A REPORT OF THE ECONOMIC IMPACT OF MISSOURI SOUTHERN STATE UNIVERSITY ATHLETICS DEPARTMENT

Transcription

1 A REPORT OF THE ECONOMIC IMPACT OF MISSOURI SOUTHERN STATE UNIVERSITY ATHLETICS DEPARTMENT April 23, 2015 Prepared for: Missouri Southern State University 3950 E. Newman Road Joplin, MO Prepared by: Impact DataSource, LLC Austin, TX

2 PURPOSE & LIMITATIONS This report presents the results of an analysis undertaken by the Impact DataSource, an Austin, TX based economic consulting firm. The analysis relies on operational data from Missouri Southern State University about its Athletics Department as well as estimates, assumptions, and other information developed by Impact DataSource from its independent research effort. Our analysis quantified the economic and fiscal impact of the University's Athletics Department during fiscal year as described throughout this report. A separate report was prepared to estimate the impact of the University, inclusive of the Athletics Department. Total Impact 2

3 CONTENTS Executive Summary Overview 4 Economic Impact Summary 6 Athletics Department Operations 6 Spectator Spending 8 Summary of Taxable Spending 9 Residential Property on Local Tax Rolls 10 Fiscal Impact Summary 11 Sales Taxes 11 Hotel/Motel Taxes 11 Property Taxes 12 Income Taxes 12 Methodology Overview of Methodology 13 About Impact DataSource 15 Total Impact 3

4 MISSOURI SOUTHERN STATE UNIVERSITY ATHLETICS DEPARTMENT EXECUTIVE SUMMARY Overview This report presents the detailed results of an economic impact analysis performed by Impact DataSource, an Austin, Texas economic consulting and research firm. The purpose of the analysis was to isolate the economic and fiscal impact of the Athletics Department of Missouri Southern State University (MSSU) in Joplin, Missouri during fiscal year Missouri Southern State University serves nearly 6,000 students in nearly 200 academic programs. MSSU's outstanding NCAA Division II athletics programs, award-winning Themed Semesters, fun student activities and enriching cultural events in theater, art, music and film create an engaging learning environment for its students and citizens of the region. The Athletics Department provided the following description of the athletic program: The purpose of the Missouri Southern State University Athletics Department is to empower the student-athlete with the confidence and ability to succeed. We feel our most important responsibility is to assist our student-athletes in reaching their highest potential as they strive for excellence academically, athletically, and socially within a diverse and challenging society. Missouri Southern State University recognizes that the welfare of the student-athlete is an integral part of a successful athletics program. We embrace the concept that the student-athlete is first and foremost a student who possesses the same individual rights, academic abilities and personal interests as the general student body. A truly effective athletic program produces student-athletes who succeed in their academic work as well as in their chosen sport, and who, following graduation, are a tribute to themselves, the University, and their communities. It is incumbent upon the Athletics Department to work in harmony with the values outlined in the Mission Statement of Missouri Southern State University. The goal of Missouri Southern State University and its Athletics Department is for student-athletes to receive a quality experience both in the classroom and in their athletic pursuits. To ensure that each student-athlete reaches this goal, the University is committed to the academic and financial integrity of our athletics programs by exercising firm institutional control. It is the responsibility of the University and the Department of Athletics to adhere to all regulations set forth for the governance of intercollegiate athletics by the National Collegiate Athletic Association and the Mid-America Intercollegiate Athletics Association. Furthermore, it is the responsibility of the University to educate and enforce those regulations among all boosters, alumni, and any group or individuals who represent the University's athletics interests. The Missouri Southern Athletics Department also works to integrate the university and the Joplin area community. Joplin, Carl Junction and Webb City High School's have used the Leggett & Platt Athletic Center as a host for their graduation ceremonies on many occasions since it was built in The Joplin Sports Authority has held many events inside the facilities at Missouri Southern, including: ACCA Basketball, Special Olympics Basketball, cheerleading events, track and field events, high school basketball and volleyball tournaments, as well as collegiate and junior college athletic events. Many outside events have also used the facilities on the campus of MSSU. The Harlem Globetrotters come to the Leggett & Platt Athletic Center each year, while MSSU facilities have also hosted the St. Louis Cardinals Caravan, professional wrestling, the American Cancer Society Relay for Life, the American Heart Association Heart Walk, the Freeman Foundation Walk for Autism, the American Diabetes Association 5k and the United Way Dodge Ball Tournament. Hughes Stadium has served as the host facility for the Joplin Crusaders football team and has also been the host for a nationally televised high school football game on ESPN. In addition, other events taking place on MSSU's campus include McAuley high school football, Joplin Crusaders football, Joplin Outlaws baseball, and AAU track and field events. Total Impact 4

