By Donald Matthew Moore Bachelor of Science Georgia Institute of Technology, 2005 Submitted in Partial Fulfillment of the Requir

THE ECONOMIC IMPACT OF SOUTH CAROLINA'S 2012 REPUBLICAN PRESIDENTIAL PRIMARY

Donald Matthew Moore

Bachelor of Science Georgia Institute of Technology, 2005

Submitted in Partial Fulfillment of the Requirements

For the Degree of Master of Arts in

Economics

Darla Moore School of Business

University of South Carolina

2014

Accepted by:

Douglas P. Woodward, Director of Thesis

Joseph C. Von Nessen, Reader

Lacy Ford, Vice Provost and Dean of Graduate Studies

ii ACKNOWLEDGEMENTS

Three generations of South Carolina political leaders have promoted South

Carolina’s “First in the South” presidential primary. With its early primary date, South

Carolina receives considerable national and international publicity and would otherwise likely be “flyover country” for most presidential candidates. Instead, South Carolinians in both political parties now have a significant impact on picking the American president.

Governor Jim Edwards (1975-1979) was a major force in giving the state

Republican Party enough credibility to host a primary. His friend and campaign manager, former South Carolina Republican Party Chairman Dan Ross (1976-1980), shepherded the earlier primary date through the state Republican Party’s executive committee in

September 1979. Over the three decades following, many political and media figures have made major contributions to South Carolina’s “First in the South” presidential primary status. I thank them for their guidance and interviews. I would also like to thank the talented researchers at the University of South Carolina for their valuable methodological guidance. Thank you also to the Federal Election Commission, the South

Carolina Republican Party, various South Carolina political operatives, local chambers of commerce, Democracy in Action’s Eric Appleman, and Smart Media Group’s Kyle

Roberts for providing valuable insights.

iii ABSTRACT

The 2011-2012 South Carolina Republican presidential primary cycle affected the state’s economy in multiple ways. Presidential campaigns, political parties, third party groups, and so-called Super PACs spent millions in television and radio advertisements.

These entities and news networks also purchased goods and services and hired staff.

Much of their spending originated from outside of South Carolina. Charleston,

Greenville, Myrtle Beach, and Spartanburg hosted four economically significant, nationally televised presidential debates attended by thousands. A large degree of presidential primary activity, including the debates and staffing, took place in these four cities plus the capital city of Columbia. The primary also brought valuable marketing opportunities to the state, colleges, universities, and other areas that hosted events. The key finding of this thesis is that the 2012 South Carolina presidential primary generated a total of $19.5 million in statewide, value-added economic activity and supported approximately 289 full-time equivalent (FTE), non-permanent jobs earning approximately $10 million in employee compensation. Every ten FTE, non-permanent jobs during the 2012 South Carolina Republican presidential primary supported approximately five FTE, non-permanent jobs in the South Carolina economy over the twelve-month primary period. Finally, the presidential primary generated nearly $30 million in statewide marketing value.

iv TABLE OF CONTENTS

ACKNOWLEDGEMENTS ...... iii

ABSTRACT ...... iv

LIST OF TABLES ...... vii

LIST OF ABBREVIATIONS ...... ix

CHAPTER 1: INTRODUCTION & BACKGROUND ...... 1

CHAPTER 2: REVIEW OF EXISTING RESEARCH ...... 4

CHAPTER 3: METHODOLOGY ...... 6

CHAPTER 4: IMPLAN INPUTS ...... 9

4.1 PUBLICLY REPORTED SPENDING BY CANDIDATES ...... 11

4.2 SPENDING ON TELEVISION AND RADIO ADS ...... 11

4.3 PRESIDENTIAL PRIMARY DEBATES ...... 12

4.4 OTHER EVENTS ...... 15

4.5 EMBEDDED REPORTERS ...... 16

CHAPTER 5: TOTAL ECONOMIC IMPACT ...... 17

5.1 STATEWIDE ESTIMATE ...... 17

5.2 REGIONAL REPORT - LOWCOUNTRY ...... 19

5.3 REGIONAL REPORT - MIDLANDS ...... 21

5.4 REGIONAL REPORT – PEE DEE ...... 21

5.5 REGIONAL REPORT – ROCK HILL ...... 22

5.6 REGIONAL REPORT – UPSTATE ...... 23

v CHAPTER 6: MARKETING VALUE ...... 24

CHAPTER 7: CONCLUSION ...... 28

REFERENCES ...... 29

APPENDIX A – INTERVIEWS ...... 31

vi LIST OF TABLES

Table 4.1 – Regional Definitions within South Carolina ...... 9

Table 4.2 – 2011-2012 Primary Spending in South Carolina by Candidate ...... 11

Table 4.3 – 2011-12 South Carolina Presidential Primary TV & Radio Buys ...... 12

Table 4.4 – Est. Spending on January 16, 2012 Myrtle Beach Debate ...... 13

Table 4.5 – Estimated Presidential Debate Spending ...... 15

Table 4.6 – Estimated Special Events Spending ...... 15

Table 5.1 – Statewide Economic Impact of the 2012 S.C. Republican Presidential Primary ...... 17

Table 5.2 – Top 10 Industry Sectors by Value Added ...... 20

Table 5.3 – Statewide Economic Impact of the 2012 S.C. Republican Presidential Primary in the Lowcountry ...... 21

Table 5.4 – Statewide Economic Impact of the 2012 S.C. Republican Presidential Primary in the Midlands ...... 21

Table 5.5 – Statewide Economic Impact of the 2012 S.C. Republican Presidential Primary in the Pee Dee ...... 22

Table 5.6 – Statewide Economic Impact of the 2012 S.C. Republican Presidential Primary in Rock Hill ...... 22

