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.

The Economic Impact of the NBA All-Star 2017 Weekend on the Louisiana Economy 3 Table 3 provides expenditures by the NBA, media, and sponsors. The NBA expenditures are particularly large due to packages which included hotel rooms and transportation for many visitors. With 21% of those surveyed and 27% of out-of-state visitors earning over $200,000 per year, it comes as no surprise that there was substantial fan spending beyond any NBA package at the event.

Table 3: NBA, Media and Sponsors Expenditures

Spending Category NBA Media Sponsors Total

Airfare2 $1.4 $0.6 $0.7 $2.7

Local Transportation $1.1 $0.0 $0.0 $1.1

Lodging $8.7 $0.3 $0.3 $9.3

Dining $1.6 $0.4 $0.4 $2.3

Bars $0.0 $0.1 $1.2 $1.4

Rental of Facilities $0.9 $0.0 $1.2 $2.1

Local Contractors $5.1 $0.0 $0.0 $5.1

Total $18.7 $1.4 $3.9 $24.0

Source: NBA, media and sponsors. Numbers may not sum due to rounding.

This new spending directly creates output and tax revenues for Louisiana. In addition, when business or individuals receiving the revenue make additional purchases another round of spending occurs. Input-output tables provide economists with a way to estimate the total impact from all rounds of spending. Table 4 contains the results of inputting the spending by both the NBA and visitors into input-output tables.

Table 4: Economic Impact of the NBA All-Star Weekend

Item Impact

New Louisiana Output $82.7

New Louisiana Earnings $24.7

New LA Sales and Excise Taxes $2.5

Source: U.S. Bureau of Economic Analysis Input-output tables and authors’ calculations.

The results imply $82.7 million in new Louisiana output and $24.7 million in new Louisiana earnings. It is important to note that Louisiana output does not imply taxable Louisiana sales. Some items counted as output could be wholesale transactions or other transactions not subject to Louisiana sales taxes. Sales and excise taxes are computed based on applying the relevant tax rates, typically 5% to direct spending. Tax revenues for the indirect output and earnings are computed by multiplying the indirect earnings times the ratio of Louisiana sales and excise taxes to Louisiana personal income. These tax estimates exclude hotel and motel taxes. This led to $2,151,460 of direct sales and taxes and $327,856 of indirect sales and excise taxes or $2,479,316 of total Louisiana sales and excise taxes generate by NBA All- Star 2017 Weekend.

2 Because most airfare expenditures lead to revenues outside Louisiana, this item is excluded from estimates of new Louisiana spending.

4 LSU E. J. Ourso College of Business Economics & Policy Research Group Conclusion

The NBA All-Star 2017 Weekend consisted of a series of events in New Orleans, Louisiana culminating in the NBA All- Star Game on Feb. 19, 2017. Three of the events attracted recorded attendance of 15,701. Intercept surveys found that the fans were high income with visitors from outside Louisiana injecting $23.7 million into the Louisiana economy. Accounting for NBA spending and packages, media spending, and expenditures of sponsors, the event brought $44.9 million in new direct spending to Louisiana.3 Accounting for both direct and indirect impacts, the event led to $82.7 million of new Louisiana output, $24.7 million of additional earnings for Louisiana workers and an increase of $2.5 million in Louisiana sales and excise taxes.

3 This total omits airfare because the majority of the ticket value supports activities outside Louisiana.

The Economic Impact of the NBA All-Star 2017 Weekend on the Louisiana Economy 5 Appendix: Visitor Proﬁle

Summary of Results from Visitor Proﬁle

Visitor’s Proﬁle

> Approximately 60% of respondents to the NBA All-Star 2017 Weekend survey lived outside of Louisiana > Louisiana respondents attending NBA All-Star 2017 Weekend events tended to come from large population parishes in close proximity to the event including: Orleans Parish with 29.29%, Jefferson Parish with 20.37% and East Baton Rouge Parish with 16.25%. There were Louisiana visitors from a total of 33 different parishes > The states with highest percentage of visitors were Texas with 13%, California with 10%, Georgia with 9% and Florida with 8%. In total, out-of-state visitors originated from 40 different US states > The NBA All-Star 2017 Weekend events attracted a number of international visitors to the state as well. Of the 60% of out-of-state visitors, 10% were from a foreign country. Among international visitors, Canada and China tied for the highest proportion with 14%, visitors from Australia represented 9% of international visitors and visitors from Poland made up 6% of international visitors. There were foreign visitors from a total of 29 different countries > 94% of out-of-state visitors stayed overnight in Louisiana > Among out-of-state visitors, the most common length of stay (41%) was three nights in Louisiana. 24% of out-of-state visitors stayed four nights while 16% stayed two nights. The mean length of stay was 3.4 nights > Among out-of-state visitors who stayed overnight in Louisiana, 78% stayed in hotels. Other accommodations include 10% of people who stayed with friends and relatives, followed by 7% who stayed in private home or apartment rental > The average night rate of a hotel room was $267. > 65% of out-of-state visitors flew to Louisiana while 33% used a personal vehicle > 67% of the attendees did not bring children to the NBA All-Star 2017 Weekend events > Among attendees that brought children to the events, 51% brought one child, 32% brought two children, and 11% brought three children. > 18% of attendees had annual income between $100,000 – $149,999, while 17% had annual income between $50,000 – $74,999. > 46% of survey respondents were identified as African American while 42% were identified as white. > A large majority of NBA All-Star 2017 Weekend attendees were male representing 68% of those in attendance. > Of all attendees for the NBA All-Star 2017 Weekend events, the mean age was 38.

