Economic Impact Analysis

Economic impact is based on the theory that a dollar flowing into an economy, that otherwise would not have been spent, is a benefit to the economy. Economic impact studies not only measure economic impact, but are also used to provide information in the decision to publicly fund sports venues or sports commissions/authorities, or to measure the “success” of events hosted in a local community in generating positive economic outcomes for both the event owners and the locale.

Economic impact analysis measures new spending in a local economy due to the presence of, for example, a facility or an event. The change in the economy is measured in terms of total new spending, fiscal impact (total new taxes collected), personal income generated, and jobs created, both directly and indirectly. By increasing the new money in an economy, the economic benefit is serving a greater good by increasing government tax revenue, augmenting business income, and ultimately resulting in more jobs and higher personal income for residents of that economy.

SportsEconomics possesses substantial experience in economic consulting to the sports industry, with specific knowledge of the economic impact of facilities, events, and teams. Considering the publicity and scrutiny surrounding such studies, it is imperative to select a firm that not only has substantial experience, but also has a reputation for consistently providing an accurate assessment of economic impact. SportsEconomics' methodology is sound and defensible, and we are qualified to and capable of affirming our results to any audience necessary.

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Economic Impact Analysis of Sports Facilities

Economic Impact Analysis of Events

Economic Impact Analysis of Teams

Economic Analysis Software

Economic impact is based on the theory that a dollar flowing into an economy, that otherwise would not have been spent, is a benefit to the economy. Economic impact studies not only measure economic impact, but are also used to provide information in the decision to publicly fund sports venues or sports commissions/authorities, or to measure the “success” of events hosted in a local community in generating positive economic outcomes for both the event owners and the locale.

Economic impact analysis measures new spending in a local economy due to the presence of, for example, a facility or an event. The change in the economy is measured in terms of total new spending, fiscal impact (total new taxes collected), personal income generated, and jobs created, both directly and indirectly. By increasing the new money in an economy, the economic benefit is serving a greater good by increasing government tax revenue, augmenting business income, and ultimately resulting in more jobs and higher personal income for residents of that economy.

SportsEconomics possesses substantial experience in economic consulting to the sports industry, with specific knowledge of the economic impact of facilities, events, and teams. Considering the publicity and scrutiny surrounding such studies, it is imperative to select a firm that not only has substantial experience, but also has a reputation for consistently providing an accurate assessment of economic impact. SportsEconomics' methodology is sound and defensible, and we are qualified to and capable of affirming our results to any audience necessary.

Click here to link to our case study:

• Economic Analysis Software

Facilities Contract Auditing

Economic impact is based on the theory that a dollar flowing into an economy, that otherwise would not have been spent, is a benefit to Many sports organizations lease the facilities in which they play and operate. Considering these lease agreements represent a large percentage of these organizations operating costs, and given the extended duration of these leases and the obligations they create for both the Landlord and Tenant, each party needs a mechanism through which to periodically verify compliance with the provisions of the Lease during the lease term.

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• Facilities Contract Auditing

Feasibility Studies

Feasibility research is often used to forecast economic impact as well as to provide information in the decision to publicly fund sports venues, sports commissions/authorities, or events which may be hosted in a local community. In broad terms, SportsEconomics can assist developers, local commissions, event owners, and public agencies in assessing the future economics and outcomes of real estate projects, economic development plans, events, and team relocations, to name a few. Some applications of feasibility research SportsEconomics conducts include market assessment, economic impact analysis, financing sources, and facility valuation.

Given the controversy surrounding the funding of sports teams and events by the public, and the frequent use of feasibility studies in negotiations between governments and event/facility owners, it is critical to appropriately assess economic impact. In addition to our breadth of experience in feasibility research, SportsEconomics has substantial experience in the negotiations process between governments and event organizers/facility owners, and in the explanation of results to various committees and media entities.