Table 5.7 – Statewide Economic Impact of the 2012 S.C. Republican Presidential Primary in the Upstate ...... 23

Table 6.1 – Estimated Marketing Value of the January 16, 2012 Myrtle Beach Presidential Debate ...... 25

Table 6.2 – Applicants to Wofford College by Year ...... 26

Table 6.3 – Nielsen Ratings of South Carolina Primary Debates ...... 26

vii Table 6.4 – Estimated Marketing Value of South Carolina Primary Debates ...... 27

viii LIST OF ABBREVIATIONS

FTE ...... Full-time Equivalent

FEC ...... Federal Election Commission

IMPLAN ...... IMpact analysis for PLANning

MBACC ...... Myrtle Beach Area Chamber of Commerce

PAC ...... Political Action Committee

RNC ...... Republican National Committee

SCGOP ...... South Carolina Republican Party

CHAPTER 1

INTRODUCTION & BACKGROUND

This thesis aims to assess the statewide economic impact of the 2011-2012 South

Carolina Republican presidential primary cycle. Original research, interviews, and generally accepted best practices were used to make conservative estimates. The economic impact stems primarily from the lead up to the January 21, 2012 primary election. America’s two major political parties use such statewide primaries to whittle down their presidential contenders and eventually arrive at the parties’ nominees for the general election. The Democratic Party held no South Carolina primary in 2012 given

President Barack Obama’s incumbent status.

South Carolina’s “First in the South” presidential primary has played an important role in choosing the Republican Party’s United States presidential nominee since 1980, when former California Governor Ronald Reagan, led by young South Carolina political operative and future RNC Chairman Lee Atwater, defeated former Texas Governor John

Connelly [1]. Until 2012, the primary had always chosen the party’s eventual nominee, earning the state some notoriety as a “firewall” that effectively ended underfunded and underprepared campaigns [2].

The primary traditionally has a substantial economic impact in South Carolina.

Considerable dollars from outside the state flow in and are spent on advertisements, events, travel, mail, consultants, and staff. Much of this spending is publicly reported under federal and state laws. This thesis also makes estimates based on interviews and

documents provided by the interviewees. However, some interviewees were not allowed to speak publicly “on the record” and instead provided information on a “not for attribution” basis.

The 2011-2012 South Carolina primary was considerably different than previous primaries. Following the U.S. Supreme Court’s landmark 2010 Citizens United v.

Federal Election Commission [3] decision that struck down existing campaign finance laws, so-called “Super PACs” flooded South Carolina with television advertisements leading up to the January 21, 2012 primary [4]. These advertisements, often sharply negative, supplemented the traditional ads placed by candidates and their campaigns.

According to television and radio advertisement purchase receipts provided by

Smart Media Group, presidential campaigns, political parties, third party groups, and

Super PACs spent over $11 million dollars in advertisements in South Carolina over the course of the primary season. These entities, plus news networks, also purchased goods and services and hired staff. National television networks spent an estimated $1.6 million to set up and produce four nationally televised debates. Two of the debates were accompanied by economically significant conferences and social events. Much of this spending, particularly on television advertisements, originated from national campaigns and thus represented an injection of outside expenditure in the state’s economy rather than a redistribution of existing, in-state spending.

This thesis evaluates the total economic impact of the primary cycle. The total economic impact of the presidential campaigns, political parties, third party groups,

Super PACs, tourists, and television networks on the state economy was greater than the total of their direct spending on advertisements, payroll, goods, and services. Dollars

spent by those entities were spent again by their employees and suppliers. Further employees then used their wages to purchase goods and services from other local businesses. Those local businesses then made purchases and hired employees who spent their wages throughout the local and state economies. This spending spurs a chain reaction of further indirect and induced spending, with continuing rounds of additional in-state spending gradually decreased through savings, taxes, and expenditures made outside of South Carolina. This economic cycle is estimated through an “input-output” economic model, which uses a series of multipliers to estimate how many times each dollar of direct spending cycles through the economy. Such cycles are measured by indirect and induced output, value added to the state economy, employee income, and employment.

Beyond employing an input-output model to calculate the total impact of South

Carolina’s 2012 Republican presidential primary, this thesis also estimates the free

“earned” marketing value garnered by regions, cities, colleges and the state at large. Free marketing values are an important consideration, given their equivalence to the expenditures that would be necessary to generate the same amount of paid advertising in print and broadcast media. Free marketing undoubtedly enhanced South Carolina’s visibility and brand awareness.

3 CHAPTER 2

REVIEW OF EXISTING RESEARCH

No existing literature addresses the full economic impact of South Carolina’s presidential primaries. However, Coastal Carolina University’s Dr. Rob Salvino, in partnership with the Myrtle Beach Area Chamber of Commerce, recently completed a regional economic impact study of the January 16, 2012 Fox News presidential debate held in Myrtle Beach [5]. The study found approximately $2.9 million in direct expenditures and $11 million in marketing value. Both estimates are used in this thesis.

Additional studies have assessed the impact of general election debates, which are much larger than primary debates in terms of national audience size. This is an important consideration when calculating free marketing value. For example, Lynn University in

Boca Raton, Florida hosted the final 2012 presidential election debate between President

Barack Obama and Governor Mitt Romney. According to an economic impact study commissioned by the university [6], the debate produced a $13.1 million economic impact in the surrounding area. The study took facility and operational spending, delegate and media spending, and ancillary event spending into consideration. The debate also provided over $63 million in marketing value given “Boca Raton was probably mentioned nearly as much as Lynn University in the story datelines” [6]. The Lynn

University economic impact study also focused on Nielsen ratings, which measure television audience composition and size.

