirculation the
initial spectator dollars
Induced Impact
 Further effect caused by employees of impacted
businesses spending some of their salaries and
wages in other businesses
Economic Impact of Sports Events
What are the basic economic impacts?
 Number of spectators
 Number of attendees (non-spectators)
 Percentage of spectators and attendees from
outside the “host economy”
 Duration of the event
Direct Economic Impact
A measure of the total amount of additional
expenditure within a defined geographic area,
which can be directly attributed to staging an
event
Based on visitor/organizer spending
An assessment of the net increase in spending
as a result of the event
Which of the following sport/event
situations is most likely to have a
negative economic impact on a
local community?
A. New college football stadium in being
built
B. Professional baseball players go on strike
C. A popular music group comes to town
D. Golf tournament organizers solicit
volunteers
Which of the following sport/event
situations is most likely to have a
negative economic impact on a
local community?
A. New college football stadium in being
built
B. Professional baseball players go on strike
C. A popular music group comes to town
D. Golf tournament organizers solicit
volunteers
Why do sport/event organizations
maintain sales and accounting
records?
A. To measure economic impact
B. To prepare promotional material
C. To calculate salary information
D. To determine household income
Why do sport/event organizations
maintain sales and accounting
records?
A. To measure economic impact
B. To prepare promotional material
C. To calculate salary information
D. To determine household income
Which of the following indicates a
positive economic impact for a city
that hosts a professional golf
tournament:
A. Higher restaurant sales
B. Fewer hotel reservations
C. Increased traffic congestion
D. Decreased tax revenues
Which of the following indicates a
positive economic impact for a city
that hosts a professional golf
tournament:
A. Higher restaurant sales
B. Fewer hotel reservations
C. Increased traffic congestion
D. Decreased tax revenues
4.02 Activity
Your city wants to build a new venue. It can be a
professional sports stadium or a multi-purpose
facility. Citizens of your community must pass a bill
to levy an 11% tax on hotels and rental cars
(hospitality tax) to help pay for the new facility. You
are in charge of the promotional campaign for
convince voters to pass the extra tax.
Your main goals is to influence the vote. How will
you convince voters that the new venue is a great
idea? How will it be beneficial to the local economy?
Troubleshoot potential negative outcomes. Present
this however you feel comfortable as long as it is
professional!