2008 Market report
Concern & Optimisim
By J. Talty O'Connor & Michelle Martin
SportsEvents magazine has just completed its third-annual trends and economic impact study for the sports events industry in North America. The results are somewhat encouraging, a little surprising and very enlightening, all at the same time.
The objective of our research is to gather information about sports competitions that move from market to market and are generally seeking alternating sites from year to year or event to event. Events that are fixed to a set destination or fixed to a few certain destinations, such as NASCAR or the NFL, are excluded, as would be the Rose Bowl, for example.
It is nice to include the economic impact of the Daytona 500 or the Kentucky Derby into a big, fat economic impact of sports events number. It is also meaningless. There are an estimated 40,000+ sports events of one kind or another held in the United States each year. Of that total, about 500 have a mammoth economic impact, mostly measured by television revenues (i.e., the Super Bowl). These events are set and aren’t going anywhere (i.e., the Masters). Another 2,500 events are pretty well set to certain destinations (i.e., NCAA football).
Finally, about 37,000+ sports events are a bit more mobile in their competition sites, starting with youth sports but including many NCAA sports, numerous professional sports and all the way through senior events. Those are our target sports events to measure and analyze.
Taking all of that into account, we admit that gathering and analyzing economic data from an ever-evolving sports marketplace is far from an exact science. So take it as you will, but here are the results of our just-completed market research.
Uneasy But Optimistic
For the most part respondents are still optimistic, but the outlook is not quite as rosy as that of last year’s market study. While nearly 80 percent of last year’s respondents predicted an increase in direct spending and/or number of events, only 68 percent of this year’s respondents predicted an increase. Another 28 percent expect no change from 2007 to 2008. And no change is still better than a decrease in spending and/or events. A small fraction indicated an anticipated decrease for 2008. What may be significant about that is the fact that none of our 2007 respondents projected a decrease in sports event revenues or events.
The uncertainty of the economy was a common concern among respondents. Event organizers as well as destination marketing executives are very apprehensive about the threat of a recession and the rising cost of fuel. Exactly what impact those factors will have on the sports event marketplace is unknown, but certainly they are creating a sense of uneasiness.
On the other hand, there is much optimism created by exciting, new sports venues opening throughout the country. In fact, 73 percent of the destination marketing officials indicated they had added, expanded or renovated sports venues in 2007. In addition, there is a groundswell of new sports marketing efforts and newly formed sports commissions.
Finally, many mentioned the spark created by the approaching 2010 Olympic Games as a positive influence on the sports event marketplace for 2008 and beyond.
So, while the projections for 2008 were mixed, generally the feeling is that the industry is poised to remain strong—with growth not only in events and spending but also in venues and sports commissions dedicated to capturing the sports event market.
Number Of Events & Participants
Based on last year’s survey, the number of sports events was expected to increase by 10 percent during 2007. According to this year’s survey, in fact, the actual growth rate of sports events was about 13.5 percent. As for the number of events held, the typical event organizer added about seven new events for a total of about 61 events held per year.
Contrary to concerns over dwindling numbers of competitors, this year our survey indicated an average of 567 athletes per sports event. This is slightly higher than the average of our past two surveys, but only by about 6 percent. Generally speaking, the average number of athletes at any given event seems fairly constant or growing slightly across the board.
Obviously, our athlete participation values are collective of the whole. While some events have grown handily, others are level or dwindling in participation numbers. However, the statistics show that 2007 experienced approximately 11.2 million additional athlete participation days over 2006. There is no data available to determine just how many of those days came from new participants and how many came from the same participants competing more often.
Either way, the good news is that, statistically speaking, the trend of more sports events being held with increasing numbers of athletes participating is anticipated to continue for 2008 and beyond. Many nontraditional sports are experiencing rapid growth. For example, in 2007 field hockey grew in both the number of events and participants. USA Field Hockey added two new events in 2007 and then in February 2008 its National Indoor Tournament doubled to 103 teams after just one year, according to USA Field Hockey’s Karen Collins, assistant executive director for membership services and events.