4 In 2008, the University of Mississippi hosted the first general election debate between Senator John McCain and then-Senator Barack Obama. According to a study by

The Cirlot Agency, the debate earned $34.5 million in free publicity for Ole Miss. The

Cirlot Agency used the media monitoring service Cision to “determine publicity values of broadcast, print and Internet to determine the figure” [7]. Their analysis focused on broadcast, print, and Internet audience size and key phrases in stories including “Debate at Ole Miss,” “Debate at the University of Mississippi,” and “Debate at Oxford,

Mississippi.”

CHAPTER 3

METHODOLOGY

With an IMPLAN input-output model, it is possible to examine inter-industry relationships in the local, state, regional, and national economies and provide estimates of indirect and induced output, value added to the state economy, employee income, and employment. IMPLAN is an acronym for the IMpact analysis for PLANning economic software that is commonly used for this type of analysis.1

The economic data for IMPLAN come from the system of national accounts for the United States. Sources include data collected by the United States Department of

Commerce, the United States Bureau of Labor Statistics, and other federal and state government agencies. Data are collected for over 500 different industry sectors of the

United States economy corresponding to North American Industry Classification System

Standard (NAICS) codes.2

IMPLAN calculates multipliers to estimate the effects of a change in economic activity within a specific region. These multipliers differ by industry and are influenced by the size of the local supplier network and spending patterns. Estimates can be made on the percentage of the workforce, total income of the workforce, and total value added

1 “About Us,” IMPLAN Group LLC, accessed November 29, 2014, http://www.IMPLAN.com. 2 “Who We Are,” NAICS Association LLC, accessed November 29, 2014, http://www.NAICS.com.

within a specified region that are attributable to a certain industry or event. Multipliers estimate three kinds of impact:

• Direct effects result from expenditures directly related to the industry or event.

• Indirect effects result from supplying industries responding to increased demand from the directly affected industries.

• Induced effects result from local spending that is increased due to income changes in the directly and indirectly affected industries.

Two different types of multipliers measure the secondary effects of spending within a region. Type I multipliers measure the rate at which a direct effect creates an indirect effect in output, value added, employment, and income within backward-linked industries:

Type I multiplier = (direct effects + indirect effects) / direct effects

Type II multipliers, which are used in this thesis, capture both indirect and induced effects:

Type II multiplier = (direct effects + indirect effects + induced effects) / direct effects

In general, multipliers allow for estimates to be made on how spending flows through a region’s economy. They also capture the likelihood of consumers and businesses to import goods and services from outside of the region. Imports are a leakage to the local economy as income is spent outside of the region rather than re-circulated to local businesses. Multipliers are typically highest in regions with large, diversified economies where businesses and households can stay within the region for goods and services.

Consider a hypothetical South Carolina industry with a Type II spending multiplier of 2.15. A spending multiplier of 2.15 indicates that one dollar of direct spending generates an additional $1.15 in indirect and induced spending. A Type II spending multiplier of 2.15 can also be interpreted as indicating that one dollar of direct spending generates total spending of $2.15 (through indirect and induced effects).

CHAPTER 4

IMPLAN INPUTS

The IMPLAN model uses inputs including publicly disclosed spending records, non-public spending records provided upon request, and best estimates of spending based on interviews and other sources, including but not limited to documents provided by local chambers of commerce and visitor bureaus. Each known and estimated spending activity

(using its ZIP code and county) was matched to one of the five South Carolina regions seen in Table 4.1. It is important to note that each spending activity’s impact is on the entire state and not just its corresponding region. The spending activities were then matched to an appropriate NAISC code and cross-walked to the proper IMPLAN sector code for input and analysis.

Table 4.1 – Regional Definitions within South Carolina

Region Included Counties Beaufort, Berkeley, Charleston, Colleton, Dorchester, Lowcountry Hampton, Jasper Aiken, Allendale, Bamberg, Barnwell, Calhoun, Clarendon, Midlands Edgefield, Fairfield, Kershaw, Lee, Lexington, Newberry, Orangeburg, Richland, Saluda, Sumter Marlboro, Chesterfield, Darlington, Dillon, Florence, Pee Dee Georgetown, Horry, Marion, Williamsburg Rock Hill Chester, Lancaster, York Abbeville, Anderson, Cherokee, Greenville, Greenwood, Upstate Laurens, McCormick, Oconee, Pickens, Spartanburg, Union

Reasonable efforts were made to ensure that the data used in this thesis are accurate and dependable. One must assume that estimates provided by interviewees are

legitimate, since the estimates are based on real-world experience including expense reports, invoices, and contracts. Estimates made by the author are kept to a minimum and based on best practices in estimating economic activity, including year-to-year comparisons and market research.

Some assumptions were made in compiling the data. First, one must assume that all spending by presidential campaigns was publicly reported in compliance with federal law and that no other presidential campaign expenditures exist. Second, only South

Carolina spending from March 2011 until the end of the February 2012 was considered.

A small number of expenditures from January and February 2011, totaling less than

$20,000, were ignored so that the data set better utilized IMPLAN’s annual data set.

Despite South Carolina’s primary occurring on January 21, 2012, credit card statements are typically due a month later – hence the February 29, 2012 deadline for expenditures.

Third, only South Carolina-based spending was considered. Campaigns and Super PACs did buy television ads in the Charlotte and Savannah media markets that were intended to reach South Carolina viewers. Those advertising dollars were ignored. Dollars spent on taxes, permits, and licenses were also ignored, as they were not a net gain for the economy.

Assumptions were also made in calculating expenditures related to the four major presidential debates held in South Carolina. Local chambers of commerce, visitor bureaus, and universities were immensely helpful in this regard. Their research and documentation, when authorized for publication, are specifically referenced. All interviews are listed in Appendix A. Finally, marketing value is estimated through standard techniques including analysis of television viewers and media mentions.