5 MISSOURI SOUTHERN STATE UNIVERSITY ATHLETICS DEPARTMENT EXECUTIVE SUMMARY Missouri Southern will host both the Nationals and Regionals cross country championships twice in four years bringing hundreds of athletes and thousands of spectators to Joplin (Neither of these events are reflected in the report numbers). Missouri Southern attendance for Men's and Women's basketball ranked in the top 25 nationally for DII. Football ranked 31st in the country and Baseball ranked 16th nationally for attendance in The athletics department does other fundraising for causes in the community. In 2014 over 2,000 canned good items were collected and donated to a local food shelter. Another initiative is the female athletes have raised over $13,000 for the Freeman Foundation for breast cancer research and care. In addition, our over 330 student-athletes and staff have compiled over 16,000 community service hours per year since the tornado in Economic & Fiscal Impacts This report includes economic impacts resulting from MSSU's Athletics Department including such things such things as jobs, earnings, economic output or sales, worker, visitor and student spending and taxable property. The State of Missouri, City of Joplin, Jasper County and other taxing districts benefit through sales, hotel, property and individual income tax collections. A summary of the economic and fiscal impact of the University's Athletics Department is provided below, followed by a detailed discussion and derivation of these impacts. Total Economic Impact of MSSU's Athletics Department During Fiscal Year The total economic impact of MSSU Athletics Department consists of the direct, indirect and induced economic impacts attributable to operations as well as the secondary economic impacts supported by student and visitor spending. In total, the Department supported jobs, $5.4 million in workers' earnings and $20.5 million in economic output or sales in the county. Table 1. Economic Impact of MSSU Athletics Department in FY Impact Employment Workers' Earnings $5,353,891 Economic Output or Sales $20,523,304 Total Fiscal Impact of MSSU's Athletics Department During Fiscal Year The economic impact of the Department generates sales, hotel, property, and individual income taxes. Sales taxes are collected on taxable spending by workers, students, visitors and sales at the University. Hotel taxes are supported by out-of-town visitors to Joplin staying in the community. Property taxes are collected on residential property owned or occupied by workers supported by the Department's economic activity. Income taxes are collected on taxable workers earnings. Table 2. Fiscal Impact of MSSU Athletics Department in FY Property Income Sales Taxes Hotel Taxes Taxes Taxes Total State of Missouri $342,468 $0 $0 $188,725 $531,193 City of Joplin $212,776 $22,150 $6,911 $0 $241,837 Jasper County $79,031 $0 $4,425 $0 $83,456 Joplin Schools $0 $0 $59,195 $0 $59,195 Joplin Road Dist. $0 $0 $3,584 $0 $3,584 Total $634,276 $22,150 $74,116 $188,725 $919,266 Total Impact 5

6 MISSOURI SOUTHERN STATE UNIVERSITY ATHLETICS DEPARTMENT ECONOMIC IMPACT MSSU Athletics Department Missouri Southern State University's Athletics Department sponsors 13 athletic programs in which 348 student-athletes compete each year. During fiscal , student-athletes received $1.7 million in scholarships or other financial aid provided by the Department. Additionally, MSSU hosted 120 athletic events with attendance of approximately 91,780 spectators. Table 3. MSSU Athletics Program Revenue Amount Development and fundraising $5,025,726 Endowments, investments $795,308 Ticket sales, and student athletic fees $134,535 Royalties, advertising and sponsorships $111,712 Camps $109,554 Concessions, stadium merchandise sales $83,991 Conference payouts $62,874 Guarantees for road games $33,000 Other $19,578 Total $6,376,278 The program generated $6.4 million in revenue during fiscal yer Many of the 88 positions in the Athletics Department are part-time positions. The athletic program supports 33 full-time equivalent positions and $2.1 million in workers' earnings. Economic Impact Summary The economic impact of Missouri Southern State University's Athletics Department includes two activities detailed later in this section; the economic impact from Department's operations and spectator spending. In total, the Department supports jobs, $5.4 million in workers' earnings, and $20.5 million in economic output or sales. Table 4. Total Economic Impact of MSSU Athletics Department in FY Department Visitor Operations Spending Total Employment Workers' Earnings $2,772,770 $2,581,120 $5,353,891 Economic Output or Sales $9,730,201 $10,793,103 $20,523,304 Each of the above economic impacts are discussed and detailed below along with a summary of taxable spending and taxable property supported by the Department. Total Impact 6

