Economic Impact Analysis of the Davis Cup Semi-Final Spain Vs United States

Rodríguez, P. & Baños, J. (2013). Economic impact analysis of the Davis Cup semi-final Spain vs United States. Journal of Sports Economics & Management, 3(1), 47-63.

ECONOMIC IMPACT ANALYSIS OF THE DAVIS CUP SEMI-FINAL SPAIN vs UNITED STATES

Análisis del impacto económico de la semifinal de la Copa Davis entre España y Estados Unidos

Plácido Rodríguez Guerrero, José Francisco Baños Pino Department of Economics, Universidad de Oviedo (Spain)

Abstract: The organization of any sporting event of some magnitude usually has a significant impact on the region where it is celebrated. To calculate the economic impact of a sport event there are different economics tools, Input- Output (I-O) model is the method used in this study. This paper looks at the economic impact for the Autonomous Community of Asturias due to the celebration of the Davis Cup Semi-final in Gijon, in September 2012, using last Input-Output tables of Asturias (2005). We want to calculate the economic impact of this event in terms of gross value added and employment. We use information that comes from data provided by the organization of the event and a survey carried out by the hotels in the city during the course of the competition. The aim of the study is to control if the public money becomes exhausted correctly. The economic results are positive principally for the expenditure of non-residents; on the other hand the impact on employment was not very relevant except in the Hotel industry sector. Keywords: Impact Analysis, Davis Cup, Input-Output, Multipliers, Gross value added, Employment

Resumen: La organización de cualquier evento deportivo de cierta magnitud por lo general tiene un impacto significativo en la región donde se celebra. Para calcular el impacto económico de un evento deportivo existen diferentes herramientas económicas, el modelo Input-output (I-O) es el método utilizado en este estudio. Este trabajo analiza el impacto económico sobre Asturias, debido a la celebración de la semifinal de la Copa Davis en Gijón, en septiembre de 2012, mediante el uso de últimas tablas Input-Output de Asturias (2005). Se calcula el impacto económico de este evento en términos de valor añadido y empleo. Utilizamos la información que proviene de los datos facilitados por la organización del evento y de una encuesta llevada a cabo por los hoteles de la ciudad durante el transcurso de la competición. El objetivo del estudio es controlar si el dinero público se gasta correctamente. Los resultados económicos son positivos , principalmente para el gasto de los no residentes, por otro lado el impacto sobre el empleo no es muy relevante, salvo en el sector de la Hostelería. Palabras Clave: Análisis de Impacto, Copa Davis, Input-Output, Multiplicadores, valor añadido, Empleo

Información de contacto: Plácido Rodríguez Guerrero [email protected]

47 Rodríguez, P. & Baños, J. (2013). Journal of Sports Economics & Management, 3(1), 47-63.

1. Introduction This paper analyses the economic impact derived from holding in Gijon (Asturias) the Davis Cup Semi-final between Spain and the United States, from 14 to 16 September 2012. It is well known that sports tournaments or exhibitions are part of what the literature calls special events, which are defined as those "that occur once or infrequently and, for a limited duration, provide consumers opportunities social and leisure activities beyond their everyday experiences" (Jago and Shaw, 1998). These special events and more specifically sports have grown in number and size in recent years in most developed countries. In the case of Spain, we should highlight the organization of the America's Cup and the Formula 1 Grand Prix, both in Valencia, the celebration in Spain of the Handball World Championships in 2013 or the World Basketball Championships in 2014. These events have a global character, but the economic impact is in the city or in the province where they are held. The same applies to other events, such as marathons in Barcelona or Madrid and other minor sporting events. A priori, from an economic point of view, it may be interesting for a small province (or city) to host a competition of this kind, since the tourists special events such as tennis, have on average higher costs than other tourist activities (Getz, 1994). In order to analyse the economic impact of the celebration in Gijon the Davis Cup Semi-final, this paper proceeds as follows: Section 2 analyses and assesses some economic impact models; Section 3 presents the results generated by the tourism spending; spending championship organization and its impact on the Asturian economy is analysed in Section 4; Section 5 presents the overall results of gross value added and employment; finishing with the conclusions.

