Journal of Business and Economics, ISSN 2155-7950, USA November 2018, Volume 9, No. 11, pp. 947-957 DOI: 10.15341/jbe(2155-7950)/11.09.2018/004  Academic Star Publishing Company, 2018 http://www.academicstar.us

Winter-Sport-Tourism and the Economic Impact of Sport Organizations:

A Case Study for

Michael Steiner1, Wolfgang Alteneder2  (1. Institute of Economics, University of Graz, Austria; 2. Synthesis Forschung GmbH, Austria)

Abstract: There is a growing interest in role of institutions organizing and supporting sport activities. The focus of the paper is the relationship between the institution that organizes on a professional level competitive as well as leisure forms of winter sports, namely Ski Austria, and the economic effect and outcome of its efforts. For this purpose trends in Austrian winter sport and tourism are given and its economic dimensions both from a macro and micro perspective are calculated. From this basis the impact of the manifold activities of Ski Austria and its potential to create impulses for the inclination to exercise winter sports is evaluated. The effects are measured in analogy to advertising and marketing activities leading to quantitative dimensions in terms of value added, employment and income. In interpreting the economic effects the paper also emphasizes the public/private and catalytic character and the social context of all activities of Ski Austria. Key words: winter sport and tourism; role of sport organizations; analogy to advertising; public-private partnership JEL codes: L32, M37, Z20, Z33

1. In Search of the Impact of Sport Organizations

It is nowadays a trivial statement to point to the close relationship between sport and the economy — it takes many forms, involves huge amounts of money and many actors both on the active as well on the passive side. This importance does not only concentrate on top professional sport activities but extends also to many leisure sports. And it extends also to the institutional framework of sport and to the institutions running and supporting sport activities. It is already less trivial to look at specific forms of this relationship and its quantitative and qualitative dimensions. Sport activities and sport (mega) events generate economic effects — for the participants, for hosting countries, but also for the organizing institutions. An in the meantime vast and growing literature tries to get hold of these effects using different methodological approaches (for recent contributions see e.g., Baade & Matheson, 2016; Flyvbjerg et al., 2016; Kozak, 2015; Müller, 2014; Philips, 2012; Preuss, 2007). A specific aspect of these relations is the role of organizing institutions dominating not only the sportive but also economic game (such as FIFA, UEFA, IOC, see e.g., Zeyringer, 2018).

Michael Steiner, Dr., Professor, Institute of Economics, University of Graz; research areas/interests: economic policy, regional economics, economics of sports. E-mail: [email protected]. Wolfgang Alteneder, Mag., Synthesis Forschung GmbH; research areas/interests: applied economics, economic models. E-mail: Waatsynthesis.co.at.

947 Winter-Sport-Tourism and the Economic Impact of Sport Organizations: A Case Study for Austria

The specific focus of the paper is the relationship between the institution that organizes on a professional level competitive as well as leisure forms of winter sports, namely the Austrian Skiing Association (Österreichischer Skiverband/ÖSV — in the following Ski Austria) and the economic outcome and effects of its organizing efforts. Winter tourism is an important sector of the Austrian economy and nurtured by both native and foreign sportsmen and women. Yet winter sport activities are not automatically self-sustaining, they have to be supported and sustained in order to develop lasting effects. Without efficient institutions creating sufficient impulses and motivations for winter sport activities these effects may decline and vanish over the long run. The basic question therefore concentrates on the impact of Ski Austria with its wide range of activities on the Austrian economy. Or put differently: To what extend would the Austrian economy have to experience losses without the existence and the activities of Ski Austria leading to a decline in winter sport activities? The paper is organized as follows: In Section 2 the interest in winter sport and the quantitative development of winter tourism is described and its economic dimensions calculated. We concentrate on the period from 2002/3 to 2012/13 because of the changing economic situation including the economic and financial crisis of 2008/9 and the following resilience. From this demand of winter tourism and sport we calculate its economic dimension. In Section 3 Ski Austria will be presented. We will point to its organizing ability and to its challenge to function as communicator and motivator and indicate its potential to create impulses for the inclination to exercise winter sports. In Section 4 the quantitative dimensions of such impulses on these activities are derived. Here we take a special approach — we measure these effects in analogy to advertising and marketing activities. In a final chapter we will give an evaluation of these dimensions and we will emphasize the “catalytic” and public-private character of Skiing Austria.