7 MISSOURI SOUTHERN STATE UNIVERSITY ATHLETICS DEPARTMENT ECONOMIC IMPACT Athletics Department Operations During fiscal year , Missouri Southern State University's Athletics Department had an annual operating budget of $4.2 million, 88 faculty and staff and an annual payroll of $2.1 million. These direct economic impacts support the following indirect and induced economic activity in the county during fiscal year : Table 5. Economic Impact of the Athletics Department's Operations Indirect & Direct Induced Total Employment Workers' Earnings $2,141,797 $630,973 $2,772,770 Economic Output or Sales $6,376,278 $3,353,922 $9,730,201 The Department's operations supported 114 jobs, $2.8 million in workers' earnings and $9.7 million in economic output during fiscal year The Department employed 88 individuals, the Department's spending supported another 26 spin-off jobs in the county. In total, the Department supported 114 area jobs. Similarly, while the Department's employees earned salaries and benefits of $2.1 million in fiscal year , the Department's spending supported another $0.6 million in earnings for workers in related spin-off jobs in the area. Therefore, total workers' earnings supported by the Department during the year totaled $2.8 million. The direct economic output supported by the Athletics Department during fiscal year was $6.4 million. This included payments that the Department made for employee salaries, purchases of goods and services, and other expenditures. The direct spending generated $3.4 million in indirect and induced sales or economic output in area businesses and other organizations. Spectator Spending In addition to the impacts supported by the Athletics Department's operations, the Department supports additional economic impacts in the community as a result of spectator spending. These out-of-town visitors have a positive impact on the community through retail spending and local lodging spending. The table below lists the attendance for MSSU athletic events in fiscal year Table 6. MSSU Athletics Attendance Summary Season Events Attendance Football 6 30,294 Baseball 27 7,457 Men's Basketball 13 19,450 Women's Basketball 14 14,582 Volleyball 11 2,995 Soccer 8 1,801 Softball 29 2,451 Cross Country 1 3,500 Track 9 8,550 Other MSSU Athletic Events MSSU Hosted Events 60 40,600 Total ,380 Total Impact 7

8 MISSOURI SOUTHERN STATE UNIVERSITY ATHLETICS DEPARTMENT ECONOMIC IMPACT These spectators have an impact on the Joplin area economy. The table below illustrates the estimates used in calculating the spectator spending impacts. Table 7. Spectator Breakdown and Spending Estimates Percent of Number of Retail Spending Spectators Spectators Per Spectator Local residents/students 44.0% 58,247 $0 From Jasper County area 36.0% 47,657 $75 From outside of the area 20.0% 26,476 $125 Total 132,380 Furthermore, of the 26,476 spectators from outside of the area, it is assumed that 47.0% of the spectators will stay in a local hotel or motel. This analysis assumes double occupancy per hotel room and therefore these assumptions translate into 6,222 hotel nights. Additionally, it is assumed that the average hotel or motel room rate is $89 per night. Table 8. Spectator Spending Amount Spending by local residents/students $0 Spending by Jasper County area spectators $3,574,260 Spending by spectators from outside of the area $3,309,500 Total Spectator Retail Spending $6,883,760 Total Spectator Lodging Spending $553,746 Total $7,437,506 The above visitor spending supports the following total economic impacts in the region. Table 9. Economic Impact of Visitor Spending Impact Employment Workers' Earnings $2,581,120 Economic Output or Sales $10,793,103 Total Impact 8