2. Economic models of impact The organization of any sporting event of some magnitude usually has a significant impact on the region where it is celebrated. The influx of competitors and fans from outside the region, which made spending on accommodation, food and other goods and services, involves an injection of income into the local economy, with the ability to create jobs and generate wealth. In addition, the expenses required for the implementation of the sporting event also involve, usually, more production and local employment. Economic theory provides tools to accurately study the impact of holding a sporting event such as a Davis Cup tie. The theoretical foundations of the economic impact analysis of sports events can be studied in various publications among which are: the pioneering work of Burns, Hatch and Mules (1986) to study the Formula 1 Grand Prix in Adelaide; analysis of Getz (1987) Greig and McQuaid (2003), Preuss (2004), Blake (2005)

48 Rodríguez, P. & Baños, J. (2013). Journal of Sports Economics & Management, 3(1), 47-63. and Dwyer et al. (2005 and 2010), cited in the references; and the recent handbook on the subject published in 2012 (Maennig and Zimbalist). Most of the economic literature that evaluates the economic impact of a sporting event uses two types of economic models: the model Input-Output (I-O) and computable general equilibrium model (CGE). These models are not the only instruments we have in order to assess the economic impact; it can also do a comprehensive approach through the Cost-Benefit Analysis (CBA) and the Contingent Valuation Method (CVM). The general approach of estimating the additional income generated by the event uses an Input-Output model to estimate the direct, indirect and induced effects on the economy. I-O model is the method used in this study. The I-O model is a useful tool to quantify structural interdependencies of an economy through matrices representing all flows of goods and services (input-output), expressed in detail monetary values and classified into product groups or industries. For any given level of expenditure of an event, the increase in value added and employment in the region will vary depending on which industries are those that receive direct spending. Specifically, the expenditure attributable to the event by organizers and visitors stimulates economic activity, boosting business, which impacts on employment and income of the families of the host community. This impact affects every sector with a different intensity. Consequently, the process of estimating the economic impact is performed by a model that identifies the relationships between the different sectors of the local economy. In short, one could say that holding a sporting event as a Davis Cup Semi-final, is a direct economic impact arising from the initial injection of income, which in turn generates indirect effects of production and induced consumption on the local economy. Direct impacts reflect the organization spending in the host city, as well as the one done by visitors in the different sectors of the economy. Therefore, the first step in economic impact studies is to identify direct monetary flows within the local economy that are explicitly attributed to the organization of the event. Indirect effects arise as companies that sell their products and services to the organizers and visitors buy inputs from other local businesses. These other businesses purchase inputs from other firms and so on. Induced consumption impacts arise when employees of businesses that receive direct and indirect impacts of the event, spend their wages on goods and services in the local area, and when the owners of the businesses, which increased sales due to the event, spend their profits in the region. The I-O model presents a number of important advantages as it provides a complete picture of an economy focusing on the inter-sectorial and allows calculating the direct, indirect and induced disaggregating by industry (Fletcher, 1989; Baños & Rodríguez, 2013).

49 Rodríguez, P. & Baños, J. (2013). Journal of Sports Economics & Management, 3(1), 47-63.

However, it is well known that this approach is also subject to a number of limitations. First, it must be accepted that the restrictive assumptions used to simplify the behaviour of the economy are considered as functions of production and demand for fixed proportions (Leontief technology) or technical coefficients are constant. That is, we would be assuming that prices of inputs (and outputs) are not changed in relative terms, when in reality this is not necessarily so. Prices can vary with an increase in tourism or investments organizing the event. The implications arising from not allowing the replacement of the factors which have been expensive in time with those that are relatively cheaper will be more important, of course, the greater the difference between the price structure for the date of preparation of the input-output tables and the period in which we analyse the impact of the event. Secondly, the I-O approach has other weaknesses, such as the assumption of the free availability of factors. This would mean that at any point of time the offer is fully able to absorb changes in demand. So, in response to an increase in demand the effects that would result for the whole economy would always be positive in the I-O framework, when in reality we should also consider the possible negative impacts that would result from the expulsion effect exerted on other economic sectors, via the flow of factors and resources that go from these to those associated with sports activities. This removal effect of excess capacity will depend on the event-related industries, the characteristics of labour markets or possible changes in the terms of trade of the economy. As a result, the impacts estimated at I-O analysis would generally be overestimated. Thirdly, the I-O models are not robust enough to analyse the economic impact of a sporting event in large areas or multi-region, being more appropriate in these cases computable general equilibrium models. However, in the case of small municipalities or regions it might be considered important that there are no restrictions on the supply of inputs, provided that it is open to flow from outside factors. Additionally, it could be assumed that relative prices are fixed outside these small economies. In these circumstances, taking into account that these regions or cities do not usually have a reference EGC and its construction is very expensive, it does justify the use of Input-Output model, as the benefits of its use outweigh its drawbacks. Consequently, in this paper, to estimate the effect on the regional economy of the Davis Cup Semi-final we have used an Input-Output methodology. This I-O model has been applied in sports in Asturias to measure the economic importance of the two main football clubs in the region (Aza et al., 2007) or the economic impact of the celebration of the Gijon Speed Skating World Championships (Baños et al., 2012).