4.1 PUBLICLY REPORTED SPENDING BY CANDIDATES

This thesis utilizes campaign spending reports made public at the Federal Election

Commission website. Presidential candidates are required by federal law to file reports by various deadlines. Over 1,500 detailed spending records (including description, ZIP code, etc.), totaling over $2.8 million, come from the Federal Election Commission’s database of 2012 presidential campaign spending,3 as seen in Table 4.2.

Table 4.2 – 2011-2012 Primary Spending in South Carolina by Candidate

Total Candidate Spending Bachmann, Michele $192,382.95 Cain, Herman $61,809.89 Gingrich, Newt $258,890.20 Huntsman, Jon $477,548.25 Liberty PAC (Paul) $25,000.00 Paul, Ron $199,039.21 Pawlenty, Tim $25,256.30 Perry, Rick $865,367.54 Romney, Mitt $351,515.00 Santorum, Rick $370,614.64 Total $2,827,423.98

Spending descriptions from the FEC database make it easy to match expenditures to NAISC codes and therefore input each into IMPLAN. However, travel reimbursements paid to staffers are frequently non-descriptive. Therefore, those expenditures were equally divided into IMPLAN between food, gas, and hotels.

4.2 SPENDING ON TELEVISION AND RADIO ADS

The Smart Media Group, a for-profit firm in the Washington, D.C. area, provided

South Carolina television and radio advertisement purchase receipts totaling over $11

3 “2012 Presidential Campaign Finance,” Federal Election Commission, accessed November 29, 2014, http://www.fec.gov/disclosurep/pnational.do.

million, as seen in Table 4.3. Political ad purchases are public under Federal

Communications Commission rules. Ads purchased in the Augusta (GA), Charlotte (NC), and Savannah (GA) media markets were ignored since those dollars did not directly enter the South Carolina economy.

Table 4.3 – 2011-12 South Carolina Presidential Primary TV & Radio Buys

Region Amount Lowcountry $2,373,682 Midlands $2,815,167 Pee Dee $3,875,590 Rock Hill none Upstate $2,180,912 Statewide Total $11,245,351

4.3 PRESIDENTIAL PRIMARY DEBATES

An estimated $6.17 million was spent on presidential primary debates in South

Carolina over the 2011-2012 primary cycle. Four nationally televised, economically significant debates were held in Charleston, Greenville, Myrtle Beach, and Spartanburg.

Of the $6.17 million estimated total, FEC and South Carolina Ethics Commission databases provided $528,000 in relevant spending by the South Carolina Republican

Party, since the state party organized three of the four major debates. Most those dollars were spent on catering, auditorium setup and audio/video services.

Another approximately $5.6 million in non-publicly reported expenses were estimated through interviews with political operatives, reporters, television networks, and independent expenditure groups. With approval, sources are listed by name or organization in Appendix A.

According to interviewees and public information, the debates in Charleston and

Myrtle Beach were much more economically significant than the debates held in

Greenville and Spartanburg. The Myrtle Beach Fox News debate was preceded by a three-day Republican conference that included dinners; concerts; issue advocacy events sponsored by the Energy Forum, AARP and Faith & Freedom Coalition; a Seventh

Congressional District debate and a sand sculpture. According to research provided by the Myrtle Beach Area Chamber of Commerce and Coastal Carolina University, 4,300 hotel nights were booked at an average of $109 per night. At 1.5 guests per room, those guests were estimated to spend $200 per day beyond their room cost for a total of approximately $734,000 in guest spending. A $200 per day estimate is higher than other cities due to the diversity of entertainment options in Myrtle Beach including putt-putt golf, go-carts, and a Ferris wheel. In order to use this estimated expenditure in IMPLAN, the total spending was divided evenly into the sectors for food, gasoline, general merchandise, and amusement parks. Hotel spending estimates were entered separately.

The Myrtle Beach debate estimates can be seen in Table 4.4.

Table 4.4 – Estimated Spending on January 16, 2012 Myrtle Beach Presidential Debate

Description Amount Non-debate Activities $823,000 Room Revenue $504,790 Food & Beverage Revenue $298,000 Visitor Spending $734,000 Debate Site Preparation $520,000 Total $2,879,790

The Charleston CNN presidential debate was accompanied by the Southern

Republican Leadership Conference, which included guest speakers at the College of

Charleston and evening receptions. According to The Charleston Post and Courier, the

“Republican presidential primary on Jan. 21 in South Carolina boosted occupancy in

Charleston County hotels by 7.8 in January, with 18,000 more room nights sold compared to the same month” in 2011. In the same article, the Post and Courier also noted, “the average daily rate for hotels in the county increased 5.3 percent to $103.54”

[8]. However, one conference organizer estimated that guests, campaigns, and debate organizers prior to January 21 used approximately 10,000 room nights for a total of

$1,035,400 in hotel spending. At 1.5 guests per room, those guests were estimated to spend $50 per day beyond their room cost for an additional $750,000 in guest spending.

In order to use the estimated guest spending in IMPLAN, the total was divided evenly into the sectors for food, gasoline, and general merchandise. Hotel spending estimates were entered separately.

Estimated guest spending at the Greenville Fox News and Spartanburg CBS debates was $50 per debate with an estimated 500 hotel nights (1.5 guests per room) booked for each debate. The Greenville Convention and Visitors Bureau provided hotel- spending data that is used in the model, but it cannot be reported in its raw form. In order to use the estimated guest spending in IMPLAN, the total was divided evenly into the sectors for food, gasoline, and general merchandise. Hotel spending estimates were entered separately.