6 LSU E. J. Ourso College of Business Economics & Policy Research Group Methodology

Working in conjunction with Louisiana Economic Development, The Greater New Orleans Sports Foundation, and the NBA, LSU’s Economics & Policy Research Group (EPRG) designed and developed a survey that was used to collect data during the NBA All-Star 2017 Weekend events. This survey serves as the basis of our visitor proﬁle. The 3-day event took place from February, 17th to February, 19th in the area of New Orleans, Louisiana. The data gathered was collected throughout the weekend at the place of the NBA events (Feb. 17th – Feb.19th) and also on an extra day on February, 20th at the New Orleans airport. The survey was administered by a survey team of 29 interviewers that were hired by EPRG. This team of surveyors was spread in different key locations where the NBA All-Star 2017 Weekend events and activities were held (including the airport location). To facilitate ﬁelding the survey, EPRG provided iPads containing the survey. After the 4 days of surveying, 1,200 surveys were completed. Some of the key locations include: New Orleans Superdome, Smoothie King Center, Champions Square, lobbies of known and important hotels in New Orleans, and the Louis Armstrong New Orleans International Airport.

To facilitate ﬁelding the survey, EPRG provided iPads containing the survey.

The Economic Impact of the NBA All-Star 2017 Weekend on the Louisiana Economy 7 Visitor’s Proﬁle

The intercept survey was administered to Louisiana residents and out-of-state visitors that attended the NBA All-Star 2017 Weekend events. 59.5% of respondents were out-of-state visitors. Out of 59.5% from out-of-state visitors, 90% were from the United States while the other 10% were international visitors.

Figure 1 In-state vs. Out-of-state Visitors

80.00% 59.5% 60.00% 40.5% 40.00% 20.00% 0.00% In-State Out-of-State

Figure 2 – United States vs. International Visitors

100.00% 90.1% 80.00% 60.00% 40.00% 20.00% 9.9% 0.00% United States International

Louisiana residents who attended the NBA All-Star 2017 Weekend events come from a total of 33 different parishes with the percentages shown below. Orleans Parish residents were most common representing 29% of in-state respondents, followed by Jefferson Parish with 20%, and East Baton Rouge Parish with 16%.

8 LSU E. J. Ourso College of Business Economics & Policy Research Group Figure 3 – Parishes

Among out-of-state visitors, the largest number were from Texas (13%), followed by California (11%), Georgia (9%), Florida (8%), Mississippi (8%) and New York (8%). Visitors from other states included residents of Alabama, North Carolina, Tennessee, New Jersey, Ohio, Virginia, Pennsylvania, Michigan, Missouri, and a small number of visitors from several other states.

Figure 4 – States

Approximately 10% of visitors from outside of the state of Louisiana were international visitors. The two countries with the largest number of visitors were Canada and China, both with 14% of international visitors. A number of visitors from Australia, Puerto Rico, the United Kingdom and Brazil were also included in the intercept survey. Other countries captured in the intercept survey included the Dominican Republic, Dubai, France, India, Japan, Philippines, Germany, Italy, Jamaica, Korea, and Russia.

The Economic Impact of the NBA All-Star 2017 Weekend on the Louisiana Economy 9 Figure 5 – Composition of International Visitors

The vast majority of out-of-state visitors who traveled to Louisiana for the NBA All- Star 2017 Weekend events planned trips that included at least one night’s stay in the state. In the survey, attendees were asked about the type of accommodation and responses are summarized in the chart below. Among out-of-state visitors, 94% stayed overnight with 78% of them staying in a hotel or motel, followed by 10% who stayed with friends and relatives.

Figure 6 – Out-of-state Visitors

100.00% 94% 80.00% 60.00% 40.00% 20.00% 6% 0.00% Stay Overnight Did Not Stay

10 LSU E. J. Ourso College of Business Economics & Policy Research Group Figure 7 – Out-of-state Visitor’s Type of Stay

The distribution of trip length is shown in the next ﬁgure. The most popular number of nights stayed for out-of-state visitors was three nights (41.1%) followed by four nights (23.9%), and two nights (15.8%).

