pre-event estimate of the economic impact of super bowl ... paul... · pre-event estimate of the...

Pre-Event Estimate of the

Economic Impact of Super

Bowl LII on Minneapolis-St.

Paul

Net Contribution to Jobs, GDP, Wages, & Tax Receipts

Prepared for:

Minneapolis Super Bowl Host Committee

April 2016

Kenneth McGill Managing Director, Rockport Analytics

Chief Economist, Global Business Travel Association (GBTA)

[email protected]

+1 (610) 213-2558

mailto:[email protected]

Copyright © 2015 Rockport Analytics, LLC. All Rights Reserved. 2

Agenda

• Super Bowl Economic Impact: Caught Between a

Rock and Hard Place

• How Will SBLII Benefit the MSP Economy?

• SBLII Economic & Fiscal Impacts

• Super Bowl LII Impact in Perspective

• About Rockport Analytics

Copyright © 2015 Rockport Analytics, LLC. All Rights Reserved.

Increasingly, sponsors, partners, citizens, businesses, &

government authorities ask the question, “is it worth it?”

• What are total hosting costs? Operations? Capital? Displacement?

• How will these funds be raised? Private or public?

• And how will local businesses, citizens, and governments benefit?

• Are there ongoing benefit streams created or is it once and done?

3

Estimating SB Impact:

Caught Between a Rock & Hard Place

Meanwhile, past estimates have been criticized as extremely

overinflated, inaccurate, even purposely misrepresented…

• Gross SB spending is interchanged with economic impact

• Resident spending, game ticket sales, air transportation are included

• Displaced regular tourism spending is not subtracted

• NFL and other organization exemptions are not subtracted

• “Softer” benefits are questionably quantified and included –e.g.

unearned media, halo effects on future meeting bookings, city brand

• Inappropriate and inflated “multipliers” are used to translate spending

into jobs, paid wages, tax receipts, and contributions to local GDP


SB Economic Impact & ROI Under Fire

Miami

New Orleans

Tampa

Pasadena

Atlanta

Miami

Tempe

New

San Diego

Miami

Atlanta

Tampa

New Orleans

San Diego

Houston

Jacksonville

Detroit

Miami

Phoenix

Miami

Dallas

Indianapolis

New Orleans

New York

Phoenix

$150

$250

$350

$450

$550

$650

$750

1988 1993 1998 2003 2008 2013 2018

in m

illio

ns

of

$ o

f To

tal E

con

om

ic Im

pac

t (G

DP

)

Super Bowl Economic Impact 1989-2015

Source: University of New Orleans, Coates and Humphreys, UCLA/LA Sports Council, Price waterhouse Coopers, Depken and Wilson, Rishe, Greater Miami Convention and Visitors Bureau, San Diego Citizen’s Task Force, Rockport Analytics Houston SBLI and Minneapolis SBLII are pre-event estimates. Source: Rockport Analytics

“The Super Bowl's economic impact: Super-hype? “ CBS Moneywatch, January 2015

“Is Hosting the Super Bowl Worth It?” U.S. New & World Report, Jan 2016

“Your City Will Never Get Rich Hosting the Super Bowl”, Mother Jones, February 2016

“Super Bowl host cities always lose the money game”, MarketWatch, February 2016

“The NFL’s Super Bowl Con: Hosting the Big Game Isn’t an Economic Score For Cities”, Daily Beast, Jan 2014

…

Copyright © 2015 Rockport Analytics, LLC. All Rights Reserved.

• Purposely conservative (If in doubt, leave it out…) : Only non-resident local

spending, local operations, broadcast, advertising, and T&E spending. Avoid

double counting and outside reimbursed costs/ spending

• Use actual spending rather than budgeted estimates wherever possible

• Triangulate: always sanity check “demand” side estimates with supply side

capacity figures (e.g. # hotel rooms, rental car inventory, air lift, etc.)