Finally, presidential debates are extremely expensive to set up and produce. It is estimated, based on background discussions with officials at Fox News, CNN and CBS, that each debate cost approximately $400,000 to stage. These dollars are spent locally on curtains, chairs, food, drinks, cleaning crews, carpenters, lights, and sound. Estimated spending on each debate can be seen in Table 4.5.

Table 4.5 – Estimated Presidential Debate Spending

Debate Lowcountry Pee Dee Upstate Total Charleston CNN $2,291,400 $2,291,400.00

Greenville Fox News $484,012.53 $484,012.53

Myrtle Beach Fox News $2,900,000 $2,900,00

Wofford College CBS $491,102.05 $491,102.05

Total $2,291,400 $2,900,000 $975,114.58 $6,166,514.58

4.4 OTHER EVENTS

A number of other groups made presidential primary-related expenditures in

South Carolina over the 2011-2012 primary campaign. Among them were groups advocating domestic energy production, the state chamber of commerce, and then-

Congressman Tim Scott, who interviewed presidential candidates in front of live audiences [9]. The South Carolina Republican Party also held multiple fundraising events with candidates. The most economically significant event was a candidate forum hosted by then-Senator Jim DeMint in Columbia. According to the event’s organizers, the forum cost approximately $181,000 to produce and televise on South Carolina Educational

Television (SC-ETV). These events are summarized in Table 4.6.

Table 4.6 – Estimated Special Events Spending

Lowcountry Midlands Pee Dee Upstate Total Special Events $10,000 $331,854.14 $1,064.38 $10,544.58 $353,463.10

Candidates frequently stop at restaurants where large numbers of potential voters are congregated. These events are not considered economically significant because the campaigns rarely spend money and presumably the voters would have still spent money on meals elsewhere. If there is any net economic impact of such events, it is negligible.

4.5 EMBEDDED REPORTERS

National television and news outlets typically assign young, ambitious reporters to cover the presidential primary as so-called “embed” reporters. Some of these embed reporters focus solely on one campaign and follow it around the country. Other reporters are stationed exclusively in one state and exhaustively cover its politics.

Zeke Miller, who covered the 2011-2012 South Carolina presidential primary for

Buzzfeed, provided some insights on how reporters typically spend money while working in the field. Miller wrote in an email, “You might spend a total of three weeks in South

Carolina (averaged between those based there and those just following candidates) at approximately $300 per day. That is $150 on the hotel, $50 on food and drinks, $25 on gas, and $75 on a rental car.” Based on Miller’s comment and off the record interviews with other reporters, it is conservatively estimated that at least five embedded reporters from major news outlets spent over $30,000 across the state.

CHAPTER 5

TOTAL ECONOMIC IMPACT

5.1 STATEWIDE ESTIMATE

The IMPLAN input-output model estimates economic impact with four measures: economic output, employment, employee compensation and value added. Economic output is the dollar value of all final goods and services that can be linked, directly or indirectly, to the 2012 Republican presidential primary. It is also a complete measure of the total, initial direct spending related to the presidential primary since it includes spending by consumers and businesses. Employment measures the number of full-time equivalent positions linked to the level of economic output. Employee compensation measures the salary, wages, and benefits connected to that employment. Value added measures the net contribution of the presidential primary to the gross state product. Table

5.1 highlights these statewide estimates.

Table 5.1 – Statewide Economic Impact of the 2012 S.C. Republican Presidential Primary

Total Employee Economic Output Employment Value Added Compensation Direct $20,596,880.42 189.3 $6,407,732.49 $13,143,027.54 Effect Indirect $5,018,864.57 47.4 $1,756,067.91 $2,882,014.25 Effect Induced $5,562,179.51 52.0 $1,871,050.89 $3,427,236.46 Effect Total $31,177,924.50 288.7 $10,034,851.28 $19,452,278.25 Effect

The approximately 189 employees who directly worked in the presidential primary and related industries generated approximately $20.6 million in annual economic output. This direct economic activity led to indirect effects totaling approximately $5 million in economic output and approximately 47 jobs. These estimates reflect the increased demand created by the presidential primary for in-state goods and services provided by in-state suppliers. The direct economic activity also led to induced effects totaling approximately $5.6 million and 52 jobs. This represents the economic activity in

South Carolina generated across all industries resulting from increased household spending. The sum of the direct, indirect, and induced effects is a total economic impact of approximately $31.2 million, which is associated with approximately 289 jobs across

South Carolina. The Type II employment multiplier is approximately 1.5. This implies that for every ten jobs supported by the presidential primary, another five jobs were created in the state.

Table 5.1 also reflects estimated indirect and induced impacts for total employee compensation. The approximately 189 employees working directly in the primary are associated with $6.4 million in total employee compensation, while the approximately 99 jobs created through indirect and induced effects led to an additional $3.6 million in total employee compensation. These figures imply that the average job supported, either directly or indirectly, by the presidential primary paid an annual total employee compensation of $34,759. According to the U.S. Bureau of Labor and Statistics, this is approximately 10% lower than the $38,700 annual mean wage for South Carolina in 2012

[10]. The average annual total employee compensation for jobs directly supported by the primary was $33,849.

The direct impact of the 2012 presidential primary on value added (i.e. gross state product) was $13.1 million, while the indirect and induced impacts total another $6.3 million. Therefore the presidential primary added approximately $19.5 million in gross state product. For comparison, South Carolina’s gross state product in 2012 was $176 billion [11].

The presidential primary heavily affected certain industries in terms of output and employment. As seen in Table 5.2, “Advertising and related services” added approximately $9.7 million to the gross state product. Almost 124 “Advertising and related services” jobs were directly supported by the presidential primary - over half of the approximately 189 jobs directly supported statewide. “Independent artists, writers, and performers” trails far behind in both employment and value added. Given candidate visits to South Carolina, it is not surprising that spending on “Hotels and motels” was also substantial.