And some traditional sports like tennis are also reporting growth after many years of dwindling participation. According to the U.S. Tennis Association, participation and membership increased to record numbers in 2007. In fact, tennis experienced the fastest growth in participation of any major sport since 2000.
Spending Per Athlete
As would be expected, spending per athlete continues to increase, influenced heavily by increasing costs of fuel and lodging. While they can do little about transportation costs, sports event planners are still generally seeking hotel room rates as close to or under $100 per night as possible.
Last year our estimated direct spending per athlete per event was $751. This year the number has grown to $792, a 5.5 percent increase. Transportation now takes about 24 percent of athletes’ spending budget per event and is a very significant factor in event decision-making. Athletes are working hard to compete in as many events as possible on a limited budget and are seeking creative ways to cut costs, such as ride sharing or parents trading turns at taking each others’ kids to competitions.
U.S. Lacrosse organizers realize transportation is a budget concern of their athletes, particularly as their participation grows across the country. Sarah Oglesby, director of special events, is expanding events beyond the East Coast, where much of lacrosse’s participation is rooted, to make events more accessible and affordable to athletes in other areas. “For the first time, we’re holding an event in Ohio to try to make travel easy for both East and West Coast participants—and everyone in between,” she said.
Spending Per Event
The overall spending per event increased again to about $261,165, a 6.7 percent increase over the year before. The average spending per event is skewed somewhat by the statistically few extremely large events that bring in millions, and in some cases tens of millions, of dollars.
Perhaps a more meaningful number would be the “median” number for direct spending per event, which is $173,829. This is the number at which half of the responses (values) were above that number and half were below that number. To illustrate the point, assume four events are held—three of which bring in $1 and one brings in $1 million. The average would be about $250,000, but that would be somewhat misleading. The median would be $1, a significant difference in this overly dramatic illustration.
However, based on this survey, in 2007 half of the sports competitions in the United States brought in more than $173,829 and half brought in less than that amount.
Overall Economic Impact
The number of sports events and the direct spending per athlete per event continue to grow, as compared to our previous two surveys. Had we experienced even the same number of competitions in 2007 as in 2006, we still would have enjoyed about a 5.5 percent growth in the marketplace on an economic basis. However, because of the growing number of competitions being held, the market grew even more.
The bottom line is that the overall economic impact grew by somewhere between $700 million and $900 million throughout the United States in 2007, jumping the economic impact to $6.1 billion or more in 2007. As long as the overall number of events continues to expand along with spending per event, this number also will continue to expand exponentially.
Participation Trends
Youth still have the corner on the marketplace in terms of both the number of events and number of participants. With so many different sports and leisure activities for youth to choose from today, organizers know it is important to capture their interest early. For instance, USA Field Hockey has launched a national development program called Stick Starz to encourage participation among 8- to 12-year-olds. “We see huge growth as those 8- to 12-year-olds feed up into the other age groups,” Collins said.
Adult participation is becoming more specialized, shifting from team sports to more individual sports. Eric Granstrom, director of marketing for the Wenatchee Valley (Wash.) Sports Council, said he has noticed that trend in the Alcoa Ridge to River Relay, a 20-plus-year event that includes cross country and downhill skiing, a downhill run, bicycling and canoeing. “In the last five years, it’s been harder to get teams to participate as more people are shifting to the iron and tandem categories,” he said. “That’s taking up to four people away who could participate in the ‘leg’ category, which usually has five or six people to a team.”
Site Selection
|
What Matters Most In Site Selection
Event organizers rated the importance of the following
factors in their site-selection decisions:
|
||||
| Most Important | Important | Average Importance | Somewhat to N/A | |
| Quality/Availability of venues | 60% | 35% | 1% | 4% |
| Bid fee | 7% | 29% | 23% | 41% |
|
# of available
hotel rooms
|
11% | 61% | 17% | 11% |
| Proximity of hotel rooms to venues | 11% | 49% | 27% | 13% |
| # of restaurants near hotels/venues | 3% | 21% | 45% | 31% |
| Availability of area attractions | 7% | 15% | 49% | 29% |
| Ease of driveability | 15% | 45% | 27% | 13% |
| Ease of air transportation | 8% | 37% | 25% | 30% |
| Organization/# of local volunteers | 12% | 32% |
31%
|
25% |
| History of hosting similar events | 17% | 44% | 20% | 19% |
| Price of available hotel rooms | 19% | 52% | 19% | 10% |
Another trend we recognized based on the survey is that event organizers and planners rated quality and availability of sports venues as the most important factor in site selection for sports events. It’s a growing concern as the number of events increases—becoming a matter of supply and demand. As noted earlier, 73 percent of CVBs and sports commissions reported the addition, expansion or renovation of fields and facilities in their area. Essentially, destinations that are not developing new sports venues or making improvements to existing ones are falling behind in the game.