• Check estimates against published benchmarks (e.g. S&L tax collections)

• Treat softer benefits such as media exposure, halo effects as “below the line

items”. Calculate it, yes, but leave it out of the headline numbers

• Displaced Tourism: Estimate the normal level of tourism activity (leisure &

business) for the late-Jan/early-Feb period, assume 100% displacement, and

subtract it from the “gross” impact

• Highlight strengths & weaknesses in data sources, models, methodology

early/often and upfront - no appendix burials.

• No black boxes: all data, model solutions, and interim work product belong to

the Host Committee. Results should be easily replicated by others

5

Use an Approach That Stands Up to

Scrutiny


Super Bowl LII –February 2018

How Will SBLII Benefit

the MSP Economy?


SBLII Economic Impact Approach

1. Estimate SBLII-initiated game attendee/visitor spending

2. Gather/estimate SBLII MSP game, event & broadcast operations spending

3. Translate incremental spending into economic impact for MSP & MN

4. Calculate SBLII-initiated state & local taxes

5. Estimate displaced tourism impact & subtract it from gross SBLII impact

6. Derive and monetize “softer” benefits of SBLII –value of media, convention/meetings lift, return visitation, etc.


Pre-Event Economic Impact of SB LII:

Executive Summary Super Bowl LII Bottom Line

For the Minneapolis-St. Paul

MSA: in millions of $ unless otherwise noted

SB LII Net*

Incremental

Contribution

Total SB LII-initiated Spending $338.4

Total Economic Impact:

Contribution to MSP GDP $342.6

Jobs Supported (# FTEs) 5,000

Wages Paid $241.5

Total Tax Receipts $95.4 Net Federal $51.3 Net State & Local $28.7

Source: Rockport Analytics FTEs=Full Time Equivalents

* After removing displaced tourism typical for 10-day period in late

January-early February

• Super Bowl LII will bring an estimated $407

million in new spending to the MSP metro area.

This will come from both the local travel spending of

125,000 expected visitors and an estimated $122

million of local game/event operations

expenditures. About $68 million in regular tourism

activity will be displaced by the event, however,

resulting in net incremental spending of $338 million.

• Given the direct, upstream, and downstream impacts

of that spending, MSP will realize a net new

contribution to the regional economy of $343

million, during which over 5,000 jobs will be

supported at an array of local businesses paying

wages of $242 million.

• SB LII-initiated state & local tax receipts will result

in an estimated net windfall of over $29 million for

state and MSP municipal governments.


Super Bowl-Initiated Spending Will Be

Substantial

Super Bowl LII Will Bring Substantial New

Spending to Minnesota in millions of $ %

Game Attendee/Visitor $284.9 70%

Events Operations $ 13.5 3%

Game, Broadcast Operations

and Promotion $ 102.3 25%

Other $ 6.0 1%

Total SB LII-Initiated Spending $ 406.6 100%

Non-Resident Visitor

Spending

Super Bowl LII

Spending (in thousands)

Retail & Shopping $63,854

Hotel $70,954

Food & Beverage $62,833

Rental Car & Commercial Vehicle $28,130

Entertainment $26,908

Other Ground Transportation $15,470

Other –e.g. travel arrangement,

laundry, other personal services $16,735

Total Attendee/Visitor Spending $284,884

• An estimated 125,400 non-resident visitors

will come to Minnesota for SB LII

• About 48% will stay overnight for slightly over 4

nights generating over 230,000 room nights at

area hotels

• SB LII visitors will spend an average of about

$620 per day in the MSP metro area. Typical

MSP tourism spending averages slightly over

$118/day

Retail & Shopping

22%

Hotel 25%

Food & Beverage

22%

Rental Car 6%

Entertainment 10%

Ground Transportation (ex Rental Car)