Figure 8 – Number of Nights of Out-of-state Visitors

The Economic Impact of the NBA All-Star 2017 Weekend on the Louisiana Economy 11 The preferred mode of transportation to Louisiana of out-of-state visitors is shown in the ﬁgure below. 65% respondents ﬂew, while 33% arrived to Louisiana by car.

Figure 9 – Out-of-state Transportation to Louisiana

The portion of respondents with a child under 18 is shown below. The majority of the attendees did not bring kids to the events with 67% reporting no children.

Figure 10 – Children Under 18

12 LSU E. J. Ourso College of Business Economics & Policy Research Group Among those who brought children, groups tended to have small numbers of children in attendance. Out of the 67% that reported bringing children to the NBA All-Star 2017 Weekend events, 51% brought one child, followed by 32% with two children, and 11% with three.

Figure 11 – Percentage of Children

The income distribution of NBA All-Star 2017 Weekend event attendees tended to be higher than the population at large. Among survey respondents, the distribution of annual income is shown below. The most common annual income category (18%) was between $100,000 - $149,999, but the percentage of high income earners is notably high relative to the population at large.

Figure 12 – Annual Income Category

The Economic Impact of the NBA All-Star 2017 Weekend on the Louisiana Economy 13 Demographics were answered by observation only with results summarized in the ﬁgures below. The largest racial group was African American with 46%, following by White with 42%, and Hispanics with 5%. The population was heavily skewed toward men with 68% of the respondents identiﬁed as male.

Figure 13 - Race

Figure 14 – Gender

14 LSU E. J. Ourso College of Business Economics & Policy Research Group Appendix: Survey Questions

NBA All-Star 2017 Weekend Survey

1. In which NBA All-Star activity or activities will you or members of your group participate? (please indicate how many people in group will attend each event selected) Friday BBVA Rising Star Challenge ______Friday NBA All-Star Celebrity Game ______Saturday State Farm All-Star Night (skills, 3-point, slam dunk) ______Saturday NBA D-League All-Star Game ______Sunday 66th NBA All-Star Game ______Other NBA-related Events ______No NBA Events 2. Do any of the following apply to you Invited guest of the NBA Member of the media Representative of an NBA Sponsor None apply 3. Do you live in Louisiana? Yes No 4. What is your Zip Code? 5. Did you travel here from somewhere in the United States? Yes (1) No (2) 6. What country are you from? 7. What type of transportation did you use to get to New Orleans? Airplane (1) Personal vehicle (2) Other (3) ______8. How much did you spend on airfare? 9. How much did you spend getting to New Orleans? 10. How many people did that cover? 11. Does your visit include an overnight stay in Louisiana? Yes No 12. How many total nights will you spend in Louisiana on this trip? 13. Where are you staying? Hotel/Motel With friends or relatives Private Home or Apartment Rental Timeshare/Condo Bed and Breakfast Other ______14. Which hotel are you staying at? 15. What is the cost of your hotel per night? 16. What is the rate for your rental per night? 17. What is the rate for your Timeshare/Condo per night? 18. What is the rate for your Bed and Breakfast per night? 19. What is rate for your accommodations per night? 20. How many people does that cover? 21. How much money do you expect to spend in total in New Orleans on Restaurants/Meals? 22. How many people does that cover?

The Economic Impact of the NBA All-Star 2017 Weekend on the Louisiana Economy 15 23. How much money do you expect to spend in total in New Orleans on Bars and Nightclubs? 24. How many people does that cover? 25. How much money do you expect to spend in total in New Orleans on Shopping? 26. How many people does that cover? 27. How much money do you expect to spend in total in New Orleans on Local Transportation (e.g. taxi, Uber)? 28. How many people does that cover? 29. How much money do you expect to spend in total in New Orleans on Gambling? 30. How many people does that cover? 31. How much money do you expect to spend in total in New Orleans on any other category? 32. How many people does that cover? 33. How much money will you spend at each event on concessions, merchandise, etc. (excluding game or event tickets)? Friday BBVA Rising Star Challenge ______Friday NBA All-Star Celebrity Game ______Saturday State Farm All-Star Night (skills, 3-point, slam dunk) ______Saturday NBA D-League All-Star Game ______Sunday 66th NBA All-Star Game ______Other NBA-related events ______34. How many people does that cover? 35. Did your group bring any children under the age of 18? Yes No 36. How many people in your group are under 18? One child Two children Three children Four children Five or more 37. For statistics purposes, what is your age? Age: ______I’m not comfortable sharing my age. 38. Would you feel comfortable in picking a category of your age? 18-24 years old 25-34 years old 35-49 years old 50-64 years old 65 years old or older 39. Which category best describes your household annual income? Under $25,000 $25,000 - $49,999 $50,000 - $74,999 $75,000 - $99,000 $100,000 - $149,999 $150,000 - $199,999 $200,000 - $500,000 More than $500,000 The following were coded by interviewer based on observation: 40. Race African-American White Asian Hispanic Other ______41. Gender Male Female

16 LSU E. J. Ourso College of Business Economics & Policy Research Group