Description of Data Gathering and Facts
You are commissioned to analyze the economic impact of the MLB All-Star Game on the City of Houston. Specifically, the community wants to know the direct spending impact, the indirect spending impact (& total impact), and the fiscal/tax impact. Houston officials want to know whether it is economically profitable to fund and bid for similar future events for the city. This event cost the City about $5 million to host in police, etc.
You create the attached survey and administer it to 342 people around Minute Maid Park during the All-Star Game.[1] Only 325 of the surveys are usable because of various errors by the respondents or too many blanks. Next, you enter the data into Excel (see spreadsheet on Canvas) and are ready to analyze the economic impact. The attached survey is survey #1 on the spreadsheet. Be sure to measure economic impact for everyone, not just the people on the survey. A survey is a sample of the target population.
Based on discussions with the local organizing committee and Houston government officials, you determine that:
- Minute Maid Park seats 40,950.
- The game was sold out.
- The city sales tax is 75% and is for all goods and services except hotels.
- The city hotel occupancy tax is 15%.
- Twenty percent (20%) of spending inside of Minute Maid Park (including tickets) for this event goes to the city government (fiscal impact or tax impact).
- Hotel capacity in the City is 45,000 rooms. Typically during this time period occupancy rates are 83%.
- Average number of persons per room for large events, such as this, is 2.4. (assume this is true for typical visitors also)
- Total spending by the local organizing committee was $4.5 million with 60% of that coming from organizations outside of the city. This is in addition to the amount the City itself is spending on police, etc. In addition, Minute Maid spends $1 million in town activating its sponsorship.
- The spending multiplier for the City of Houston is 6 (based on information from the Minnesota IMPLAN Group).
II. Questions (explain/show your logic for each answer in order to get full credit)
- How many total people attended the All-Star Game?
- How many visitors (people who are not local residents) attended the All-Star Game?
- How many visitors who attended the game were time-switchers?
- How many visitors who attended the game were casual visitors?
- How many visitors should be used in the calculation of the economic impact estimates (incremental)?
- What is the average spending per-person per day by the “incremental” visitors for everything but lodging and tickets (event category) (Question 5 provides the “incremental” visitors)? What is that number for lodging per night stayed?
- What is the average length of stay for incremental visitors in terms of days and nights?
- What is the per-person spending per stay by the incremental visitors?
- What is direct economic impact not accounting for any hotel capacity constraints that may exist (be sure to account for the new/incremental event organizer spending also and the costs of hosting the event)? Those capacity constraints are addressed in the Question 11.
- What is the total economic impact?
- Based on hotel capacity information, how many typical visitors do the event incremental visitors crowd out?
What is the new direct and total economic impact accounting for the crowding out?
- What is the fiscal or tax impact of the event on the city?
- 10 million viewers watched the event on television. A 30-second spot on the telecast costs $100,000. Three minutes and 15 seconds of coverage about the city occurred on the telecast. What is the direct media impact as measured in terms of buying ad time on the telecast, known as “media equivalency”?
[1] You make your best efforts to get a random sample of people around the stadium.