2. Winter sport, winter tourism, and its economic effects

The interest in winter sports in Austria maybe analyzed at different levels. We take as a hard criterion for this interest to spend money on it, especially by staying and booking in winter resorts. As the broad literature on winter tourism shows there is a strong link between winter sport and winter tourism (albeit with changes in kind and intensity of winter sport practice and the need to diversify the offer of the winter sport sector — see Zellmann & Mayrhofer, 2015; Arbesser et al., 2010; Manova, 2010; Bourdeau, 2009; Macchiavelli, 2009). Although not every winter tourist practices sport the motives for booking in winter resorts overlap and are closely related to snow-bound activities. We take the period of a decade (2002/3 to 2012/13) with changing economic situations, overlapping business cycles including the economic crisis and the following upswing. This period shows a clear increase in demand. The number of overnight stays of domestic increased year by year. Their number rose over the 10 years by 17 percent and amounted in 2012/13 to 15.323.000. Since there is an ongoing trend to high value hotels (four and five stars) the financial expenditures rose even more strongly. Quantitatively even more important for the interest in winter sports in Austria is the demand of foreign guests. Their number of overnight bookings amounted to about 50, 3 million. The relation of foreign to domestic guests hence approaches approximately 3 to 1.

948 Winter-Sport-Tourism and the Economic Impact of Sport Organizations: A Case Study for Austria

Figure 1 Overnight-stays Development of Domestic Visitors in the Winter Season Number of Overnight-Says (Index: 2002/2003 = 100) Source: Austrian Statistical Office, Tourism Austria 2013

Figure 2 Total Overnight-Stays 2012/2013: 65,559,000 Source: Austrian Statistical Office, Tourismus Osterreich 2008, 2013

Half of the demand of foreign guests comes from Germany. This interest keeps its level — over the period it stayed constant. 11 percent of foreign guests come from the Netherlands with a small decline of about 1 percent. A stronger decline was experienced by guests from Great Britain — minus 3.3 percent with a share of 4 percent. A strong increase of 8 percent at the same level of share as Great Britain happened with guests from Switzerland and ; obviously the revaluation of the Swiss frank shows its influence. About a tenth of all foreign demand comes from “new” countries with interest in skiing: Czechia, Russia, Poland, , Rumania. With mixed developments: Russia with very strong, Czechia with strong increase, Poland and Rumania stagnate, Hungary declines.

949 Winter-Sport-Tourism and the Economic Impact of Sport Organizations: A Case Study for Austria

Figure 3 Total Amount Overnight-Stay of Foreign Guests 2012/2013: 50,326,900 Source: Austrian Statistical Office, Tourism Austria 2008, 2013

Over a longer period — two decades — the interest in winter sports shows a steady increase of 1.2 percent annual growth. This applies both for domestic and foreign demand. This growth is not uniform: There is an overlap of a long term trend with cycles: short term declines in the first half of the nineties and again during the crisis of 2008/9. Nevertheless, the trend and its increase is due to winter sport: city tourism amounts only to 12 percent of all bookings during the winter season.

Figure 4 Winter-Tourism Developments Increase with Some Throwbacks (Total Overnight-Stays) Source: Austrian Statistical Office, Tourism Austria 2013

The interest for winter sports of domestic and foreign children, adolescents, women and men leads to expenditures on a macroeconomic level for Austria of 14.7 billion Euro. 8.2 billion Euro are caused by the demand of foreign guests, 6.5 billion Euro by domestic guests. This can be split into different kind of demands: tourists with overnight stays and day-trip guests. The role of day-trip demand is not negligible — 27 percent of expenditures are due to this form of enjoying days of skiing. This of course relies on a certain vicinity to skiing resorts. Nevertheless, trips up to several hours are taken up in order to be able to experience the joy of skiing. Regarding foreign guests 83 percent of their expenditures are connected with

950 Winter-Sport-Tourism and the Economic Impact of Sport Organizations: A Case Study for Austria overnight stays whereas a smaller share — 60 percent — accounts for the ones of domestic guests. They understandably enjoy the advantage of greater vicinity.

