Sports Event Analysis Fails to Account for Redistribution

For CVBs that pride themselves in sound performance measurement, a recent comment attributed to a Clemson professor in another community's newspaper really made me cringe.

In response to hearing some unlikely economic impact estimates for major sports events held in that other community, Dr. Raymond Sauer is quoted as saying "numbers thrown out by tourism groups and chambers of commerce have a 'whiff of boosterism' associated with them."

For years there have been warnings that if "all" community groups don't shift to more credible models, it will undermine the credibility of those like Durham that have.

There are five basic pitfalls into which some communities continue to fall:

• Using data from another city that held a similar event without first vetting how it was computed and making adjustments. This also often results in an exaggeration "arms race" of sorts, with communities vying to outperform others.
• Using national formulas without re-calibrating them with local inputs.
• Including residents in computations. Residents are never included in economic impact estimates because they would have been spending money elsewhere anyway and going to the sports event is considered redistribution, not new impact.
• Failing to distinguish that events create losers and winners. For example, if fans go to the game or stay home to watch it on television, they benefit certain businesses at the expense of others in which they would be spending.
• Using gross spending and failing to adjust for input-output leakage or dislocation. Not all spending is "value added" to that economy.

In this day and age, why would communities still use numbers that are suspect? Unfortunately many fall victim to trying to please the news media or local officials, both of whom get caught up in the euphoria and believe the numbers must be "stupendous." Ironically, both quickly turn on the source when numbers prove incredible.

Fortunately things are going in the right direction, and more and more CVBs are being very conservative. But it will take years to restore credibility. In the meantime, many of us will need to send messages that people will resist.