9 MISSOURI SOUTHERN STATE UNIVERSITY ATHLETICS DEPARTMENT ECONOMIC IMPACT Summary of Taxable Spending The Athletics Department's employees and workers in spin-off jobs will generate significant taxable spending in the area. An estimate of total direct and spin-off worker spending is provided below. The estimate assumes workers spend 16.0% of wages on taxable goods and services and 70% of this spending will occur in the region, consistent with spending patterns of families earning approximately $50,000 per year. Table 10. Taxable Spending by Workers Amount Total Workers' Earnings $5,353,891 Wages as a % of Earnings 75.0% Taxable Spending as % of Wages 16.0% % of taxable spending that is local 70.0% Taxable Spending by Workers $449,727 In addition, the spectator's spending is assumed to be 100% taxable and the ticket sales and concessions represent $218,500 of taxable sales. Table 11. Total Taxable Spending Amount Taxable Spending by Workers $449,727 Taxable Spending by Visitors, incl. Lodging $7,437,506 Taxable Spending at Events $218,527 Total $8,105,759 Residential Property on Local Tax Rolls Although the University's property is not on local tax rolls, the Department's employees and workers in spin-off jobs in the community own or occupy residential property on which they directly or indirectly pay property taxes, as shown below. Table 12. Total Residential Property Supported Amount Number of direct and spin-off workers supported by MSSU Percent of workers who live in Jasper County* 53.6% Average market value of residential property in the area** $67,978 Total residential market value supported $8,512,438 * Estimate based on data from the U.S. Census OnTheMap Program, Commuting Patterns for the region. ** Estimate based on the number of housing units reported by the U.S. Census in Joplin and Joplin CAFR presenting the total value of residential property in the city. The economic impacts described above will result in tax revenues for local taxing districts. The fiscal impact of the Department is detailed below. Total Impact 9

10 MISSOURI SOUTHERN STATE UNIVERSITY ATHLETICS DEPARTMENT FISCAL IMPACT Fiscal Impact Summary The economic impacts supported by MSSU's Athletics Department result in tax revenues for the state and local taxing jurisdictions. The fiscal impact analysis in this study focuses on the major revenue sources for local jurisdictions in which the University is located. Other nearby cities and counties benefit from the Department as well however, this analysis focuses on the City of Joplin, Jasper County, and the State of Missouri. The table below summarizes the tax revenues supported by MSSU in fiscal year Table 13. Total Fiscal Impact of MSSU Athletics Department Property Income Sales Taxes Hotel Taxes Taxes Taxes Total State of Missouri $342,468 $0 $0 $188,725 $531,193 City of Joplin $212,776 $22,150 $6,911 $0 $241,837 Jasper County $79,031 $0 $4,425 $0 $83,456 Joplin Schools $0 $0 $59,195 $0 $59,195 Joplin Road Dist. $0 $0 $3,584 $0 $3,584 Total $634,276 $22,150 $74,116 $188,725 $919,266 Sales Taxes The taxable spending supported by the Department results in sales tax revenue for Joplin, Jasper County and the State of Missouri. The estimated annual sales taxes supported by the Department are shown below. Table 14. Sales Tax Collections Sales Amount Total Taxable Spending $8,105,759 Tax Amount State of Missouri Sales Tax Rate: 4.225% $342,468 City of Joplin Sales Tax Rate: 2.625% $212,776 Jasper County Sales Tax Rate: 0.975% $79,031 Total Sales Tax Collections $634,276 Hotel/Motel Taxes The lodging spending supported by the Department results in hotel/motel tax revenue for Joplin in addition to the sales taxes shown above. The table below shows the hotel/motel taxes for Joplin based on the estimated lodging spending by out-of-town visitors to MSSU athletics events. Table 15. Hotel Tax Collections Sales Amount Total Lodging Spending $553,746 Tax Amount City of Joplin Hotel Tax Rate: 4.000% $22,150 Total Hotel Tax Collections $22,150 Total Impact 10

11 MISSOURI SOUTHERN STATE UNIVERSITY ATHLETICS DEPARTMENT FISCAL IMPACT Property Taxes The University's property is not on local tax rolls but the Department's employees and workers in spin-off jobs in the community own or occupy residential property on which they directly or indirectly pay property taxes as summarized below. Table 16. Property Tax Collections Sales Amount Total residential market value supported $8,512,438 Total assessed value of property Assessment Rate: 19.0% $1,617,363 Tax Amount City of Joplin Property Tax Rate per $100 of assessed value: $6,911 Jasper County Property Tax Rate per $100 of assessed value: $4,425 Joplin Schools Property Tax Rate per $100 of assessed value: $59,195 Joplin Road District Property Tax Rate per $100 of assessed value: $3,584 Total Property Tax Collections $74,116 Income Taxes The workers' earnings supported by the Department results in individual income tax revenue for the State of Missouri. Missouri's individual income tax system consists of ten brackets and a top rate of 6%. Impact DataSource applies an effective income tax rate of 4.7% to workers' earnings less benefits to estimate the income tax supported for the state of Missouri. This rate was determined by comparing Missouri individual income tax collections to personal income. Table 17. Individual Income Tax Collections Sales Amount Total workers' earnings less benefits $4,015,418 Tax Amount State of Missouri Effective individual income tax rate: 4.70% $188,725 Total Individual Income Tax Collections $188,725 Total Impact 11

