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On the Louisiana Economy

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On the Louisiana Economy The Economic Impact of the NBA All-Star 2017 Weekend on the Louisiana Economy Dek Terrell, PhD Stephen R. Barnes, PhD Freeport Mcmoran Professor of Economics and Associate Professor of Economics and Executive Director, Economics and Policy Research Group Director, Economics and Policy Research Group Louisiana State University Louisiana State University Executive Summary This report summarizes the estimated economic impact of the NBA All-Star 2017 Weekend on the Louisiana economy. In particular, we focus on estimating the Louisiana sales and excise taxes attributable to the event based on intercept surveys conducted by the LSU Economics & Policy Research Group at the event, expenditure data provided by the NBA, media and sponsors, and vendor surveys. Key results are: > Recorded attendance figures indicate 15,701 persons attended the 66th NBA All-Star Game in New Orleans, Louisiana on Feb. 19, 2017. > We also used recorded attendance of the NBA All-Star Celebrity Game (9,604), BBVA Compass Rising Stars Challenge (15,701), State Farm All-Star Saturday Night (15,701), and the NBA D-League All-Star Game presented by Kumho Tire (6,000), and estimated attendance based on intercept surveys at other events associated with NBA All-Star Weekend such as those in Champions Square. > Because many people attended multiple events, we used survey information to convert these attendance figures to an estimate of 27,241 unique individuals attending one or more events during the NBA All-Star 2017 Weekend. > Consistent with standard impact study methodology, we focus on identifying visitors from outside Louisiana and estimating spending by those from outside the State. NBA ticket allocations imply 85% of NBA All-Star Game tickets were allocated to visitors from outside Louisiana, roughly matching our survey estimates. > Visitors to the NBA All-Star Game were much higher income than the population as a whole with 27% of the out-of state visitors surveyed reporting incomes over $200,000. > The combination of NBA ticket sales and survey responses implies that 18,911 out-of- state visitors were attracted to Louisiana by the NBA All-Star 2017 Weekend. > Many visitors attending NBA All-Star 2017 events had packages covering tickets and in some cases hotels and transportation during the weekend. Intercept surveys found that these visitors spent $1,440 on average beyond what was covered in these packages. > Out-of-state visitors who attended only events other than the NBA All-Star 2017 Game spent $798 on average. > This implies $23.7 million of new Louisiana visitor spending beyond anything provided by the NBA can be attributed to the NBA All-Star 2017 Weekend. > The NBA reported $18.7 million in Louisiana spending during the NBA All-Star 2017 Weekend, including the packages discussed above. Media outlets reported $1.4 million of spending and sponsors added another $3.9 million. Excluding airfare, these sources infused $21.3 million into the Louisiana economy. > Summing across all spending sources, the NBA All-Star 2017 Weekend injected $44.9 million of new spending into the Louisiana economy. > Using input-output tables to account for the indirect impact of this spending, we estimate that the event led to $82.7 million of additional Louisiana output and $24.7 million of additional earnings for Louisiana workers. > Accounting for both direct and indirect impacts, $2.5 million of new Louisiana sales and excise taxes (excluding hotel and motel taxes) can be attributed to the NBA All-Star 2017 Weekend. The Economic Impact of the NBA All-Star 2017 Weekend on the Louisiana Economy 1 Introduction The NBA All-Star 2017 Weekend included a series of events beginning February 17, 2017 leading up to the 66th NBA All-Star Game on February 19, 2017. This study focuses on estimating the impact of spending by visitors to NBA All-Star 2017 events as well as spending by the NBA, media and sponsors on the Louisiana economy. In particular, we seek to estimate the Louisiana sales and excise taxes (excluding hotel and motel taxes) attributable to the event. The basic methodology consisted of conducting intercept surveys at key venues during the event as well as at hotels and the airport to estimate visitor spending. Visitors were asked to omit any packages provided by the NBA or expenses that would be reimbursed by employers for media and sponsors in estimates of Louisiana expenditures. This data is augmented using data from the NBA measuring spending by the league as well as packages provided to many visitors. Likewise, media and some sponsors also provided additional spending data. The results indicate that the event attracted 18,911 visitors from outside Louisiana. This spending injected $23.7 million of new spending into the Louisiana