50 Rodríguez, P. & Baños, J. (2013). Journal of Sports Economics & Management, 3(1), 47-63.

3. Economic impact of tourism In this section we present the results of the economic impact of the spending by visitors who attended the celebration of the Davis Cup Semi-final in Gijon. We have quantified both direct and indirect effects and induced tourist spending, showing the economic impact in terms of gross value added and employment generated, and disaggregating the total economic activity among the sixteen branches which regional accounting considers in Spain. While the direct impact is calculated using economic data from tourist spending (or purchases and investments made by the organizers of the competition), to quantify the indirect and induced effects it is necessary to go to the Input-Output. It is known that an increase in internal tourism expenditure, when satisfied, generates an increase in activity (direct effect) for the first providers of such demand (hotels, restaurants,...), which should adequate orders to its suppliers (food, drink ...) and these in turn, to meet the additional demand, will generate a second round of economic transactions, increasing orders to their suppliers and so on (indirect effects). The effects of internal tourism expenditure are not confined to the direct and indirect effects, as these generate an increase in household income via wages and salaries, resulting in increased private spending and starting a new cycle called induced effects. A schematic of the economic impact of tourism is mentioned in Figure 1.

Wages!and!Salaries! ! Private!Consumption! Wages!and!Salaries! Private! Consumption! Internal( Tourism( Tourism( +! Tourism( +! Tourism( tourist( direct( indirect( induced( total( expenditure( effects( effects( effects( effects( in(Asturias( ! ! !

!!Purchases!and! Investments! ! ! Figure 1. Economic impact of tourism Source: Fundación Observatorio Económico del Deporte (FOED) The input-output model quantify the impact that an increase in demand, in this case tourism, produces in each sector, through the set of feedback effects that indirectly and induced occur in the economic system, recognizing that demand effects are not confined to the simple direct satisfaction, but are transmitted and spread to the rest of the activity through the web of dominant relationships in the productive tissue. Getting the value added of a known economic activity by applying an input- output model is achieved by the expression R1− , where it holds VA= AVA (I− A ) Y 51 Rodríguez, P. & Baños, J. (2013). Journal of Sports Economics & Management, 3(1), 47-63. that VA is the vector of added values to be calculated; AVA is a matrix in which the elements of its main diagonal are the technical coefficients of the sectorial added value extracted from the Input-Output Table of Asturias 2005 (TIOA- 2005) and the other elements are equal to zero, I is the unit matrix, AR is the matrix of technical coefficients interior of the region, and Y, is the vector of internal tourism expenditure (YCTI) or private consumption (YCP), according to what is intended is to estimate the gross added value derived from the direct effects plus indirect, or the induced effects, respectively. The above expression tells us that the product of the Leontief inverse by internal tourism expenditure ratios and by gross value added coefficients in the production of each branch leads to GVA of direct and indirect effects, while replacing internal tourism spending private consumption would help to quantify the effects induced. To calculate the induced impacts we must start from the gross wages and salaries generated as a result of the direct and indirect effects. Then, taking into account the information provided by the Regional Accounting we will determine the percentage of those who, on the whole, the economy allocates to private consumption. Once set the value of this magnitude, sectorial disaggregation (which is what constitutes private consumption vector YCP) is performed by applying the same breakdown by sectors, in relation to private consumption within the region, as shown in the TIOA-2005. Finally, to calculate the economic impact of tourism resulting from the holding of the Davis Cup semi-final in Gijon requires quantifying internal tourism spending, which in turn must combine information about the number of tourists, their expenditure and the average stay. This information comes from both data provided by the organization of the event and a survey carried out by the hotels in the city during the course of the competition. From the tickets sold to persons not living in Asturias, it has been estimated at 3,604 the total number of tourists who came to the Davis Cup Semi-final. More specifically, these visitors were broken down as follows: 2,712 of the Tennis Territorial Federations of Spain and USTA, the U.S. Tennis Association, in addition to those invited by the main sponsors; 451 people who bought their seats in shops outside of Asturias, 383 Asturias non-residents who purchased online and 58 who did by phone1. In addition, information on hotel occupancy has allowed to quantify in 2,428 the number of tourists who came to the Davis Cup tie and spent the night in Gijon collective accommodation establishments, amounting to 1,176 the tourists who have stayed in hotels of other areas of Asturias.