5.2 REGIONAL REPORT - LOWCOUNTRY

As seen in Table 5.3, South Carolina’s Lowcountry region generated approximately $8 million in economic activity in South Carolina over the course of the

2011-2012 presidential primary. The Lowcountry supported approximately 73 jobs in

South Carolina earning approximately $2.5 million in employee compensation. The value added in the Lowcountry region to gross state product was approximately $5 million.

Table 5.2 – Top 10 Industry Sectors by Employment

IMPLAN Total Employee Description Employment Value Added Economic Output Sector Compensation Advertising and related 377 123.7 $4,665,841.71 $9,679,687.04 $14,526,246.13 services Independent artists, writers, 405 18.5 $379,019.69 $1,200,882.58 $1,885,580.06 and performers Hotels and motels, 411 16.2 $468,223.48 $1,015,492.02 $1,875,027.69 including casino hotels Food services and drinking 413 16.1 $346,806.00 $493,731.24 $916,403.97 places Civic, social, professional, 425 9.5 $345,971.09 $281,848.52 $459,194.74 and similar organizations

20 360 Real estate establishments 8.6 $112,282.44 $759,968.74 $1,024,594.86 Promoters of performing 404 arts and sports and agents 6.3 $69,288.70 $130,785.90 $347,708.56 for public figures 382 Employment services 6.1 $184,752.94 $205,516.47 $247,201.30 Private household 426 5.1 $7,768.54 $7,768.54 $7,813.25 operations Motion picture and video 346 4.9 $89,214.84 $171,588.41 $574,042.46 industries

Table 5.3 – Statewide Economic Impact of the 2012 S.C. Republican Presidential Primary in the Lowcountry

Total Economic Employment Employee Value Added Output Compensation Direct $5,253,051.47 47.5 $1,589,722.60 $3,343,042.18 Effect Indirect $1,331,685.46 12.6 $471,063.55 $762,746.76 Effect Induced $1,404,232.61 13.1 $472,361.30 $865,247.15 Effect Total Effect $7,988,969.53 73.3 $2,533,147.45 $4,971,036.08

5.3 REGIONAL REPORT - MIDLANDS

As seen in Table 5.4, South Carolina’s Midlands region generated a total of $8.1 million in economic activity in South Carolina over the course of the 2011-2012 presidential primary. The Midlands supported approximately 77 jobs earning approximately $2.8 million in employee compensation. The value added in the Midlands region to gross state product was approximately $5.2 million.

Table 5.4 – Statewide Economic Impact of the 2012 S.C. Republican Presidential Primary in the Midlands

Total Economic Employment Employee Value Added Output Compensation Direct $5,388,250.43 51.4 $1,881,652.96 $3,536,827.62 Effect Indirect $1,193,285.76 10.6 $415,674.42 $695,816.23 Effect Induced $1,565,301.67 14.6 $526,542.39 $964,493.10 Effect Total Effect $8,146,837.86 76.7 $2,823,869.77 $5,197,136.95

5.4 REGIONAL REPORT – PEE DEE

As seen in Table 5.5, South Carolina’s Pee Dee region generated a total of $6.9 million in economic activity in South Carolina over the course of the 2011-2012

presidential primary. The Pee Dee supported approximately 66 jobs earning approximately $2.1 million in employee compensation. The value added in the Pee Dee region to gross state product was approximately $4.1 million.

Table 5.5 – Statewide Economic Impact of the 2012 S.C. Republican Presidential Primary in the Pee Dee

Total Economic Employment Employee Value Added Output Compensation Di rect $4,513,491.08 43.0 $1,275,133.41 $2,731,130.94 Effect Indirect $1,221,606.70 11.8 $427,535.36 $694,509.69 Effect Induced $1,160,191.50 10.8 $390,268.83 $714,876.78 Effect Total Effect $6,895,289.27 65.7 $2,092,937.60 $4,140,517.40

5.5 REGIONAL REPORT – ROCK HILL

As seen in Table 5.6, South Carolina’s Rock Hill region generated a total of

$142,000 in economic activity in South Carolina over the course of the 2011-2012 presidential primary. Rock Hill supported approximately one job earning approximately

$46,000 in employee compensation. The value added in the Rock Hill region to gross state product was approximately $90,000.

Table 5.6 – Statewide Economic Impact of the 2012 S.C. Republican Presidential Primary in Rock Hill

Total Economic Value Employment Employee Output Added Compensation Direct Effect $94,963.61 0.9 $30,261.20 $61,641.90 Indirect Effect $21,110.42 0.2 $7,427.56 $12,382.92 Induced Effect $25,677.74 0.2 $8,637.69 $15,821.80 Total Effect $141,751.77 1.3 $46,326.44 $89,846.62

5.6 REGIONAL REPORT – UPSTATE

As seen in Table 5.7, South Carolina’s Upstate region generated a total of $8 million in economic activity in South Carolina over the course of the 2011-2012 presidential primary. The Upstate supported approximately 72 jobs earning approximately $2.5 million in total employee compensation. The value added in the

Upstate region to gross state product was approximately $5.1 million.