New facilities are opening the door for more events and longer seasons, as illustrated by the new Greater Wenatchee Regional Events Center. The facility will allow for more than three months of added sports events that the area otherwise would not have had to host. “I tracked 120 events last year, and I expect close to twice that in 2008; much of that will come from the opening of the Events Center,” said Granstrom.
The market is adapting in other ways to accommodate the growing demand for sports event venues. Collins said she often has difficulty finding appropriate fields and facilities for both indoor and outdoor USA Field Hockey events. The National Hockey Festival over Thanksgiving weekend has been held at a polo complex in Palm Springs, Calif., for 10 years because, she said, the fields are pristine and large enough. “We can fit six field hockey fields on one polo field—and we use 25 contiguous fields during the festival.”
Another important factor of site selection reported by event planners is the destination’s history of hosting similar events. More than 60 percent of respondents rated similar event history as an important consideration in choosing a host city for sports events. That venues and event history are among the most important factors is both good news and bad news to CVBs and sports commissions. Those destinations with both ample, quality venues and a history of hosting similar events have a considerable advantage in attracting sports events.
Hotel Selection
|
What Matters Most In Hotel Selection
Event organizers rated the importance of the following
factors in their hotel-selection decisions:
|
||||
| Most Important | Important | Average Importance | Somewhat to N/A | |
|
Complimentary Continental breakfast
|
19% | 43% | 24% | 14% |
| Pool | 5% | 19% | 38% | 38% |
| Hotel restaurant | 0% | 29% | 48% | 23% |
| Security personnel |
14% | 19% | 43% | 24% |
| Interior corridor rooms |
5% | 33% | 38% | 24% |
| Fitness Room |
0% | 0% | 52% | 48% |
| Laundry facilities |
5% | 24% | 43% | 28% |
Sports event planners want to get the most hotel services and amenities—with complimentary Continental breakfast at the top of the list—at the lowest rate per room possible for participating athletes and their families.
Many respondents rated security personnel as important or most important in a hotel choice, especially when holding youth events. Oglesby said security is a priority for U.S. Lacrosse as the organization moves to hotels for the first time after a long history of housing youth athletes in the dorms of the colleges hosting lacrosse events. “Because it’s our first time to use hotels, we want to ensure the security of our athletes. Even at the hotels with on-site security, we’re bringing in private security. I have no problem spending money on extra security for our athletes.”
Other Trends
The process of planning sports events requires up to a year or more on average. According to the survey responses, 29 percent of event organizers begin planning 10-12 months before the actual event and another 29 percent begin planning 13-18 months before the event. Almost 10 percent require more than 18 months’ planning time.
The overwhelming majority of event organizers—70 percent—always or sometimes rely on a CVB or sports commission for assistance. Collins said there are noticeable benefits to utilizing a CVB or sports commission’s planning services.
“I count on them to put me into contact with people in the community who can provide equipment and services necessary to run a tournament,” Collins said. “Without a CVB or sports commission’s help, I would have to scramble around to find those things to run the event.”
Don Schumacher, executive director of the National Association of Sports Commissions, said he is encouraged that so many event planners are contacting CVBs and sports commissions for help.
“I would like to see that percentage grow so that it’s commonplace. CVBs and sports commissions know how to market their destinations and know what visitors will want and enjoy while there; if CVBs and sports commissions are involved, event organizers will have a better experience in their communities.”
In summary, sports event organizers and destination marketing executives are a bit more uneasy than in past surveys yet are generally optimistic for continued growth in the number of sports competitions and athlete participation levels.