1For the calculation of the Internet and telephone we have made a very conservative estimate of how many visitors have come from outside Asturias. It has been taken as reference the total tickets bought in stores, totaling 2,398. Of these 1,947 were sold in Asturias and the rest out, accounting for sales outside a 18.81% of the total. The same percentage was used for the Internet and the phone, but we are convinced that Internet, especially for this proportion, is underestimated (in Internet 2,036 tickets were sold in total and 311 by telephone). 52 Rodríguez, P. & Baños, J. (2013). Journal of Sports Economics & Management, 3(1), 47-63.

One aspect that has been considered is that the number of visitors analysed actually represents a net increase in tourism demand for the city and the region and has not been a simple deviation of the number of tourists. It is understood that those 3,604 visitors do not replace other types of tourists, which have also visited Gijon and Asturias for reasons other than to attend the sporting event. Direct tourism expenditure due to the celebration of the Davis Cup Semi-finals, once estimated the number of visitors and their spending in hotel services and the average number of days of stay, has been valued at 898,460 euro excluding value added tax. In this sense, the average spending per visitor during the three- day visit would have been 130.5 euro for accommodation, 97 euro in restaurants and cafes, 43 euro on shopping and 11 euro on transport. So, tourists have concentrated their spending funds on the Hotel Industry, representing 82.3% of the total, followed by Trade, with a weight of 13.7%, and Transport and Communications with a meagre 4%. The sectorial breakdown of tourist spending appears in Table 1. Table 1. Total expenditure by visitors to the Davis Cup

Expenses (euros, VAT Branch of Activity excluded) 11. Trade and repairs 123,275 12. Hotel industry 739,333 13. Transport and communications 35,852 TOTAL 898,460

Source: FOED From tourist expenditure vector we used the Leontief demand model discussed above to estimate the impacts in terms of GVA, using the Input-Output table of Asturias intersector relations for 2005. According to this, tourism spending motivated by the celebration of the Davis Cup semi-final resulted in the generation of gross value added at basic prices estimated at just over 1.12 million euro, broken down between direct, indirect and induced shown in Table 2. As can be seen, the direct effects are concentrated in three sectors where tourist consumption falls: Hotel industry representing a total of 81.5% of these direct effects, followed by Trade and repairs with 14.6%, and Transport and communications with the remaining 3.9%. Meanwhile, the indirect effects are distributed over the entire economic tissue, due to the purchases that the three previous branches of activity should make to the rest of the branches to meet their demand, stressing in this regard the importance of Financial and managing services (45.8%), reflecting the degree of

53 Rodríguez, P. & Baños, J. (2013). Journal of Sports Economics & Management, 3(1), 47-63. externalization that is appreciated in a modern economy such as the Asturias one, Trade and repairs (11.6%) and Transport and communications (11.1%). Table 2. Effect of the tourist expenditure on the GVA. Break down by branches of activity (Current Euro) DIRECT INDIRECT INDUCED TOTAL BRANCH OF ACTIVITY EFFECTS EFFECTS EFFECTS EFFECTS

