The Sport Tourism Economic

Assessment Model

Tony FisherDirector of Research

Canadian Sport Tourism Alliance

research@canadiansporttourism.com

Before we begin…

Questions are encouraged!

• The STEAM model – what it is and how it

works

• How to use STEAM

• Interpreting and understanding the results

• STEAM / STEAM PRO and on-site analysis

Motivation

• One of the objectives of the CSTA is to raise the profile of the economic benefits associated with hosting sport events

• When we began, we quickly realized that there were many sources of error associated with measuring economic impact:

– Number of visitors

– Spending of visitors

– Multipliers used

History of STEAM

• Research on developing a model began in

2001

• Engaged a number of partners including

– Sport Canada

– Canadian Association of Convention and Visitors

Bureaus

– Canadian Tourism Commission

– Skate Canada

STEAM – the Solution

• STEAM addresses these issues in two ways:

– The model uses a consistent set of visitor profiles

• Specific to sport

• Calibrated based on more than 10,000 on-site surveys

collected at 50+ events across Canada

• Expenditure profile varies based on location of event, age of

participants, distance traveled, etc.

– STEAM has a nationally consistent set of multipliers

• Developed for CSTA by Conference Board of Canada

• Regularly updated based on changes in Tax / I-O structures

(i.e. HST, introduction of NAICS)

STEAM - Structure

Unique Features

– Web based tool

– Scalable to communities of ALL sizes

– Specifically developed to estimate economic

impact of sport events

• Future Events

• Past Events

– STEAM can be used for a variety of sports events,

from small (30 participants) to large (20,000

spectators)

STEAM - Features

Using STEAM – Required Information

• To use STEAM, start with the minimum information about your event:

• Proceed to www.canadiansporttourism.com

• Sign in to the

members section

using your member

username and

password

Signing In

• Select Access STEAM

under the Members

Home tab on left

• Choose the appropriate

province

• Note the User’s Guide is

available to download

from this page as well

Signing In

Challenges With Signing In

• If you have problems signing in (i.e. you don’t

see anything), 99% of the time it is because of

a pop-up blocker

• Pop-up blockers need to be disabled from:

– Web browser (Under Tools menu in IE)

– Many ‘Toolbars’ such as Google, Yahoo, etc., also

have pop-up blockers; we recommend you disable

these

– Note that STEAM works best using IE

STEAM – Main Menu

STEAM – Adding Projects

1) Type Name2) Click Insert

3) Click Close

STEAM – General Input

What is an out-of-town visitor?

• Don’t want to include spending of local residents as their money is a transfer, they would likely be spending money within host city

• Old definition:

– 80km one-way, or overnight away from home, except 40km in Ontario

• New definition: – Outside of your usual spending environment

• Important to establish a definition and stick with it!

Define your local area

STEAM – Visitor Attendance

• In using STEAM, all figures should refer to out-of-town visitors

• Information regarding expected attendance can be derived from a number of sources:

– Historical attendance at annual events

– Attendance of similar events in host community

– Marketing plan (e.g. are you marketing locally or nationally)

– Capacity of venue (and accommodation capacity of host region)

STEAM – Participant Input

Visitor InputOntario STEAM - Participant Input

Number of unique out of town participants 0

Percentage of out of town participants staying overnight (0-100) 100

Overnight participants (0-100)

Participants from Canada (%) 10

Participants from U.S. (%) 10

Participants from Overseas (%) 80

Canadian overnight visitor origin(0-100)

Out of town up to 320km, regardless of province of origin (%) 10

More than 320km and the same province as the event (%) 10

More than 320km and a different province as the event (%) 80

Average overnight length of stay (nights) 7.0

Age of participants (0-100)

Participants under 19 (%) 80

Participants 19-44 (%) 10

Participants 45 and over (%) 10

Participants under 19 who are staying in commercial accommodation (%) 100

Same Day participant

Average number of day trips taken by each participant 3.0

• Data entry is

similar to that of

Participants with

the addition of a

question about

the importance

of the event in

the travel

decision

– In most cases,

this will be

100%

STEAM – Spectator Input

• When people

travel and are not

responsible for

final bill, they

tend to spend

more

• Last visitor

category includes

those who are

usually

sponsored,

members of

media and VIPs

STEAM – Media/VIP Input

STEAM – Capital Expenditures

• Need to ensure that all capital expenditures are directly associated with the event

• Changes to physical structures (permanent)

– Clubhouse renovation $150,000

– Driveway repaving $100,000

• Paving was originally scheduled for September 2014, but was accelerated to take place before the event, therefore we do not include the driveway expenditure, as it would have occurred anyways

STEAM – Capital Input

British Columbia STEAM - Capital Input

Enter Capital Spending on:

Buildings and Renovations $0

Machinery and Equipment $0

Furniture and Fixtures $0

Transportation Equipment $0

Other Supplies $0

Other Services $0

Total (calculated) $0

Enter the % of construction costs that are attributed to local

firms100

Operational Expenditures

STEAM –

Operational

Input

A full description

of the categories

can be found in

the user’s guide

IMPORTANT

You must enter

revenues that

are equal or

greater than your

expenses

STEAM – Operational Expenditures

• Need to classify budgetary expenses into

STEAM categories

• Examples:

– Operations $20,000

• Actually comprised of the following components:

– Rent $ 10,000

– Insurance $ 500

– Security $ 5,000

– Renovations $ 4,500

STEAM – Operational Expenditures

• Administration $40,000

– Components

• Salaries $ 10,000

• Rent $ 10,000 – (Donated)

• Office Supplies $ 2,000

• Advertising $ 10,000

• Communications $ 8,000

STEAM – Operational Expenditures

• Need to classify budgetary expenses into STEAM categories

• Major categories are:– Salaries, Fees, etc.: paid positions of host society,

tournament managers, etc

– Rent: venues, tents, fencing, TV’s, other AV, etc.

– Communications: cell phone, internet, etc.

– Merchandise: goods you are selling, volunteer uniforms, etc.

– Transportation and Storage: bus rentals, etc

Operations – Misc. Goods & Services

• If some expenses don’t easily fit into the

STEAM categories, use the catch all categories

of other goods & other services

– Goods: trophies, decorations, etc.

– Services: garbage disposal, security, etc.

STEAM – Operational Expenditures

• In order to accurately capture the true

economic benefits of the event for the host

city, some adjustments to operational budgets

are also necessary

– Exclude all value in kind donations*

– Exclude all transfers (i.e. TV rights and fees for

other organizations)

– Exclude all inter-city transportation

Operations Food & Bev and Accommodation

• STEAM has 3 categories for Food & Bev and Accommodation

– Organizing committee: expenditures made and consumed by event organizers (e.g. food for volunteers)

– Participants: expenditures made on the behalf of participants

– Media / VIP: expenditures made on the behalf of media / VIP members

• If you use the participants and media / VIP categories, you need to let STEAM know what proportion of these groups are being sponsored (enter as % between 0-100)

Case Study - Assumptions

• 2013 Jim Wilson Winter Classic

• Remember, in using STEAM, all figures should refer to out-of-town visitors

• In this case, we are using team registration information

• Estimate that there are an average of 15 skaters and 2 goalies per team (17 total)

• A total of 85 teams, 68 teams from out-of-town, 62 ‘regional’, 4 long-distance

• Doing the math = 1,156 out of town participants

• Assumed 1.2 family members for every player, thus an additional 1,387 spectators

Visitor Input

• Once you have determined number of visitors, figure

out proportion who are staying overnight (90%)

• Overnight length of stay (in nights) = 2.3 (most stay 2

nights, some teams will travel on Thursday to play

Friday morning

• Number of day trips – most play on Friday and

Saturday, about 1/3 of teams make the playoff

rounds on Sunday, however some near regional

teams played on Thursday, so estimate 2.5 trips per

same day visitor

Operations InputEnter Operating Expenditures on:Salaries, Fees and Commissions $14,790

Advertising Services $0

Professional Services $0

Financial Services $0

Rent $20,000

Laundry and Cleaning Services $0

Other Services $0

Communication $100

Energy and Other Utilities $0

Office Supplies $125

Other Supplies $0

Repairs $0

Food and Beverages – Prepared $350

Accommodation $500

Merchandise and Retail $0

Personal Travel $1,480

Transportation and Storage $300

Total Expenditure $37,645 Total Event Revenue $52,650

Operating Surplus $15,005

1

2

3

4

5

6

B CA

Presenting your results

•The combined expenditures of visitors, event operations, and capital expenditures as a result of hosting the Jim Wilson Winter Classic were estimated to reach (1a) $513,000 in the Province of Ontario.

•The event is estimated to have generated (2a) $553,000 in GDP in Ontario (net economic activity), of which (2b) $364,000 occurred in Orillia

•A total of (3b) $253,000 in wages and salaries were paid in Orillia, with an additional (3c) $98,000 paid throughout the rest of the Ontario; supporting an estimated (4b) 8.4 jobs in the city, and an additional (4c) 1.5 jobs in other areas of the province.

Presenting your results

• In summary, the spending supported an estimated (6a) $1.2

million in economic activity, of which (6b) $770,000 occurred

in Orillia.

• The event supported (5.4a) $263,000 in taxes; of which (5.1a)

$114,000 accrued to the federal government. Additionally,

(5.2a) $97,000 in tax revenue was supported in the province

with (5.3a) $52,000 in municipal taxes supported, of which

(5.3b) $44,000 accrued in Orillia.