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• Feasibility Studies

Financial Valuation of Facilities

The valuations of sports franchises and leagues are particularly complicated, given the infrequency of transactions and the limited supply of opportunities to enter professional leagues. While traditional valuation analysis typically examines comparables in the same market, this is analysis is complicated for sports franchises, as leagues control the location and proximity of franchises and franchise financial structures are generally confidential.

Moreover, the variances between professional leagues differ with regard to franchise availability, location, facility contracts and ownership, majority or minority stakes, player contracts, and a number of variables that are frequently in flux. The limited number of franchise transactions and the variances in team operating structures and assets make it especially important to understand and analyze these differentiating factors when valuing any of a team’s assets. Further complicating this is the fact that sportsmen owners, who are not necessarily profit maximizers, can skew the underlying economic value of the assets.

One asset commonly included in team valuations is the facility in which the team plays and operates. Whether or not the team owns or leases the facility, the high costs of these agreements and the duration of the commitment make these venues an increasingly important factor in a team’s financial success. Stadium leases have become core assets of professional sports franchises, and the financing of the construction of state-of-the-art facilities have become a common factor in the negotiations between teams and the communities in which they are located.

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• Financial Valuation of Facilities

Financial Valuation of a Team

The valuations of sports franchises and leagues are particularly complicated, given the infrequency of transactions and the limited supply of opportunities to enter professional leagues. While traditional valuation analysis typically examines comparables in the same market, this is analysis is complicated for sports franchises, as leagues control the location and proximity of franchises and franchise financial structures are generally confidential.

Moreover, the variances between professional leagues differ with regard to franchise availability, location, facility contracts and ownership, majority or minority stakes, player contracts, and a number of variables that are frequently in flux. The limited number of franchise transactions and the variances in team operating structures and assets make it especially important to understand and analyze these differentiating factors when valuing any of a team’s assets. Further complicating this is the fact that sportsmen owners, who are not necessarily profit maximizers, can skew the underlying economic value of the assets.

One asset commonly included in team valuations is the facility in which the team plays and operates. Whether or not the team owns or leases the facility, the high costs of these agreements and the duration of the commitment make these venues an increasingly important factor in a team’s financial success. Stadium leases have become core assets of professional sports franchises, and the financing of the construction of state-of-the-art facilities have become a common factor in the negotiations between teams and the communities in which they are located.

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• Financial Valuation of a Team

Financial Valuation of a Professional Sports League

The valuations of sports franchises and leagues are particularly complicated, given the infrequency of transactions and the limited supply of opportunities to enter professional leagues. While traditional valuation analysis typically examines comparables in the same market, this is analysis is complicated for sports franchises, as leagues control the location and proximity of franchises and franchise financial structures are generally confidential.

Moreover, the variances between professional leagues differ with regard to franchise availability, location, facility contracts and ownership, majority or minority stakes, player contracts, and a number of variables that are frequently in flux. The limited number of franchise transactions and the variances in team operating structures and assets make it especially important to understand and analyze these differentiating factors when valuing any of a team’s assets. Further complicating this is the fact that sportsmen owners, who are not necessarily profit maximizers, can skew the underlying economic value of the assets.

One asset commonly included in team valuations is the facility in which the team plays and operates. Whether or not the team owns or leases the facility, the high costs of these agreements and the duration of the commitment make these venues an increasingly important factor in a team’s financial success. Stadium leases have become core assets of professional sports franchises, and the financing of the construction of state-of-the-art facilities have become a common factor in the negotiations between teams and the communities in which they are located.

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• Financial Valuation of a Professional Sports League

Health & Fitness Facility Research

Many health clubs and fitness facilities overlook the importance of market research when setting their marketing strategies. Members have different motivations for joining and utilizing club and fitness facilities. Understanding these inherent expectations and motivations and targeting these consumer segments accordingly can result in increased revenues, more efficient and effective marketing and promotions, and reduced member attrition.