5%

Other 6%

Game Attendee / Non-Resident Visitor Spending

$285 million


SB LII’s Gross Economic Impact

Impact on MSP

Businesses

Value to MSP Economy

Total Super Bowl LII

Spending

Total Expenditures

$407 million

Economic Impact

$404 million

Direct Impact

$206 million

Indirect & Induced Impact

$198 million

Jobs Supported

6,000 FTEs

Industries providing goods and services to front-line businesses

e.g Food Distribution

Industries directly providing goods and services to MSP

visitors e.g. Restaurants


SB LII Will Be a Seminal Tourism Event

Super Bowl LII Economic Impact Metric

Direct Indirect (Supply Chain)

Induced (Income)

Total

Total Spending (in thous $) - - - $ 406,643

Value-Added (GDP) (in thous $) $ 206,230 $ 88,519 $ 108,945 $ 403,694 Wages (in thous $) $ 152,142 $ 58,898 $ 52,148 $ 280,561 Jobs (# Full Time Equivalents) 3,800 900 1,300 6,000 Tax Receipts (in thous $) $ 113,188 Federal Taxes $ 60,401 State Taxes $ 33,045 Local Taxes $ 19,742

• Direct Impact –accrues to those MSP businesses that directly serve SB LII game

attendees, visitors, and out-of-town staff; plus businesses directly involved with

hosting the game and its many related events.

• Indirect Impact –benefit to the many local upstream businesses that populate the

supply chain of SB LII direct businesses

• Induced Impact –both direct and supply chain businesses pay wages to their

workers. Much of these local wages will be spent in the MSP area at business that

provide a broad range of consumer goods and services.

2018 SB LII Gross Economic Impact Summary


SB LII Bottom Line for MSP & Minnesota

Super Bowl LII Bottom Line

For the Minneapolis-St. Paul

MSA:

in millions of $ unless otherwise noted

Super Bowl

LII Gross

Contribution

Displaced

Tourism

Offset

Super Bowl

LII Net*

Incremental

Contribution

Total Gross Spending $406.6 ($68.3) $338.4

Total Economic Impact: Contribution to GDP $403.7 ($61.1) $342.6

Direct Impact $206.2 ($32.2) $174.0

Indirect Impact $88.5 ($13.5) $75.0

Induced Impact $108.9 ($15.4) $93.6

Jobs Supported (# FTEs) 6,000 (1,000) 5,000

Contribution to Area Payrolls $280.6 ($39.1) $241.5

Total Tax Receipts $113.2 ($17.8) $95.4

Net Federal $51.3

Net State & Local taxes $28.7

Source: Rockport Analytics, Minneapolis Super Bowl Host Committee

* After removing displaced tourism typical for 10-day period in late January-early February

FTEs=Full Time Equivalents

Total estimated gross state & local

taxes initiated by SB LII are reduced to

account for tax receipts from typical

tourism activity at that time of year that

will be displaced by the game and its

events (middle column)

Displaced tourism is estimated using

Meet Minnesota estimates of annual

visitor spending adjusted for a 10-day

Super Bowl period using average daily

hotel data (2007-2014) from Smith Travel

Research and Indianapolis’ actual SB

XLVI experience. It includes all displaced

leisure and business trips.

Includes both full and part-time

workers converted to FTE using full-

time definition of 2,080 hours per year


SB LII Fiscal Contribution is Significant

Minneapolis-St. Paul Super Bowl LII

Tax Overview in thousands of dollars

Federal Taxes Collected –Total Impact $ 60,401

State Taxes Collected –Total Impact $ 33,045

Sales $ 18,511

Rental Car $ 2,750

Local Taxes Collected –Total Impact $ 19,742

Lodging + Entertainment $ 1,568 Restaurant + Liquor $ 1,617 Hennepin County Sales $ 198 Minneapolis Sales $ 224 Transit Improvement $ 673

Total Gross Super Bowl LII-Initiated Taxes $ 113,188

State and Local Taxes Analysis

Super Bowl LII S&L Gross Tax Receipts $ 52,787

Incremental Super Bowl LII-Initiated State

and Local Taxes less displaced tourism and

existing exemptions

$28,666 Estimated by Rockport w/ input

from Meet Minneapolis and the

Minneapolis Super Bowl Host

Committee

Transaction taxes are estimated

using spending by category and

appropriate tax rates less any

exemptions (i.e. sales tax on grocery

store food purchases)

State & Local tax totals also include

other tax types such as corporate

income (state) and property (local).