INTERPRETING YOUR RESULTS

Economics 101

• The economic impact of an event can be measured at three levels as the money flows through the economy

– Direct

– Indirect

– Induced

• The bottom line… most results report all 3 of these

• Some Stats Can I/O models do not have induced EI

1

2

3

Economics 101

• Among the detailed outputs, the model reports two types of economic measures:

– Total Output

• The total amount of economic activity in generated as a result of the initial expenditure (could involve double-counting)

– Gross Domestic Product (GDP)

• The amount of net economic activity as a result of the initial expenditure

An Example

Tanner sells

basketball pieces

to manufacturer

for $10

Value of Output = $10

Cost of Inputs = $0

Net Value Added = $10

• The example on

the right

illustrates the

difference

between the

two measures

Manufacturer sells

ball to Nike for $25

Value of Output = $25

Cost of Inputs = $10

Net Value Added = $15

Nike adds Swoosh

and sells ball for $45

Value of Output = $45

Cost of Inputs = $25

Net Value Added = $20

Total Economic

Activity

= $45 + $25 + $10

= $80

Total Value Added

= $10 + $15 + $20

= $45

Warning

• While Total economic activity is the number

you will want to report, you need to be

careful in presenting it. Someone will do math

like:

– $1,154k / 72 out of town teams = $16,000 per

team…

• Models such as STEAM use input-output tables as the

basis for evaluation with the results including tax

revenues from three sources:

– New tax revenues created by the event

– Direct & Indirect taxes supported by event

– Induced taxes from the re-spending of wages &

salaries

Taxes in STEAM

• The STEAM results report new revenues that arise

from:

– User fees in support of the event (e.g. liquor license,

building permits, etc)

– Destination marketing fees (i.e. hotel room tax) arising from

the total room nights sold

– The profit sensitive component of property taxes and other

profit sensitive taxes

Tax Revenues - New

Direct & Indirect Tax Revenues

• For example, a hotel has revenue of $5 M per year

• Our event generates $50 K in revenue for the hotel (1% of annual total)

• The hotel employs 100 people and pays $200K in taxes annually

• The event has supported 1 job and $2K in taxes

Tax Revenues – Direct & Indirect

Tax Revenues – Direct & Indirect

• Sources:

– Hotels

– Restaurants

– Other front line businesses

• Note, this method is not just for municipal property

taxes, but Provincial & Federal as well (i.e. GST / HST,

Payroll taxes, Income Tax, etc.)

Induced Tax Revenues

• The induced effect measures the re-spending of

wages and salaries earned in the local economy

• Surveys conducted by Statistics Canada reveal the

average percentage of a workers wages and salaries

that are spent on taxes (including property tax, GST/

HST, etc.)

Tax Revenues - Induced

• While some argue that ‘supported’ revenues are not

new revenue and are consequently irrelevant,

sports events are very important to many business

in host communities. Examples are clearly evident

– Restaurants contacting recreation centers to inquire

about upcoming events in order to manage staffing

Tax Revenues – Indirect & Induced

Support of Taxes & Jobs

• Saanich Commonwealth Pool was built for 1994 Commonwealth Games

• Hotel was built in 2001

Support of Taxes & Jobs

• Other hotels have developed their existing facilities to support sport tourists

Troubleshooting

1) Turn off your pop-up blocker!– Installed Yahoo/Google toolbar

– Recent upgrade on your system

2) On Operations Input screen, ensure

revenues are greater than expenses

– You will get incorrect results if revenues are less

than the total expenses

Troubleshooting

•Do – erase cell

completely while

entering data

• Don’t – insert cursor

to the right of the ‘$’

sign unless erasing

completely

(i.e. don’t insert cursor

here:

$|0

Fully Erase Cells

Troubleshooting – other

1. Ensure that you are using the correct STEAM Scenario (Workbook) as well as the correct STEAM model

2. Refer to the STEAM user’s guide

3. Contact the CSTA (research@canadiansporttourism.com)

OTHER INFORMATION

Things you need to be cognizant of

• If you are receiving STEAM inputs for funding

consideration:

– Ensure only visitors are used

– Unique individuals vs. total attendance

– Inflation of total attendance figures

– Seeing output sheets only – crucial to see how the

results were produced and if they are reasonable

assumptions

Other EI Models

• Economic Impact models are generally not comparable

– STEAM / STEAM PRO / TEAM are consistent

– STEAM (direct and indirect) is quite close to Stat Can I/O Model

• Other models available

– TREIM (Ontario only) – developed in 2006? And hasn’t been updated

– Statistics Canada I/O

STEAM vs. STEAM-PRO

• Pre event EI projections

• Limited information

• Post event analysis

• On-site electronic

survey

• Full EI assessment of

event

What STEAM PRO Includes

• Customized electronic survey instrument

• PDAs

• Customized survey plan consistent with ‘Guidelines’

• Training for surveyors

• Full analysis of data

• Accurate visitor estimates

• EI projection and report

Unconventional things you can do with

STEAM & STEAM PRO

• Baseline analysis – what is the event /

program worth before we invest in it

• Annual program / venue analysis – what is the

program worth for the year as a whole

• Basic market research – what do people like /

not like, who is coming, etc.

• Note that surveys / MR is integrated across

mobile, email and web

The Sport Tourism Economic

Assessment Model

Tony FisherDirector of Research

Canadian Sport Tourism Alliance

research@canadiansporttourism.com