Figure 5 Tourism Demand During Winter Season 2012/2013 Source: Austrian Statistical Office, 2013

Of the total of 14.7 billion consumed by winter tourists in Austria the biggest parts accrue to accommodation (4.7 billion — 32.1 percent) and gastronomy (4.3 billion — 29.2 percent), the rest to passenger transport (16.1 percent — half of it for lifts) and goods and further services (22.6 percent). To be able to get hold of the indirect effects of accommodation (and their gastronomy) and hence to their value chains and multiplier effects we look at a “standardized” 4 and 5 star hotel (assuming a growing trend towards these kinds of hotels). We try to “normalize” the effects of 100.000 overnight stays and the necessary expenditures to satisfy their demands, i.e., we count how many hotels are needed (given an average utilization of 48 percent each) and how their structure of value-added looks like. This corresponds to the capacities of two 5-star-hotels (each with 100 beds) and four 4-star-hotels (each again with 100 beds). Given a “standardized” 4/5-star hotel with a turnaround of 2.6 million Euro we get the following structure of value-added: cost of sales 15 percent, investment depreciation and maintenance 24 percent, wages 43 percent, operating income 18 percent. Given the 2.6 million Euro as the turnover of a 100-bed “standardized” hotel the 15 percent “cost of sales” amounts to 390.000 Euro turnover of local food businesses (baker, butcher, other food-stuff); the 24 percent of turnover of depreciation amounts to 624.000 Euro turnover of local construction businesses (besides construction itself also carpenter, painter, electricians). On average, this leads to nine additional full-time jobs which are created by a single “standardized” hotel. Starting with the expenditures of winter tourism we can — using our value chains generated by 100.000 overnight stays multiplied by the total number of overnight stays — follow the additional demand. It amounts to an indirect value added of 8.3 billion Euro and to an additional employment of 15.600 (on the basis of all year full employment). Counting all these expenditures originated by the touristic expenditures of 14.7 billion we get a direct and indirect value-added of 23 billion Euro.

951 Winter-Sport-Tourism and the Economic Impact of Sport Organizations: A Case Study for Austria

Figure 6 Overnight Stays and Value Added Source: Synthesis databank, authors’ calculation

3. Ski Austria, Its Status and Its Activities

Ski Austria is among the institutions in Austria — despite being of sportive nature — receiving high public attention and also appreciation. A good third part of the year the media report extensively about the sportsmen and -women of Ski Austria, its competition are broadcasted live, success and failures are emotionally discussed. Despite changing conditions Ski Austria was over years and decades able to sustain its existence and also its reputation in Austria’s society. Its successful athletes — both female and male — became idols, their image contributes to the image of Austria as a nation of skiers. Such a position is also a challenge for research and leads to questions of potential impulse effects of its activities. Especially from an economic point of view it is a challenging question to what extend the activities of Ski Austria — followed with a huge active and passive participation — lead to economic effects: what is its contribution to the Austrian economy. The question may also be raised from an opposite perspective: What were the losses for the economy without this institution? Ski Austria is a nonprofit association with public utility goals. The aim of the association is formulated as: “Main aim of the association is the support of skiing and snowboard for the public utility, for physical education and positive development in mass and competitive sports as well as an essential contribution for health”. To follow these aims Ski Austria has built a broad organization with a managing head organization, nine regional organizations, a visible circle of top professional sportsmen and — women, a mass oriented number of members and their coaching, a highly differentiated number of units and fields, a structure of sponsors and skipool members assembled over years and decades. To this adds a highly professional operation of competitions not only at the highest and most visible level of the world cup but also on lower professional ranks down to amateur races. On the basis of this organization Ski Austria works as motivator. This happens in the most visible way through the buildup and assistance of the Austrian ski team comprising besides the elite national team different cadres and junior groups not only for but also for , Nordic skiing, snow board, biathlon,

