ufc event impacts

UFC EVENT IMPACTS:
ECONOMIC STUDY FOR NEW YORK STATE
UPSTATE ((BUFFALO)) AND DOWNSTATE ((NYC))
NOVEMBER 10, 2008
Mixed Martial Arts by the numbers
$3.0 million
• Average gate revenues for UFC g g
fights in 2008
11
• Television series/episodes about ban
the sport in 2008
14
• Former Olympians competing in MMA
17
• Former NCAA Wrestling g
Champions competing in MMA
2
UFC regulation can bring needed economic and fiscal benefits to New York State
and fiscal benefits to New York State
NYS Law enacted in 1997:
§ 5-a. 2. No combative sport shall be conducted, held or given within
the state of New York, and no licenses may be approved by the
commission for such matches or exhibitions.
UFC is regulated and recognized by 36 out of the 44 states that have athletic commissions, including California, Nevada, New Jersey, Ohio and Pennsylvania.
3
Attendance at UFC events has risen substantially over the last decade
substantially over the last decade Attendance
180,000 160,000 140,000 ,
120,000 100,000 80 000
80,000 60,000 40,000 20 000
20,000 ‐
2001
2002
2003
2004
2005
2006
2007
2008
Attendance Total
Source: Zuffa, LLC.
Note: 2008 attendance is projected
4
UFC’s market share has also increased dramatically
Increase in Pay per View Revenues Increase
in Pay per View Revenues
2003‐2006 (in millions)
250 200 150 100 50 ‐
WWE
HBO Boxing*
Est 2003 PPV Revenues
UFC
Est 2006 PPV Revenues
Source: USA Today, February 28, 2007; WWE 2003 Annual Report; HR&A analysis of HBO Boxing 2003 & 2006 flight lists
5
HR&A Advisors assesses economic impacts for events and activities across the country
events and activities across the country
HR&A was retained by Zuffa, LLC. to project economic and fiscal activity for potential events in both upstate and downstate New York.
States Worked In
• California
• Connecticut
• District of Columbia
• Illinois
• Massachusetts
• Maryland
• North Carolina
• New Jersey
• New York
• Ohio
• Pennsylvania
• South Carolina
Selected Clients
• American Museum of Natural History
• Brooklyn Academy of Music
• City of Washington, DC
• East Baltimore Development, Inc.
• Habitat for Humanity
• New York City Economic Development Corporation
• New York Empire State Development Corporation
• New Jersey Sports and Exposition Authority
• Times Square Alliance
• Large national private real L
i
l i
l
estate developers
Study Areas
• Mixed‐Use Development
• Museums
• Parks
• Shopping Centers
• Sporting Events
• Stadiums
• Transit Oriented Development
6
Economic impact: event spending and visitor spending stimulate economic activity
spending stimulate economic activity
Local Event p
g
Spending
Economic Activity
Local Economic Economic
Employment Contribution
Employment
Wages
Fiscal Impacts
Visitor Spending
7
Summary of Findings
Upstate (Buffalo)
( ff l )
8
Local event spending by Zuffa and its affiliates HR&A analyzed typical event budgets for a comparable UFC marquee event. Local spending was analyzed by line item. Event Costs
Merchandise
T
Transportation
t ti
F d
Food
Staffing
Television Production
Advertising
Commercials
Estimated Event Spending: $1.7M
9
Total visitor spending of $1.4 million
.
1
• 3,000 attendees from Buffalo Metropolitan area
• No additional local spending
.
• 7,000 daytrippers
•. $475,000 local spending
1
• 6,000 overnight visitors
• $575,000 local spending
• $300,000 lodging
$300 000 lodging
2
3
2
3
Total
• $1.1 million in local spending
$1.1 million in local spending
• $300,000 in lodging
• $1.4 million in total spending
10
$5.2 million in total economic activity for the local economy
local economy
$1.7 million of direct event spending is leveraged 3 times to result in $5.2 million dollars of total activity in the local economy.