These are derived by the IMPLAN

economic model of MSP.

Normal tourism-initiated taxes

for a typical 10-day period in

late January-early February.

These receipts are assumed to

be 100% displaced by Super

Bowl LII


SBLII Estimated Impact In Range With

Past Results Why the Broad Range?

• Different authors, methodologies, data integrity -

some more conservative than others

• Estimates vs. Hard Data: Level of cooperation from

NFL, Fox, CBS, ESPN, corporate sponsors, municipal

authorities, etc.

• Time: inflation naturally lifts the value of all visitor &

operations spending

• Relative Cost of Living -MSP’s cost of living is higher

than some other host cities (e.g. Dallas, Indianapolis)

• Minneapolis previously hosted Super Bowl XXVI in

1992 –economic impact estimated @ $176 million

($364 million in today’s dollars)

Miami

New Orleans

Tampa

MSP SBXXVI

Pasadena

Atlanta

Miami

Tempe

New

San Diego

Miami

Atlanta

Tampa

New Orleans

San Diego

Houston

Jacksonville

Detroit

Miami

Phoenix

Miami

Dallas

Indianapolis

New Orleans

New York

Phoenix

MSP SBLII

$150

$250

$350

$450

$550

$650

$750

1988 1993 1998 2003 2008 2013 2018

in m

illio

ns

of

$ o

f To

tal E

con

om

ic Im

pac

t (G

DP

)

Super Bowl Economic Impact 1989-2018

Source: University of New Orleans, Coates and Humphreys, UCLA/LA Sports Council, Price Waterhouse Coopers, Depken and Wilson, Rishe, Greater Miami Convention and Visitors Bureau, San Diego Citizen’s Task Force, Rockport Analytics * Houston SBLI and Minneapolis SBLII are pre-event estimates. Source: Rockport Analytics

Year Super

Bowl Host City

Economic

Impact (in millions $)

2010 XLIV Miami $ 333

2011 XLV Dallas $ 200

2012 XLVI Indianapolis $ 324

2013 XLVII New Orleans $ 480

2014 XLVIII New York $ 600

2015 XLIX Phoenix $ 719

2016 L San Francisco n/a

2017 LII Houston* tba

2018 LII Minneapolis* $ 404


SBLII Economic Impact in Perspective

By Promoting Minnesota Jobs

SBLII will support 6,000 full time equivalent jobs in MSP paying an average wage equivalent of $47,000 per year

By Contributing to the Health of the Public Education System

SBLII-initiated net state & local tax revenue is estimated to be enough to educate 2,350 Minnesota public school students or

hire more than 500 new classroom teachers*

By Directly Benefiting Area Businesses

SBLII will generate net incremental top-line revenue of over $338 million benefiting a broad array of Minnesota businesses in

sectors far beyond just hotels and restaurants.

By Building MSP Tourism

SBLII’s $338 million in incremental spending will boost annual MSP tourism by an estimated 7% in 2018 -all in a 10-day period

during tourism’s low season! Moreover, many visitors impressed with MSP and MN will return to build future tourism.

By Helping to Relieve the Tax Burden of MSP Households

SBLII will generate about $21 per MSP household in state & local tax receipts. Since no resident spending was included in the

economic impact analysis, these tax receipts can be considered net new to state and municipal government budgets.

By Capturing and Retaining Local Expenditures Made By SBLII Visitors

For every $1 spent at SBLII, the MSP economy will retain 99₵. About 69₵ of that retained benefit will go towards paying

Minnesota workers a total of $281 million in wages and salaries. And 13₵ of each SBLII dollar will go towards the payment of

state and local taxes.