952 Winter-Sport-Tourism and the Economic Impact of Sport Organizations: A Case Study for Austria ski cross, free style - altogether about 800 competitors. This continues in the support and training of the many members by mostly honorary coaches. And it carries forward on an even broader motivational basis to the many skiers who would not or could not be as active on this broad basis without the material and immaterial infrastructure created by Ski Austria and its role model function. This requires a broadly designed communication. It relies on the publicity value of its top athletes, of world cup and ski jumping events with on-site-watching or TV-broadcasting, of print media reporting, of advertising and sponsor activities – for inland and foreign countries. With all these organizational structures and activities Ski Austria has become more than just a privately organized association and turned into an important player in Austria’s society but also Austria’s economy. Its impulses lead to economic effects resulting from the sum of its organizational, motivational and communicative activities. Only such a broadly structured association has the organizational power to administrate the many interfaces necessary to foster the motivation and to keep the attractiveness of skiing in the mind of Austrian and foreign winter guests alive. This leads to the fact that skiing is the national popular sport in Austria: more than half of the population between 14 and 70 is active in skiing (albeit in different intensity, Manova, 2010). To this adds a vast number of passive sport fans participating via TV and the new technological media in the events and raise the attentive potential for sportive and other kinds of advertising messages. It also raises the potential of foreign skiers who become aware — via manifold media channels — of the successes of the Austrian ski team and regard Austria as the country of ski sports, hence also a top address for their own skiing activities.

4. Impulses of Ski Austria and Its Quantitative Dimensions

The manifold activities of Ski Austria — starting with the visible forefront of professional winter sports in various fields, extending to numerous world cup and ski jumping events and to the buildup of an efficient organization with strong media presence — has strong qualitative and quantitative effects. Qualitative effects have several dimensions. Efforts oriented towards mass participation and inclusion of young people lead to an activation of physical exercise and in consequence to better health — frequent skiing raises physical and mental fitness, reduces the risk of diseases and may even work as an anti-aging-factor (Burtscher 2009/10). Winter sport events with a high number of passive followers on site and on media offer thrilling entertainment. Via providing support for winter tourism Ski Austria contributes to the preservation and sustainment of alpine regions. From an economic point of view and in terms of quantitative dimensions it is important to look at measurable impulses with effects on the Austrian economy. Given the portfolio of activities of Ski Austria with its strong public communication channels these economic effects can be measured in analogy to advertising and marketing with regard to the behavior of target groups. Such advertising is considerably more effective when it is able to activate an existing disposition for identification and participation; and it is also more effective if it does not have to focus on a simple “invitation to buy”. It is exactly this effect which occurs in the context of the comprehensive reporting of the main events and competitions of professional skiing. The extensive coverage of skiing events and the mass sports oriented Ski Austria activities intensifies the existing inclination for winter sport activities. Young people, men and women alike inclined to ski do not have to be convinced, they just have to be motivated to realize and to put into (more) practice their existing predisposition. This also applies for residents in foreign regions and

953 Winter-Sport-Tourism and the Economic Impact of Sport Organizations: A Case Study for Austria countries. They want to go skiing and just decide which skiing region seems to be most attractive. To a certain degree they often want to follow the winners. Recent research on advertising impact and evaluation addresses this central aspect of marketing and tries to quantify this effect. It points to the strong emotional dimension of sport advertising and media coverage. Emotions, tension, the “we-feeling” are aspects that make sports coverage in terms of advertising different to other forms of commercialization (Kim & Kim, 2009; Tsiotsu & Alexandris, 2009). For such kinds of “indirect” advertising additional sales and effects of 4 percent to 10 percent are attributed; long term effects are considered as even higher (Linke, 2016; Lewis & Reiley, 2011; Elbersee & Verleun, 2012; Bongard, 2002; SevenOne, 2002). These approximations and evaluations of the advertising impact can be taken as a basis for the effects of media coverage and advertising also of winter sport initiated by Ski Austria. Yet we assume different advertising effects for domestic and foreign winter sport tourists. They are higher for the latter because of the influence of the advertising effect on the destination decision (and in first line not on the decision to ski or not to ski) and in second line because of a higher potential to make this basic decision in favour of winter sport activities. In this line of argumentation based on analogies of advertising the activities of Ski Austria have a “gradual” effect. If its performance were not as effective as they are winter sport activities of Austrians would decline and its touristic demand would be reduced by 2 percent. Regarding the destination decision of foreigners and their basic decision to ski this would result in a reduction of 6 percent. This would lead to a loss for the Austrian tourism sector of 3.3 million overnight stays (given the number of 50.3 million foreign overnight visitors and 15.2 million domestic ones).