Economic Output ‐ $5.2M
$1.0 $1.7 Direct Event Spending
Vi it S
Visitor Spending
di
$1.1 $1.4 Indirect Activity
Induced Activity
source: Zuffa, LLC & HR&A input‐output analysis using IMPLAN
11
A UFC event could increase direct sports‐
related activity in Buffalo by 20%
related activity in Buffalo by 20%
$15M of direct economic activity (including visitor spending) in Buffalo was generated from sporting events in 2007. A UFC event could add $3.1M.
2007 EVENTS
Direct Economic Impact Comparison (in $millions)
2007 Men’s Basketball Tournament – Rounds 1 and 2
USA H k Ti 1 d 2
USA Hockey Tier 1 and 2 Supersite
$16.0 $14.0 $12.0 $10 0
$10.0 $8.0 $6.0 $4.0 $2.0 $‐
United States Bowling Congress
NCAA Swimming and Diving
NCAA Tournament
All Other Events
Atlantic 10 Swim Championships
NYS High School Swim Championships
ESPN Bassmaster Elite Championships
Buffalo Sporting Events
UFC Event
US Figure Skating Northeast Regionals
•‐ Buffalo hosted 43 sporting events in 2007, including the NCAA Men’s Basketball Tournament Rounds 1 and 2. These events generated $15M in direct economic activity. Source: Buffalo Niagara Convention and Visitors Bureau, 2007 Annual Business Review.
12
An event would produce substantial local employment
One‐time event activity, including over 300 staff working on the event, is equivalent to the creation of 57 local jobs.
Employment ‐ 57 Jobs
9
7
Direct
Indirect 41
Induced
Source: Zuffa, LLC & HR&A analysis using IMPLAN model
13
Direct revenue benefits for both local and state governments
state governments
$0.4 M of total fiscal impacts to Buffalo and the State of New York. NYS ‐ $320k
Buffalo ‐ $30k
$120,000
$25,000 $100 000
$100,000
$20,000 $80,000
$15,000 $60,000
$40,000
$10 000
$10,000 $20,000
$0
$5,000 $‐
Sales Tax
Sales Tax Hotel Occupancy Hotel
Occupancy
Tax*
$0 4M could fund an additional 5 police officers in Buffalo
$0.4M could fund an additional 5 police officers in Buffalo
* Taxes fund the Buffalo Niagara Convention and Visitors Bureau.
14
• 12,000 available 12 000
il bl
rooms
• Peak occupancy of 85%
• Average occupancy of 65%
Source: HR&A analysis of Smith Travel Research Market Trends Report
H l Dem
Hote
mand
d
Hottel Su
upplyy
Significant net gain in Western New York hotel occupancy
• 3,400 estimated 3 400 ti t d
visitor room nights
• 700 estimated room nights for i h f
event staff
• Represents additional occupancy of 11%*
* ‐ over any given weekend period
15
Summary of Findings
Downstate (NYC)
(
)
16
Local event spending by Zuffa and its affiliates HR&A analyzed typical event budgets for a comparable UFC marquee event. Local spending was analyzed by line item. Event Costs
Merchandise
T
Transportation
t ti
F d
Food
Staffing
Television Production
Advertising
Commercials
Estimated Event Spending: $5.3M
17
Total visitor spending of $1.4 million
NYC TRANSIT
10,000 LOCAL ATTENDEES
• No additional
No additional
local spending
LOCAL
LOCAL SPENDING
SPENDING
$1.0 million Amtrak
Metro-North
• $600,000 5,100 LIRR
local spending
local spending
DAYTRIPPERS
LODGING
$
$0.4 million TOTAL SPENDING
$1.4 million $1.4 million
NJT
1,900 OVERNIGHT
VISITORS
• $345,000 local spending
• $380,000 lodging
Source: HR&A analysis of NYC & Company visitor spending data.