How Will SBLII Benefit MSP & Minnesota?

* Based upon National Education Association statistics for Minnesota, 2015


Methodology & Data Sources

Task Methodology/Approach Data Sources

Estimate SB-initiated Visitor Spending

Past studies of game attendee/visitor spending were used to derive likely MSP SB LII outlays on hotel, F&B, rental car, shopping, etc. Estimates of total expected SB visitor volume was derived using stadium capacity, past surveys of game attendee-to-total visitor ratios, and MSP hotel room inventory. Spending per diems were adjusted for: (a) cost-of-living differential between MSP and other host cities and (b) overall inflation by category to 2018.

• Indianapolis, Dallas, New Orleans, and San Diego studies

• Smith Travel Research • Meet Minneapolis • D.K. Shifflet & Associates (DKSA) • US Census Bureau, BLS • Past NFL, Media, & Corporate expenses

Estimate SB-initiated MSP Game & Event Operations Spending

Each major operations entity was estimated using two approaches: (1) imputing MSP using past SB data covering individual line item expenses and (2) direct input from Minneapolis Host Committee’s budget. Organizations include NFL, ESPN, various Corporate sponsors, municipal authorities, NBC, local airport authorities, and local DMOs.

• Indianapolis, Dallas, New Orleans’ studies • Indianapolis, Dallas Host Committee

reported expenses • Minneapolis Host Committee budget

Translate spending into economic impact on MSP

Spending streams for visitors and operations by detailed category are inputted into the latest (2013) IMPLAN economic model of the MSP metropolitan statistical area. Contributions to GDP, jobs, wages, and taxes are estimate by the model. IMPLAN is a non-proprietary model of the regional economy that is widely used by to assess the economic impact of public or private investments.

• IMPLAN (www.implan.com)

Calculate Minnesota & MSP transactional taxes

Taxes directly applicable to visitor & operational transactions are calculated using the categorical spending described above alongside appropriate current tax rates. Exemptions for items identified in the tax law are also factored (e.g. state sales tax on food & clothing)

• Minnesota Department of Revenue • Meet Minneapolis collection of key tourism

taxes and rates

Estimate displaced tourism & calculate net SB LII impact

SB LII will displace regularly occurring tourism during Jan-Feb 2018. This tourism impact was estimated and subtracted from the gross SB LII impact calculations mentioned above towards a net benefit. Displaced tourism was estimated by prorating regular annual tourism spending for the winter season and using past studies to derive the 10-day late Jan-early Feb portion of average spending.

• Meet Minneapolis visitor profile and tourism spending estimates

• DKSA MSP trip budget averages • STR daily hotel activity during SB XLVI • IMPLAN model of MSP


About Rockport Analytics

Rockport Analytics LLC 1610 Herron Lane West Chester, PA 19380

web: rockportanalytics.com email: [email protected] phone: (866) 481-9877

Rockport Analytics is a research and analytical

consulting firm providing high quality quantitative and

qualitative research solutions to business, government,

and non-profit organization clients across the globe. We

provide fast, nimble service in a transparent

environment.

Capabilities include:

• Market Analysis and Forecasting

• Economic Impact Assessment, Tourism Satellite

Accounting, and Economic Development

• Market Modeling and Decision Support Tools

• Project Feasibility Assessment

• Primary and Secondary Research Synthesis

• Stakeholder Surveys – internal & external

Recent client examples include: Orange Bowl

Committee, Houston SB Host Committee, U.S. Travel

Association, Global Business Travel Association, MPI,

Indianapolis Super Bowl Host Committee, Delaware

Tourism Office, Indiana Office of Tourism Development,

Boeing, Visa, American Express, Carson Wagonlit,

IHG, Annapolis CVB…

http://www.vantagestrategy.com/

mailto:[email protected]

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