Table 5.7 – Statewide Economic Impact of the 2012 S.C. Republican Presidential Primary in the Upstate

Total Economic Employment Employee Value Added Output Compensation Direct Effect $5,347,123.83 46.5 $1,630,962.31 $3,470,384.91 Indirect $1,251,176.24 12.1 $434,367.03 $716,558.66 Effect Induced $1,406,775.98 13.1 $473,240.68 $866,797.63 Effect Total Effect $8,005,076.06 71.8 $2,538,570.02 $5,053,741.20

CHAPTER 6

MARKETING VALUE

Marketing value is an estimate of the third-party publicity generated by an event and is equivalent to the spending that would have been required to place the same amount of paid advertising. Traditionally, measuring marketing value has focused on print

(newspaper) and broadcast impressions. Such impressions occur when an event or its location is mentioned in a byline or a story. One real world example is former SCGOP

Chairman Chad Connelly saying, on live local television, “We will soon welcome candidates and guests to the world’s most beautiful beaches in Myrtle Beach, South

Carolina.” According to the online media tracking software TVEyes,4 the short mention was valued at over $10,000. In another unique example at the 2012 Myrtle Beach presidential debate, the Myrtle Beach Area Chamber of Commerce (MBACC) built a large sand sculpture featuring the faces of the presidential candidates. According to research conducted by MBACC and Coastal Carolina University [5], the sand sculpture earned 424 print and broadcast impressions worth almost one million dollars.

According to further research conducted by MBACC and Coastal Carolina

University [5], the January 16, 2012 Fox News presidential debate in Myrtle Beach generated considerable marketing value beyond the sand sculpture. As seen in Table 6.1,

4 “TVEyes: Global Media Monitoring Services Company,” TVEyes Inc., accessed November 29, 2014, http://www.tveyes.com/?page_id=90.

these dollar amounts represent the equivalent amount of spending necessary to make the same number of impressions.

Table 6.1 – Estimated Marketing Value of the January 16, 2012 Myrtle Beach Presidential Debate

Marketing Source Stories Impressions Value Print 131 87,251,613 $1,500,000 Broadcast 2,149 162,046,625 $10,000,000 Total 2,280 249,298,238 $11,500,000

Wofford College also earned significant marketing value for the November 12,

2011 CBS presidential debate held on its campus. It was the first broadcast network primary debate ever held in prime time (between 8:00 PM and 11:00 PM in the Eastern

U.S. time zone) [12]. The online Newsbank5 database returns 207 print stories referencing “Wofford College” and “debate” in 2011 and 2012. Further, Wofford

College’s logo appeared on-screen, behind the candidates for at least fifteen minutes of the one-hour debate. According to the Nielsen and SQAD rating services [13], an average thirty-second advertisement in primetime costs $110,000. It is estimated that Wofford

College earned an extra $3.3 million in free advertising due to its logo appearing on screen.

David Cordeau, then-president of the Spartanburg Chamber of Commerce, told the Spartanburg Herald-Journal [14], “The real impact comes from the visibility that

Spartanburg gets tied to the reputation that goes with hosting a debate…People around the country see the words ‘Spartanburg, South Carolina,’ hear the reporters ‘saying coming to you from Wofford College in Spartanburg, South Carolina.’ It gets the word

5 “About Newsbank,” Newbank, Inc., accessed November 29, 2014, http://www.newsbank.com/about-newsbank.

out in a very positive way, and you can't really put a price tag on that.” Then-Union

(S.C.) High School student and Wofford College applicant Dean Diamonduros told the

Herald-Journal [14], “It makes me want to go there now…It makes it more of a bigger, nationally recognized school.” According to the Wofford College admissions website,6 the college did receive a boost in Fall 2012 applicants following the November 2011 debate. This boost in applicants is seen in Table 6.2.

Table 6.2 – Applicants to Wofford College by Year

Year Applicants 2014 2,556 2013 2,718 2012 3,197 2011 2,354 2010 2,595 2009 2,442 2008 2,278

According to the Nielsen ratings seen in Table 6.3, almost 5.5 million people watched both the Wofford College and Myrtle Beach presidential debates.

Approximately 5 million people watched the Charleston CNN debate on January 19,

2012 and approximately 3.3 million people watched the Greenville Fox News debate on

May 5, 2011.

Table 6.3 – Nielsen Ratings of South Carolina Primary Debates

Date Location Network Total Viewers Age 25-54 Jan. 19, 2012 Charleston CNN 5,022,000 1,717,000 Jan. 16, 2012 Myrtle Beach Fox News 5,475,000 1,517,000 Nov. 12, 2011 Spartanburg CBS 5,480,000 1,520,000 May 5, 2011 Greenville Fox News 3,258,000 854,000

6 “Wofford College Admission,” Wofford College, accessed November 29, 2014, http://www.wofford.edu/admission.

Given their fleeting nature, limited print and broadcast metrics currently exist for debates other than Myrtle Beach, which earned a total of $11.5 million in free marketing according to MBACC and Coastal Carolina University [5]. However, given the solid number of print references and likely number of broadcast references for the remaining three debates, a very conservative estimate is that each debate generated at least $5 million in free marketing for South Carolina and its cities. Wofford earned an extra $3.3 million given its logo appearing on screen for approximately fifteen minutes. In total, the four debates earned an estimated in estimated $29.8 million in free marketing value. The event estimates can be seen in Table 6.4.

Table 6.4 – Estimated Marketing Value of South Carolina Primary Debates

Date Location Network Estimated Value Jan. 19, 2012 Charleston CNN $5,000,000 Jan. 16, 2012 Myrtle Beach Fox News $11,500,000 Nov. 12, 2011 Spartanburg CBS $8,300,000 May 5, 2011 Greenville Fox News $5,000,000

CHAPTER 7

CONCLUSION South Carolina’s 2011-2012 Republican presidential primary cycle was unique in the state’s history. A groundbreaking U.S. Supreme Court decision combined with a large field of candidates led to an explosion of primary-related spending in South Carolina.