18
$11.3 million in total economic activity for the local economy
local economy
$5.3 million of direct event spending is leveraged 2 times to result in $11.3 million dollars of total activity in the local economy.
Economic Output ‐ $11.3M
$2.2 Direct Event Spending
$5.3 $2.4 Visitor Spending
Lodging
$0.4 $1.0 $
Indirect Activity
Indirect Activity
Induced Activity
Source: Zuffa, LLC & HR&A input‐output analysis using IMPLAN.
19
$11.3 million in total economic activity for the local economy
local economy
$68.6 million in economic activity was generated by the New York City Waterfalls public art work over 108 days in 2008. A UFC event could generate $11.3 million, or 15% of the economic activity over a single A UFC event could generate $11.3 million, or 15% of the economic activity over a single
weekend.
Source: Appleseed and Audience Research & Analysis, “The New York City Waterfalls: Economic Impact of a Public Art Work,” October 2008.
20
An event would produce substantial local employment
One‐time event activity, including staff working on the event, is equivalent to the creation of 81 local jobs.
Employment ‐ 81 Jobs
14
Direct
12
Indirect 56
Induced
Source: Zuffa, LLC & HR&A analysis using IMPLAN model
21
Direct revenue benefits for both local and state governments
state governments
$0.9 M of total fiscal impacts to New York City and State. NYC ‐ $400k
NYS ‐ $517k
$175,000 $250,000
$150,000 $200,000
$125,000 $150,000
$100,000 $100,000
$75,000 $50,000 $50,000
$25,000 $0
$‐
Sales Tax Personal Income Tax
Income
Tax
Business Hotel Income Tax
Income
Tax Occupancy
Occupancy Tax
Tax
$0 9 M can fund textbooks for over 15 000 NYS/NYC children
$0.9 M can fund textbooks for over 15,000 NYS/NYC children
Activity is substantially net new
Citties hossting UFFC Even
nts
The New York market is relatively underserved by UFC events. Las Vegas
Atlanta
London
Dublin
Chicago
Los Angeles
Montreal
Newark
Anaheim
Houston
Atlantic City
Miami
New Orleans
Denver
Mohegan Sun
Columbus/Cincinnati
NYC Regional Area
134 UFC Events Nov 1993 to Jan 2009
12 within NYC regional area
Only 1 event within the last 3 years
23
Activity is substantially net new
Attendance at Madison Square Garden boxing & wrestling events has fallen 20%.
Attendance at MSG Boxing / Wrestling Events*
120,000 100,000 80 000
80,000 60,000 40 000
40,000 20,000 ‐
2001 ‐ 2004
2005 ‐ 2008
Source: HR&A analysis of Madison Square Garden event data,; based on assessment of average attendance and capacity figures for time periods in question.
24
Activity is substantially net new
HR&A utilized conservative local e ent spending impacts
event spending impacts
$5.3M
Visitor spending for 39% daytrippers
and 23% overnight visitors
and 23% overnight visitors
We assume lodging spending may not be “net new”
not be “net new”
Indirect and Induced impacts
Indirect and Induced impacts
Over 90% of activity is likely “net new”
Average visitor spends $119/day on non‐
lodging: retail, food & beverage, transportation
$1.4M
$0.4M
$
NYC lodging is substantially at capacity at 86% average
$4 6M
$4.6M
$
$10.9M
Source: HR&A analysis of NYC & Company visitor spending data.
25
Combined Findings: Upstate and Downstate Activity
dD
t t A ti it
26
$16.5 million in total economic activity for local economies
local economies
$7.0 million of direct event spending is leveraged 2.3 times to result in $16.1 million dollars of total activity in the local economy.
Economic Output ‐ $16.1M
$3.3 $7.0 $3.6 Direct Event Spending
Visitor Spending
$2.3 $
Indirect Activity
Induced Activity
Source: Zuffa, LLC & HR&A input‐output analysis using IMPLAN.