1.- AGRICULTURE AND FISHING — 14,099 3,113 17,212

2.- OIL INDUSTRIES — 3,312 1,000 4,312 3.- FOOD, BEVERAGES AND — 18,327 3,514 21,841 TOBACCO 4.- CHEMICAL INDUSTRY — 926 131 1,057 5.- OTHER NON-METALLIC — 1,273 383 1,656 MINERAL PRODUCTS 6.- METALLURGY AND — 1,050 313 1,363 METALLIC PRODUCTS 7.- METAL TRANSFORMATION — 2,526 615 3,141 INDUSTRY 8.- OTHER MANUFACTURER — 3,609 1,462 5,071 INDUSTRIES 9.- ELECTRIC ENERGY, GAS AND — 18,610 5,353 23,963 WATER 10.- CONSTRUCTION — 10,806 3,841 14,647

11.- TRADE AND REPAIRS 102,370 30,610 29,893 162,873

12.- HOTEL INDUSTRY 572,572 2,996 20,561 596,129 13.- TRANSPORT AND 27,753 29,258 14,699 71,710 COMMUNICATIONS 14.- FINANCIAL AND MANAGING — 121,068 50,431 171,499 SERVICES 15.- EDUCATION, HEALTH AND — 1,436 9,718 11,154 SOCIAL SERVICES 16.- OTHER SERVICES — 4,588 11,214 15,802 TOTAL 702,695 264,494 156,240 1,123,429

Source: FOED

Induced effects finally show the distribution of household spending within the region, also highlighting the role of the Financial and Managing services sector (32.3%), Trade and repairs (19.1%) and the Hotel industry (13.2%). Once estimated the economic impact of tourism in terms of gross value added, it is equally interesting to know the impact on another key indicator of the economy such as employment. We will be using the relationships between GVA and employment derived from the Input-Output tables of Asturias. These relationships should be applied to the results previously obtained for the GVA, but noting that monetary aggregates should be expressed in real terms 54 Rodríguez, P. & Baños, J. (2013). Journal of Sports Economics & Management, 3(1), 47-63. from 2005. Thus, they can calculate the total jobs (direct, indirect and induced) that tourism expenditure has created in the region, due to the celebration of the Davis Cup Semi-final. Table 3. Effects of the tourist expenditure on employment. Break down by branches of activity (Units)

DIRECT INDIRECT INDUCED TOTAL BRANCH OF ACTIVITY EFFECTS EFFECTS EFFECTS EFFECTS

1.- AGRICULTURE AND FISHING — 1 — 1

2.- OIL INDUSTRIES — — — — 3.- FOOD, BEVERAGES AND — — — — TOBACCO 4.- CHEMICAL INDUSTRY — — — — 5.- OTHER NON-METALLIC — — — — MINERAL PRODUCTS 6.- METALLURGY AND METALLIC — — — — PRODUCTS 7.- METAL TRANSFORMATION — — — — INDUSTRY 8.- OTHER MANUFACTURER — — — — INDUSTRIES 9.- ELECTRIC ENERGY, GAS AND — — — — WATER 10.- CONSTRUCTION — — — —

11.- TRADE AND REPAIRS 2 1 1 4

12.- HOTEL INDUSTRY 10 — — 10 13.- TRANSPORT AND — — — — COMMUNICATIONS 14.- FINANCIAL AND MANAGING — 1 — 1 SERVICES 15.- EDUCATION, HEALTH AND — — — — SOCIAL SERVICES 16.- OTHER SERVICES — — — — TOTAL 12 3 1 16 Source: FOED

It is estimated that the demand of tourists generated a total employment2 of 16 equivalent jobs, of which 12 were direct because of the momentum of tourism expenditure, while the rest is divided between three jobs created indirectly and 1 job of induced form (see Table 3).

2 The employing unit used is the full-time equivalent jobs, defined as the number of hours worked divided by average annual hours worked in full-time work in the economic territory.

55 Rodríguez, P. & Baños, J. (2013). Journal of Sports Economics & Management, 3(1), 47-63.

The industry that generated more employment in relative terms was the Hotel industry, with 62.5%, followed by the Trade and repairs group (25%), leaving far behind Agriculture and fishing sectors and Financial and managing services (6.3% in each case).