Too often in the rush to sell new memberships, existing members are forgotten. Most fitness clubs in the industry face annual attrition rates of about 40%. Therefore, even a small reduction in attrition each year can significantly add to a clubs’ bottom line. With a better understanding of its core target segments, a facility can determine which targets have the highest potential of becoming a member, how to identify which consumers are most likely to leave the facility and at what point in their membership, and which interactive events, promotional ideas and experiential marketing campaigns are most likely to get results. Facilities can also understand how to modify their customer service, sales, and marketing strategies to better achieve these goals and to differentiate themselves from the myriad of competitive fitness alternatives in their locality.

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• Health & Fitness Facility Research

Intellectual Property Valuation

The valuation of intellectual property can be quite difficult because of its uniqueness and non-marketability. In particular, the value of a sports team comes from its participation in a league, the quality of its team, the quality of its venue, the size of the market, and more. Further, the brand or image that the team creates for itself is also a determinant of team value.

Professional league franchises mostly consist of intangible assets. Valuation is further complicated by the fact that most franchises are privately held. The limited number of franchise transactions, the confidentiality of franchise financial structures, and the variances in team operating structures and assets make it particularly important to understand and analyze these differentiating factors when valuing any of a team’s assets.

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• Intellectual Property Valuation

Naming Rights Analysis

Frequently, team and arena owners are in need of determining additional revenue sources for their operations. The sale of naming rights, Permanent Seat Licenses (PSL’s), and luxury suites have evolved as potential sources of additional long-term income for a franchise or facility. While there are political issues involved with selling the name of a facility, particularly those that are newly constructed and/or publicly owned, political entities and businesses have realized that facility naming rights have become a unique source of income which could offset costs borne by taxpayers. Furthermore, corporations seek facility naming rights due to their desire for facility name inclusion in all media coverage of the venue’s attractive calendar of events, for exclusive in-venue product distribution rights, and to demonstrate local community citizenship. Additionally, the purchase of naming rights represents a unique marketing opportunity as there are a limited number of facilities and arenas which house the operations of major league teams, making imitation or duplication by competitors virtually impossible.

Corporations often employ SportsEconomics to assess the return on investment of their naming rights initiatives, while properties often seek to gauge their true market value. Often, both corporations and properties/franchises will utilize these analyses to better their position in contract negotiations. Moreover, such analyses can help corporations find ways to strategically enhance the value of the deal they are considering, and to determine whether the naming rights opportunity aligns with its sales, marketing and public relations objectives.

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• Naming Rights Analysis

Sponsorship and Endorsement Analysis

Given the proliferation of sports and the media outlets in which they are viewed, sponsorship evaluation has emerged as a popular need within the sports industry.  Corporations often employ our services to assess the return on investment of their sponsorship initiatives, while properties often seek to gauge their true market value. Often, both corporations and properties/individuals will utilize these analyses to better their position in contract negotiations.  Moreover, such analyses can help corporations find ways to strategically enhance the value of the sponsorship or endorsement they are considering, and to determine whether the opportunity aligns with its sales, marketing and public relations objectives.

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• Sponsorship and Endorsement Analysis

Sports Commissions & Local Government

SportsEconomics possesses substantial direct experience in economic consulting in the sports industry, with specific and highly relevant knowledge of the economic impact of events, teams, and facilities. These studies are often used by sports commissions/authorities as well as local governments in their decision to publicly fund sports venues or events that may be hosted in their local community.

Considering the controversy surrounding the funding of sports teams and events by the public, and the frequent use of economic impact studies in negotiations between commissions, governments and event organizers, it is critical to select a firm with a reputation for consistently providing an accurate assessment of economic impact. In addition to our extensive background in economic impact assessment, SportsEconomics has substantial experience in the negotiations process between governments and event organizers/facility owners, and in the explanation of results to various governmental committees and media entities.

Click here to link to our case study:

• Sports Commissions & Local Government