Impact of Ski Austria on Austrian winter tourism

Figure 7 Effects of Advertising Impact of Ski Austria on Austrian Winter Tourism

These considerations can now be extended beyond the effects of reduced overnight stays. An important part of winter sport activities consist of daily visits to winter sport resorts both from domestic and foreign visitors — it would therefore lead to an equivalent reduction in day-trip expenditures of foreign and domestic guests (as

954 Winter-Sport-Tourism and the Economic Impact of Sport Organizations: A Case Study for Austria derived from the Tourism Satellite Account for Austria 2013 where both overnight stays and the leisure consumption are taken into account). Taken the total sum of direct and indirect value added of almost 23 billion Euro we would get a reduction of total value added generated by winter sport of 880 million Euro. This would in consequence lead to a reduction in jobs. Calculated on the basis of the balance sheets of hotels and gastronomy and its value chains 15.600 full time all year jobs would be lost. Given the dominant seasonal and also part time character of these kinds of jobs even a much higher number of men and women would lose income. Given the wage structure in these sectors connected to winter tourism this would result in a reduction of gross annual income amounting to 317 million Euro.

Figure 8 Additional Employment and Income

5. Conclusions — A Socio-Economic Interpretation

Economic approaches to analyze the effects of competition, performance and productivity on welfare and material well-being are manifold. In the attempt to evaluate the effects of Ski Austria on the Austrian economy we used a case study approach and measured its quantitative dimensions in analogy to advertising and marketing. The attractiveness of Ski Austria for such a case study does not only lie in its importance as the biggest sports institution of Austria but also because it is active at the interface of a “public/private enterprise”. This is based on its organizational structure, its special way of financing, its popularity and its large target group addressed by its activities among the Austrian population: a target group who actively pursues the sport which represents the core of the activities of Ski Austria. On the basis of this “public/private”-profile Ski Austria works as a catalyzer who supports winter sport activities by creating and transmitting for interested young people, men and women alike an image of winter sports which reinforces the identification and raises the motivation for active practice. This is the “public” and social context of all the activities of Ski Austria. These activities do certainly have strong economic effects both on a micro and macro level. As with all enterprises at the interface of a “public/private” character a certain area of tension and conflict arises as soon as the distribution of costs and returns comes into play. Yet the distinctive feature of Ski Austria consist in its undisputed effectiveness with which it shapes and develops its organization. Ski Austria proves its

955 Winter-Sport-Tourism and the Economic Impact of Sport Organizations: A Case Study for Austria competitiveness compared with organizations of similar kind time and again and stands this test on the level of elite sports season after season. Of course the question arises if all the financial resources — public and private — which Ski Austria receives directly and indirectly are well invested from an economic point of view. Such a question can typically not be answered directly given its “public/private” and “catalytic” character. It rather requires the reverse question: what would happen if Ski Austria were not as effectively organized and capable of acting and competing; if it were in its different fields of activities not as effective in its role of “catalyzer”. In the framework of this paper we pursued this question with regard to tourism in the winter season. For this purpose we gave a short sketch of the trends in Austrian winter tourism. We approached the question both from a micro and macro perspective and looked at the output of relevant businesses mirrored in expenditures of the tourists and the consecutive inputs of other businesses. From this we deducted on the basis of their respective value chains the direct and indirect value added. It lies in the nature of “catalytic” organizations that their effective input only amounts to a modest share in respect to the dynamics of total wealth creation. In our case of Ski Austria it comes up to 880 million Euro (out of a total of 23 billion Euro of direct and indirect value added) which are generated by the demand in the course of a season of winter tourism. This corresponds to a “catalytic” proportion of about 1: 26. As a share this is modest. But if this catalystic value would not take effect due to a declining effectiveness of Ski Austria (in all its manifold activities but especially with its elite professionals) the respective value added of 880 million Euro would successively decline and vanish. Obviously Ski Austria is — due to its “public/private” and “catalytic” character — a worth-wile institution also from an economic point of view.

Acknowledgements

The research leading to this paper was partly supported by Ski Austria. Ski Austria did not take any influence on the results.

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