4. Economic impact of organization costs of Davis Cup semi-final 4.1. Investments and purchases by Asturian companies The analysis of the influence of the Davis Cup Semi-final on Asturias should not be limited to the contribution on tourism, since the expenditure required for the celebration of the event has resulted in several purchases and investments within the municipality and the rest of the region which has supposed a direct impact and also, given the inter-relationships between the various branches of activity, has also caused a number of indirect and induced effects. For the calculation of these impacts, as well as for tourism, we apply again the R1− Input-Output analysis. Using the previous formula VA= AVA (I− A ) Y, where Y, in this case, refers to the vector of internal purchases and investments made by the Townhall City Council of Gijon, as organizer of the Davis Cup Semi-final. Table 4. Total investments by organization to the Davis Cup Expenses (euros, Tax Branch of Activity excluded)

8.- OTHER MANUFACTURER INDUSTRIES 183

10.- CONSTRUCTION 126,135

11.- TRADE AND REPAIRS 39,511

12.- HOTEL INDUSTRY 19,245

13.- TRANSPORT AND COMMUNICATIONS 4,930

14.- FINANCIAL AND MANAGING SERVICES 51,269

16.- OTHER SERVICES 5,323 TOTAL 246,596

Source: FOED Total expenditures undertaken by the organization of the Davis Cup Semi-final to hold the competition involved an expenditure of 1,854,550 euro, including VAT. Of this amount, and once VAT excluded, almost 247,000 euro were allocated to purchases by companies with regional presence, being these companies the ones that really matter to analyse its ability to pull on the Asturian economy. For this purpose we have considered the outsourcing that various companies of the rest of Spain have made in Asturias. As shown in Table 4, these purchases that make up the vector of expenditure (Y) are heavily concentrated on Construction (51.2%), Financial and managing services (20.8%) and Trade and repairs (16%). 56 Rodríguez, P. & Baños, J. (2013). Journal of Sports Economics & Management, 3(1), 47-63.

The costs incurred to organize the Davis Cup Semi-final in Gijon generated a Gross Value Added at basic prices estimated at 226,153 euro. Of this amount, 121,072 euro are GVA generated directly, while 68,497 euro are indirect and the rest, 36,584 euro, are induced effects (Table 5). Table 5. Effect of the investments on the GVA. Break down by branches of activity (Current Euro)

DIRECT INDIRECT INDUCED TOTAL BRANCH OF ACTIVITY EFFECTS EFFECTS EFFECTS EFFECTS 1.- AGRICULTURE AND FISHING — 501 729 1,230 2.- OIL INDUSTRIES — 1,363 234 1,597 3.- FOOD, BEVERAGES AND — TOBACCO 506 823 1,329 4.- CHEMICAL INDUSTRY — 354 31 385 5.- OTHER NON-METALLIC — MINERAL PRODUCTS 4,927 90 5,017 6.- METALLURGY AND — METALLIC PRODUCTS 2,640 73 2,713 7.- METAL TRANSFORMATION — INDUSTRY 785 144 929 8.- OTHER MANUFACTURER INDUSTRIES 70 2,031 342 2,443 9.- ELECTRIC ENERGY, GAS AND WATER — 2,390 1,253 3,643 10.- CONSTRUCTION 45,637 13,817 899 60,353 11.- TRADE AND REPAIRS 23,889 6,068 7,000 36,957 12.- HOTEL INDUSTRY 10,852 630 4,814 16,296 13.- TRANSPORT AND COMMUNICATIONS 2,778 7,693 3,442 13,913 14.- FINANCIAL AND MANAGING SERVICES 34,118 24,098 11,808 70,024 15.- EDUCATION, HEALTH AND SOCIAL SERVICES — 64 2,275 2,339 16.- OTHER SERVICES 3,729 629 2,626 6,984 TOTAL 121,072 68,497 36,584 226,153 Source: FOED

The economic sectors with the greatest impact on GVA are Financial and managing services and Construction, with 30.9% and 26.7% of the total effect, respectively. It is followed, at some distance, by Trade and repairs (16.3%), Hotel industry (7.2%) and Transport and communications (6.2%). Considering the proportions between GVA and employment, as it was done in the case of tourism, the impact of the costs of organizing the sports event on the labor market in Asturias has been further assessed. Thus, these costs would have an overall effect on employment measured in 3 jobs, of which 2 are attributed to