economy. The NBA, media, and sponsors added another $21.3 million in spending — raising the total new Louisiana spending to $44.9 million. Accounting for both the direct and indirect impact of this spending, the NBA All-Star 2017 Weekend led to over $80 million in new Louisiana output and $24 million in new Louisiana earnings. This translates into $2.5 million in new Louisiana sales and excise taxes. Methodology The Louisiana Economics & Policy Research Group (EPRG) designed and developed a survey that was used to collect data during the NBA All-Star 2017 Weekend. The NBA All-Star 2017 Weekend events took place in the area of New Orleans, Louisiana from February, 17th to February, 19th. Data were gathered through an intercept survey conducted during the 3-day weekend at the events and an extra day on Monday, February 20th at the New Orleans airport. The survey was administered, through the use of iPads that were provided by EPRG, by a survey team (29 people total) that were hired by EPRG. The survey team was spread in different main areas where the NBA All-Star 2017 Weekend events and activities were held, including the airport, obtaining a total of 1,200 completed surveys after the 4 days of surveying. Some of the locations include: > Mercedes-Benz Superdome > Smoothie King Center > Champions Square > Lobbies of hotels designated for housing guests for the NBA All-Star game in New Orleans > Louis Armstrong New Orleans International Airport A detailed visitor profile providing more detailed results on the typical visitor based on these intercept surveys is included in the Appendix. Results Our research begins with using our intercept survey results to estimate spending for visitors. We initially investigate the possibility that spending varied across types of visitors. In particular, those attending the NBA All-Star Game tended to be higher income and spend more than those who may have attended another part of the NBA All-Star 2017 Weekend, but not the NBA All-Star Game on Sunday. The results in Table 1 contain survey results reporting average expenditures by out-of-state visitors to the NBA All-Star 2017 Weekend. It is important to note that the survey explicitly asks everyone to omit any expenditures covered by an NBA package or reimbursed by an employer to avoid double counting. 2 LSU E. J. Ourso College of Business Economics & Policy Research Group Table 1: Average Louisiana Visitor Expenditures Attended only Spending Category Attended All-Star Game Other Events Accommodations $501 $289 Meals $280 $166 Bars $161 $98 Shopping $208 $103 Local Transportation $60 $30 Gambling $108 $85 Other Spending $122 $25 Total $1,440 $798 Source: EPRG Surveys and Authors’ Analysis. Numbers may not sum due to rounding. The next step requires estimating the number of out-of state visitors attending the NBA All-Star Game and the number of visitors from outside Louisiana attending only events other than the NBA All-Star Game. We start with recorded attendance of 15,701 people attending the All-Star game and NBA information that 15.1% were from Louisiana. Summing across all events, combined attendance at NBA weekend events was 72,311. However, most visitors attended more than one event. We address this issue by using our survey to estimate the portion of visitors attending combinations of events. For example, 249 people in our sample of 1,128 attended State Farm All-Star Saturday Night, but not the NBA All-Star Game. Of this group, 46% were from Louisiana and 54% were out-of-state visitors. Repeating this computation across all events leads to our estimate that 27,241 different individuals attended one or more events and that 18,911 were from outside Louisiana. Table 2 contains estimates of total new Louisiana spending created by multiplying survey estimates of visitor spending times the number of persons in both visitor categories (attending the NBA All-Star Game or attending only other events). Most out-of-state visitors attended the NBA All-Star Game and this group also spent more. This led to $19.2 million of new spending generated by those attending the NBA All-Star Game and $4.4 million from those attending only other events. Across both groups, this sums to $23.7 million.1 Note that these figures exclude employer reimbursements to media or sponsors and NBA packages providing lodging and/or transportation for many fans. Table 2: Total Louisiana Visitor Expenditures Attended only Spending Category Attended All-Star Game Total Other Events Accommodations $6.7 $1.6 $8.3 Meals $3.7 $0.9 $4.7 Bars $2.1 $0.5 $2.7 Shopping $2.8 $0.6 $3.4 Local Transportation $0.8 $0.2 $1.0 Gambling $1.4 $0.5 $1.9 Other Spending $1.6 $0.1 $1.8 Total $19.2 $4.4 $23.7 Source: EPRG Surveys and Authors’ Analysis. Numbers may not sum due to rounding. 1 The computation is $19.210 million +$44.444 million which rounds to $23.7 million.
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