Four nationally televised primary debates particularly benefited Myrtle Beach and

Wofford College in terms of positive publicity. In total, the 2011-2012 South Carolina presidential primary cycle produced nearly $50 million in combined value-added economic activity and earned marketing value.

It is difficult to predict whether future South Carolina presidential primary cycles will produce a similar economic impact. The national Republican Party has recently made efforts to cut down on the number of presidential primary debates. Congress could attempt to limit Super PAC spending. And it seems almost certain that South Carolina will never again host four presidential primary debates in a twelve-month span.

Yet the cost of U.S. presidential elections only continues to rise. Campaigns are now reaching voters on social networks, streaming video sites, and traditional websites as well as legacy media outlets like television networks and radio stations. Tracking such expenditures on a state-by-state basis might become increasingly difficult. However, the public’s desire for transparent, accountable political spending should bring some measure of hope to both voters and future researchers.

REFERENCES

[1] Bingham, Amy. “South Carolina Primary Winners and Losers.” ABCNews.com. January 20, 2012. Accessed November 13, 2014. http://abcnews.go.com/Politics/south-carolina-primary-winners- losers/story?id=15398363.

[2] James, Frank. “‘Down And Dirty,’ South Carolina Has History Of Quashing Challengers.” NPR.org. January 11, 2012. Accessed November 11, 2014. http://www.npr.org/blogs/itsallpolitics/2012/01/10/145009483/down-and-dirty- south-carolina-has-history-of-quashing-challengers.

[3] Citizens United v. Federal Election Commission, 558 U.S. 310 (2010).

[4] Schouten, Fredreka, and David Jackson. “Super PACs Saturate South Carolina with Attack Ads.” USAToday.com. January 10, 2012. Accessed November 11, 2014. http://usatoday30.usatoday.com/news/politics/story/2012-01-13/south-carolina- republican-primary-super-pacs/52655406/1.

[5] Salvino, Dr. Rob. “The Economic Impact of The 2012 GOP Presidential Debate in Myrtle Beach, SC.” Coastal Carolina University and the Myrtle Beach Area Chamber of Commerce. February 14, 2012. Accessed November 11, 2014. http://www.myrtlebeachareamarketing.com/presentations.html.

[6] “Lynn’s debate produced millions in positive economic impact and publicity.” Lynn University. January 31, 2014. Accessed November 11, 2014. http://www.lynn.edu/about-lynn/news-and-events/news/lynn2019s-debate- produced-millions-in-positive-economic-impact-and-publicity-for-the- community.

[7] “Debate garners $34.5 million in PR for Ole Miss.” The Cirlot Agency. October 2, 2008. Accessed November 11, 2014. http://www.cirlot.com/debate-garners-345- million-in-pr-for-ole-miss/.

[8] Wise, Warren L. “GOP primary helps boost Charleston County hotel occupancy 7.8 percent in January.” The Charleston Post and Courier. February 9, 2012. Accessed November 13, 2014. http://www.postandcourier.com/article/20120209/PC05/302099975.

[9] Rosen, James. “GOP's Tim Scott’s star rockets to the top.” McClatchyDC.com. September 26, 2011. Accessed November 13, 2011. http://www.mcclatchydc.com/2011/09/26/125308_gops-tim-scotts-star-rockets- to.html.

[10] “South Carolina - May 2012 OES State Occupational Employment and Wage Estimates.” U.S. Bureau of Labor Statistics. Accessed November 11, 2014. http://www.bls.gov/oes/2012/may/oes_sc.htm.

[11] “Fact Sheet - South Carolina’s Gross Domestic Product.” South Carolina Department of Commerce. Accessed November 13, 2014. http://sccommerce.com/sites/default/files/document_directory/fact_sheet_gdp_20 13.pdf.

[12] Rosenberg, Debra. “In GOP Debate, Candidates Vie For Valuable Commodity: Camera Time.” NPR.org. November 12, 2011. Accessed November 13, 2014. http://www.npr.org/blogs/itsallpolitics/2011/11/12/142277432/in-gop-debate- candidates-vie-for-valuable-commodity-camera-time.

[13] Cate, Kevin. “Earned Media Value of the 1st Presidential Debate.” CateComm.com. October 8, 2012. Accessed November 14, 2014. http://www.catecomm.com/2012/10/08/earned-media-value-of-the-1st- presidential-debate/.

[14] Doughman, Andrew. “For one day, Spartanburg becomes center of political universe.” The Spartanburg Herald Journal. November 13, 2011. Accessed November 14, 2014. http://www.goupstate.com/article/20111113/ARTICLES/111131018.

APPENDIX A – INTERVIEWS

Name Interview Date Area of Expertise Region Bernstein, Wendy October 8, 2014 Myrtle Beach Area Chamber of Commerce Pee Dee Breede, Nancy October 23, 2014 Greenville Convention and Visitors Bureau Upstate Byars, Luke October 8, 2014 Debates/events Midlands Cahaly, Robert October 9, 2014 Charleston Debate/RSLC Lowcountry Cobb, Patrick October 8, 2014 AARP South Carolina Statewide Connelly, Chad September 24, 2014 SCGOP Statewide Crouch, Aimee October 9, 2014 S.C. Educational Television Midlands Denny, Tony October 9, 2014 Third party spending Statewide Gainey, Katie Baham October 8, 2014 Debates/events Midlands Hamby, Peter August 12, 2014 Media spending Statewide Marx, Gary October 8, 2014 Faith and Freedom Coalition Pee Dee 31

Miller, Zeke August 12, 2014 Media spending Statewide Ragley, Connelly-Anne October 9, 2014 Third party spending Statewide Salvino, Dr. Rob July 23, 2014 Coastal Carolina University Pee Dee Siegling, Lanneau October 10, 2014 Charleston Debate/RSLC Lowcountry