57 Rodríguez, P. & Baños, J. (2013). Journal of Sports Economics & Management, 3(1), 47-63. the direct impacts and 1 to indirect impacts. The breakdown of these impacts among different branches of activity is outlined in Table 6. Table 6. Effect of the investments on the employment. Break down by branches of activity (Units) DIRECT INDIRECT INDUCED TOTAL BRANCH OF ACTIVITY EFFECTS EFFECTS EFFECTS EFFECTS 1.- AGRICULTURE AND FISHING — — — — 2.- OIL INDUSTRIES — — — — 3.- FOOD, BEVERAGES AND — — — — TOBACCO 4.- CHEMICAL INDUSTRY — — — — 5.- OTHER NON-METALLIC — — — — MINERAL PRODUCTS 6.- METALLURGY AND METALLIC — — — — PRODUCTS 7.- METAL TRANSFORMATION — — — — INDUSTRY 8.- OTHER MANUFACTURER — — — — INDUSTRIES 9.- ELECTRIC ENERGY, GAS AND — — — — WATER 10.- CONSTRUCTION 1 1 — 2 11.- TRADE AND REPAIRS 1 — — 1 12.- HOTEL INDUSTRY — — — — 13.- TRANSPORT AND — — — — COMMUNICATIONS 14.- FINANCIAL AND MANAGING — — — — SERVICES 15.- EDUCATION, HEALTH AND — — — — SOCIAL SERVICES 16.- OTHER SERVICES — — — — TOTAL 2 1 — 3 Source: FOED

4.2. Other expenditures The agreement signed between the Royal Spanish Tennis Federation (RFET) and the Gijón Tourism Society SA (SMTG) includes hosting fee, the construction of grandstands and tennis court, and other small expenses, for a total amount of 1,324,375 euro (excluding VAT) which is the 84.27% of spending. Of this amount, SMTG recovered a total of 432,480 euro with the money obtained with the tickets sold to the 3,604 visitors with an estimated average ticket price of 120 euro3 (excluding VAT) for the three days, representing a net outflow of money to Barcelona (RFET headquarters) of 891,895 euro. This outflow is a loss for Asturias and will be taken into account in the conclusions.

3 Tickets rank from 90 to 312 euro. There were some luxury boxes (six seats) at a price of 10,000 euro 58 Rodríguez, P. & Baños, J. (2013). Journal of Sports Economics & Management, 3(1), 47-63.

5. Total economic impact of the Davis Cup semi-final on Asturias The total economic impact of the celebration of the Davis Cup semi-final in Gijon, added to the impacts due to the net increase of tourists and organizational costs incurred by the City Council, would have represented a contribution of 1,349 million euro to the region in terms of Gross Value Added (Figure 2).

Figure 2. Total effects on the GVA. Break down by type of impact (Current thousands euro) The structure of the impacts in terms of value added, the direct effects involving 823,767 euro (61% of total), followed by indirect effects, with 332,991 euro (24.7%), while the induced represent 192,284 euro (14.2%). The break down by branches of activity is presented in Table 7.

21 19 14

4 7 1

0 Direct Effects Indirect Effects Induced Effects Total Effects

Figure 3. Total effect on the employment. Break down by type of impact (units) Source: FOED

According to Table 7, three branches of activity are those that concentrate total GVA generation: Hotel industry (45.4% of total), Financial and managing services (17.9%) and Trade and repairs (14.8%). It is precisely in these sectors where both tourism expenditure as well as purchases and investments of the 59 Rodríguez, P. & Baños, J. (2013). Journal of Sports Economics & Management, 3(1), 47-63. organization of the sporting event are concentrated. Then, at a greater distance, lie Transport and communications (6.3%) and Construction (5.6%). It should also be noted that the indirect and induced effects affect to almost the entire production of Asturias, highlighting both the importance of Financial and managing services, with weights around 43% and 32% of the total, respectively.

