Economic Impact

Should the City of Normal subsidize a 16 & under girls

softball tournament when 75% of the teams are from

outside the area?

Net economic change in the incomes of host residents that results from spending attributed to an event, attraction, or facility

Aimed to assure the public they are making “a profit” for subsidizing events.

Economic Impact

Community pays taxes

City uses tax $ to subsidize

development of facilities & events

To attract out of town visitors

Who spend money in the local community

Creating jobs in the community for

those who pay taxes

Conceptual Rationale

for Economic

Impact

When visitors to an event spend money in a community, their initial direct expenditure stimulates economic activity and creates additional business turnover, personal income, employment, & gvt. Revenue in the host community.

Assumes businesses are interconnected Impacts initial business as well as their

suppliers, the suppliers’ suppliers…. Leakage – money that goes out of the

community – outside suppliers, taxes

Multiplier Effect

First round of spending◦ Local interindustry purchases..within the

community Restock inventories for future sales Maintain buildings, equipment, insurance

◦ Direct household income Employees, shareholders

◦ Local gvt revenue Sales tax, property tax, license fees

Fig 4.3

Accounted for in economic

impact studies

First round of spending◦ Non-local interindustry purchases

Businesses located outside community

◦ Non-local household income Workers outside the community

◦ Non-local gvt revenue State income taxes, sales taxes

Fig 4.3

NOT accounted for in economic impact studies…

leakage

Successive rounds of spending◦ How local first round spending is spent

Fig 4.3

Direct effects

Indirect effects◦ Ripple effect if additional rounds of re-circulating

dollars by local people & businesses◦ Re-circulating dollars = multiplier effect

Induced effects◦ Further ripple effects caused by employees of

affected businesses spending their money on other businesses in the city.

3 Effects

Business surveys◦ Least desirable as figures are inaccurate

Visitor surveys◦ Participants, officials, sponsors, vendors from

outside community

Collecting data