Top 8 Take-Aways from the Sports ETA 2019 State of the Industry Report

$45.1 $25.4 $32.8

Dr. Jennifer Stoll, CSEE Sports ETA Research and Education Stoll Sports Strategies, LLC

You have likely received, and hopefully read, the recently released Sports ETA State of the Industry Report in partnership with our leading experts at Tourism Economics. If you missed it, you can check it out here.

And it’s okay, that’s why Sports ETA is here, to provide our members and constituents with a deeper dive into what the report means with the Top 8 Take-Aways from the 2019 State of the Industry Report. Let’s get started.

Direct sales Indirect sales

Source: Tourism Economics Induced sales Total sales Number 8 Direct, Indirect, and Induced Spending…Oh my! Lets face it, most of us are not trained economists. We know enough to be dangerous about economic impact, and we can “fake-it-till-we-make-it”. Heck, we might even be solid in our navigation of the Event Impact Calculator. But when comes to understanding the main elements of direct, indirect, and induced impact, our eyes glaze over a bit.

These are important elements to learn. Think of them this way: Direct impacts are those tied to the spending that occurs DURING the event. Indirect impacts are spending that occurs through the purchases that GO INTO THE EVENT. Induced impacts are when wages earned from direct and indirect spendings are, in turn, spent in the community. These are the foundational elements of economic impact that frame our understanding of the report’s key headlines forthcoming.

The impact among all the industries affected by the sports events and tourism industry. Number 7 Oh Hi, Business Sales, I Hadn’t Thought About You So now that we’ve got direct, indirect, and induced impacts down, we see that the impacts of sports events and tourism have a large ripple effect in other industries. The impact among all the industries affected by our industry is a mind-boggling $103.3 Billion in total business sales. That is billion with a “B”. In other words, our work has a very real – and large – impact on a myriad of other industries, particularly the finance, insurance, and real estate industries. Sports events and tourism clearly do not operate in a silo.

30% of Destinations Owning and Operating Events (2017)

58% of Large Markets Owning and Operating Events (2019)

28% of Markets with budgets under $1M Owning and Operating Events (2019)

All Destinations - $176k

Large Markets - $260k

Small Markets - $70k Number 6 The Rise of O/O E’s Lets set aside the economics of events for a moment. A trend we have been watching for the last handful of years is the rapid increase of destinations owning and operating events (I’ll call them O/O E’s). Sports ETA reported 30% of destinations were dabbling in O/O E’s in 2017’s edition of the report, and the 2019 edition revealed those numbers continue to be on the rise. Even pre-pandemic, I wrote about this trend in my “Top 10 Trends to Watch in 2020” blog (see #4). Sidenote: Boy, have things changed since I typed those words! But one has not, and that is the increase in O/O E’s.

I see this trend continuing to increase as destinations try to score some wins with increased resource (time, people, and money) efficiencies. More than half (58%) of large markets are already in this space (turn no further to Kansas City, Louisville, and Richmond), and many more markets with budgets under $1M are starting to follow-suit with 28%. We will certainly be tracking this information over time.

Number 5 Ch- Ch- Ch- Changes the Game of Bid Fees Consolidation of budgets and increases in owned and operated events among destinations are setting the industry up for a change in recent bid fee trends. The average destination bid fee pool in 2019 was $176k, and by market that average was up near $260k for large markets, and still nearly $70k for small markets…not too shabby! About 73% of markets paid bid fees in 2019.

These figures are going to play a part in the revamped strategies of destinations, and certainly among rights holders, as in many cases, these swelling pots of money have been severely cut, or quite frankly gone away completely. Naturally, based upon the business model of individual event organizations, the financial implications for event viability without these funds (even with reduced funds) will likely leave both sides of the transaction creatively rethinking terms out of necessity.

$14.6 Billion in tax revenues

410,000

Number 4 Coins in the Coffers Often when reporting event impact, we stop at economic impact. We have the EIC to help us measure this, and we announce expected and actual EI numbers with our heads held high. City council members across the country collectively roll their eyes. It might not be that they don’t believe the input data, or your presentation, but we often neglect to take those numbers to the next level for our elected officials, to demonstrate the dollar-for-dollar return to government coffers.

The State of the Industry report revealed sports-related travel spending resulted in a whopping $14.6B in tax revenues, $6.8B of which were at the state and local levels. These are dollars that – depending on the type of tax (i.e. sales vs. lodging) – the local or state government can then turn around and use to subsidize other city operations – paved streets, new parks, community assets that benefit the LOCAL populous.

Do not stop short of going all the way down the path of tax revenues. Elected officials often care predominantly about getting re-elected. The last time I checked, your non-local youth tournament participants are not voting for your community’s city council members. But those families who are utilizing the new park made possible by the subsidies provided through sports events and tourism? They sure are.

Number 3 The “J” Word Jobs. Jobs. Jobs. While we are on the kick of elected officials. Lets pump the brakes and look at job creation through sports events and tourism efforts. The report finds our industry creates more than 410,000 full-time equivalent jobs across the nation directly, and another nearly 330,000 total jobs when including indirect and induced jobs. For those counting at home, that is just shy of 740,000 total jobs. The value back to your community in the supported job creation from sports and events tourism cannot be understated, especially during the current challenging market conditions.

330,000

740,000

TRANSPORTATION $12.5B

LODGING $9.2B

FOOD & BEVERAGE $8.6B

Source: Tourism Economics

RETAIL $5.1B

TOURNAMENT OPERATIONS $3.9B

Number 2 $45.1B (I know you were waiting for this one) Jumping back to the economic picture, of that $103.3B in total impact (remember direct + indirect + induced), $45.1B comes just from the direct spending side of the equation. That is $12.5B from transportation, $9.2B from lodging, $8.6B from food and beverage, $5.7B in entertainment, $5.1B in retail, and $3.9B in tournament operations. ENTERTAINMENT

In 2019 the sports events and tourism industry was flying high, recording astonishing growth year-over-year. This number has obviously seen a scorching decline in 2020. But perhaps knowing the concrete 2019 number has never been as important as it is today. It now serves as a high-water mark, an industry-wide benchmark through which to measure recovery going forward… which takes me to my top take-away from the 2019 State of the Industry report.

Number 1 “Never Let a Good Crisis Go to Waste” – Winston Churchill It’s one thing to gather more information and cultivate a deeper understanding of it, such as the case with the State of the Industry report. It is entirely another thing to do something with the information learned.

The top take-away from the report is not a fact or figure on a certain page, or even on the insights I have provided here. The top take-away is what you – the boots on the ground – do with that information to drive sports events and tourism forward through innovation in the face of adversity.

Winston Churchill said, “Never let a good crisis go to waste.” I could not agree more. The creative ways we have seen our colleagues respond to unprecedented circumstances is defining the future of our industry. Continue to be bold, embrace failure as necessary learning, and keep pushing the industry to new heights…and that will be the best take-away of all.