Table 7. Total Effects of Davis Cup Semi-final on the GVA. Break down by branches of activity (Current Euro) DIRECT INDIRECT INDUCED TOTAL Branch of Activity EFFECTS EFFECTS EFFECTS EFFECTS 1.- AGRICULTURE AND FISHING — 14,600 3,842 18,442 2.- OIL INDUSTRIES — 4,675 1,234 5,909 3.- FOOD, BEVERAGES AND — TOBACCO 18,833 4,337 23,170 4.- CHEMICAL INDUSTRY — 1,279 162 1,441 5.- OTHER NON-METALLIC — MINERAL PRODUCTS 6,201 473 6,674 6.- METALLURGY AND — METALLIC PRODUCTS 3,690 386 4,076 7.- METAL TRANSFORMATION — INDUSTRY 3,311 759 4,070 8.- OTHER MANUFACTURER INDUSTRIES 70 5,639 1,804 7,513 9.- ELECTRIC ENERGY, GAS AND WATER — 21,000 6,607 27,607 10.- CONSTRUCTION 45,637 24,624 4,740 75,001 11.- TRADE AND REPAIRS 126,259 36,677 36,893 199,829 12.- HOTEL INDUSTRY 583,423 3,626 25,376 612,425 13.- TRANSPORT AND COMMUNICATIONS 30,531 36,951 18,141 85,623 14.- FINANCIAL AND MANAGING SERVICES 34,118 145,166 62,239 241,523 15.- EDUCATION, HEALTH AND SOCIAL SERVICES — 1,499 11,993 13,492 16.- OTHER SERVICES 3,729 5,217 13,840 22,786 TOTAL 823,767 332,991 192,824 1,349,582 Source: FOED In relation to employment, it is estimated that the Davis Cup Semi-final generated a total of 19 equivalent jobs (Figure 3), of which 14 were due to direct effects, 4 were due to indirect effects, while the remaining employment is attributed to the induced effects. Broadly speaking, we have a distribution of industries similar to the value added, with Hotel industry leading the job creation and contributing with a 52.6 per cent of the total, followed by Trade and repairs, with 26.3 per cent, and Construction accounting for 10,5 per cent (Table 8).

60 Rodríguez, P. & Baños, J. (2013). Journal of Sports Economics & Management, 3(1), 47-63.

Table 8. Total effect on the employment. Break down by Branch of Activity (units) DIRECT INDIRECT INDUCED TOTAL Branch of Activity EFFECTS EFFECTS EFFECTS EFFECTS 1.- AGRICULTURE AND FISHING — 1 — 1 2.- OIL INDUSTRIES — — — — 3.- FOOD, BEVERAGES AND — — — — TOBACCO 4.- CHEMICAL INDUSTRY — — — — 5.- OTHER NON-METALLIC — — — — MINERAL PRODUCTS 6.- METALLURGY AND METALLIC — — — — PRODUCTS 7.- METAL TRANSFORMATION — — — — INDUSTRY 8.- OTHER MANUFACTURER — — — — INDUSTRIES 9.- ELECTRIC ENERGY, GAS AND — — — — WATER 10.- CONSTRUCTION 1 1 — 2 11.- TRADE AND REPAIRS 3 1 1 5 12.- HOTEL INDUSTRY 10 — — 10 13.- TRANSPORT AND — — — — COMMUNICATIONS 14.- FINANCIAL AND MANAGING — 1 — 1 SERVICES 15.- EDUCATION, HEALTH AND — — — — SOCIAL SERVICES 16.- OTHER SERVICES — — — — TOTAL 14 4 1 19 Source: FOED

6. Conclusions When organizing a sporting event, funded with public money, the first thing to consider is the economic result of the organization. Of the costs incurred by the local government of Gijon there has been an outflow greater than the inflow of money. Due primarily to payments made to the Royal Spanish Tennis Federation, the city has suffered a net loss of 891,895 euro. On the other hand, the sum of the economic impacts due to the net increase of tourists and organizational costs incurred by the City Council have represented a contribution of 1,349,582 million euro to the region in terms of Gross Value Added. This represents a positive benefit of 457,687 euro. In relation to employment, it is estimated that the Davis Cup Semi-final generated a total of 19 equivalent jobs.

61 Rodríguez, P. & Baños, J. (2013). Journal of Sports Economics & Management, 3(1), 47-63.

To the authors, these results are relevant for the economic impact analysis, so having a profit of almost half a million euro in terms of gross value added. We can conclude that the organization of the Davis Cup Semi-final was a success for the city of Gijon.

7. References

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