27
Direct revenue benefits for state government
$0.8 M of total fiscal impacts for New York State. NYS ‐ $836k
$250,000
$200,000
$150,000
$100 000
$100,000
$50,000
$0
$0.8 M can fund textbooks for over 12,000 students
Summary Local Jobs
Local Jobs
Local Local
Taxes
Local Economy
Local Local
Impacts
• Over 300 event jobs
• 138 jobs created in total
j
• $5.6M in compensation
• $836,000 in taxes to NYS
$836 000 in taxes to NYS
• $400,000 in taxes to NYC
• $30,000 in taxes to Buffalo
• $7.0M in direct event spending
• $2.3M in visitor spending
• $6.9M in indirect/induced benefits
/
• $16.1M in ‘net new’ economic activity
• 6,000 room night stays
• Tourism exposure
• Media exposure
29
Detailed Methodology
30
HR&A studied the economic impacts of UFC events in New York
events in New York
Data Inputs
Analysis
Outcome
• Event Financials
• Visitor spending
• Tax Sources & Tax Sources &
Rates
• Economic Aggregation
• Input‐Output Modeling
• Fiscal Analysis
Fiscal Analysis
• Total Activity
• Fiscal Impacts
• Net Impacts
31
HR&A determined existing level of activity at selected venues
selected venues
Madison Square Garden and HSBC Arena have 40‐50% availability on weekend dates. HSBC
MSG
3%
4%
2%
14%
7%
Available
Available
50%
Circus
39%
13%
Hockey
Hockey
Boxing
Lacrosse
30%
Basketball
Concert
Concert
Bull Riding
35%
3%
Source: HR&A analysis of MSG and HSBC Arena event schedules.
32
HR&A analyzed spectator origin data from comparable events to project local spending
comparable events to project local spending
Attendance origin: 80% from outside Buffalo region, 11% from outside NYC region 16,000 Buffalo Spectators
17,000 NYC Spectators
Spectators by Origin
Spectators by Origin
Total Canadian
11%
19%
34%
Non‐NYS
39%
Residents within Metropolitan Area 11%
New York State
50%
36%
NYC Residents
Other
Buffalo Metropolitan Area
33
Multiplier effects of direct spending were assessed
HR&A used input‐output modeling to determine the multiplier effects of direct event and visitor spending.
p
g
IMPLAN (IMpact Analysis for PLANning) is a widely‐
recognized modeling tool.
IMPLAN traces the pattern of commodity purchases and
sales between industries that are associated with each
dollar’s worth of a product or service sold to a customer,
analyzing interactions among 528 industrial sectors.
sectors
IMPLAN is used for the preparation of economic impact
analyses by many public and private entities throughout the
U.S. Industry data is updated annually and would be
specifically customized to the study area.
34
Three types of activity can be measured based on models of economic behavior
on models of economic behavior
IMPLAN measures indirect and induced activity resulting from calculated direct activity. Direct Activity • Direct activity resulting from event and visitor spending
Indirect Activity • Activity by suppliers of goods and services as a result of the direct activity
Induced Activity • Activity in the local economy due to spending by employees of direct spending providers
35
Measures of impact include activity, employment, and wages
employment, and wages
IMPLAN provides economic activity, employment and wages impacts.
Economic A ti it
Activity
• Total spending on event by
on event, by visitors, and from indirect and induced activity
Employment
p y
• Total direct, indirect and
indirect and induced jobs created (equivalent to (equ
a e t to
annual jobs)
Employment W
Wages
• Estimated wages of jobs added in
of jobs added in the local economy due to c eased
increased spending 36
UFC EVENT IMPACTS:
ECONOMIC STUDY FOR NEW YORK STATE
UPSTATE ((BUFFALO)) AND DOWNSTATE ((NYC))
NOVEMBER 10, 2008