12 MISSOURI SOUTHERN STATE UNIVERSITY ATHLETICS DEPARTMENT METHODOLOGY Overview of Methodology This report presents the results of an analysis undertaken by the Impact DataSource, an Austin, TX based economic consulting firm. Economic impacts can be categorized into two main types of impacts. First, the direct economic impacts are the jobs and payroll directly created by the Department. Second, this economic impact analysis calculates the indirect and induced impacts that result from the Department. Indirect jobs and salaries are created in new or existing area firms, such as maintenance companies and service firms, that may supply goods and services for the University. In addition, induced jobs and salaries are created in new or existing local businesses, such as retail stores, gas stations, banks, restaurants, and service companies that may supply goods and services to new workers and their families. The impacts supported by students and visitors are categorized as indirect and induced impacts. Regional Input-Output Modeling System (RIMS II) The economic impact estimates in this report are based on the Regional Input-Output Modeling System (RIMS II), a widely used regional input-output model developed by the U. S. Department of Commerce, Bureau of Economic Analysis. The RIMS II model is a standard tool used to estimate regional economic impacts. The economic impacts estimated using the RIMS II model are generally recognized as reasonable and plausible assuming the data input into the model is accurate or based on reasonable assumptions. The RIMS II model is described in basic detail below. Generally speaking, input-output modeling attempts to estimate the changes that occur in all industries based on a change in the demand for the output of an industry. An input-output model allows an analyst to identify the subsequent changes occurring in various industries within a regional economy in order to estimate the total impact on the economy. Total economic impact is the sum of three components: (1) direct, (2) indirect, and (3) induced impacts. If the demand for the output of an industry, measured by industry sales or revenue, increases by $1.0 million, total regional output increases by $1.0 million. This initial change in output is called the change in direct economic output and also referred to as the direct expenditure effect. The change in total economic output in the region resulting from the initial change does not stop with the change in direct economic output. Businesses in a variety of industries within the region will be called upon to increase their production to meet the needs of the industry where the initial increase in demand occurs. Further, other suppliers must also increase production to meet the needs of the group of initial supplier firms to the industry. This increase in expenditures by regional suppliers is considered the indirect economic impact of the initial $1.0 million in sales, and is classified as indirect expenditures of the total economic impact or the change in indirect economic output. The total economic impact of the $1.0 million in sales includes one more component, the induced impact. All economic activity, whether direct or indirect, that results from the initial increase in demand of $1.0 million, requires workers, and these workers must be paid for their labor. This means that part of the direct and indirect expenditures is actually in the form of wages and salaries paid to workers in the various affected industries. These wages and salaries will in turn be spent in part on goods and services produced locally in the region. This spending is another part of the regional economic impacts referred to as induced impacts and is classified as induced expenditures or the change in induced economic output. Based on the initial direct impact, the RIMS II model can be used to estimate the direct, indirect and induced impacts on economic output, value added, earnings and employment in a given region. Economic output is gross output and is the sum of the intermediate inputs and final use. This is a duplicative total in that goods and services will be counted multiple times if they are used in the production of other goods and services. Value added is defined as the value of gross output less intermediate inputs. Workers earnings or earnings consist of wages and salaries, employer provided benefits and proprietors income. Employment consists of a count of jobs that include both full-time and part-time workers. Total Impact 12

13 MISSOURI SOUTHERN STATE UNIVERSITY ATHLETICS DEPARTMENT METHODOLOGY The RIMS II model is based on regional multipliers, which are summary measures of economic impacts generated from changes in direct expenditures, earnings, or employment. Multipliers show the overall impact to a regional economy resulting from a change in demand in a particular industry. Multipliers can vary widely by region. Multipliers are higher for regions with a diverse industry mix. Industries that buy most of their materials from outside the state or region tend to have lower multipliers. Multipliers tend to be higher for industries located in larger areas because more of the spending by the industry stays within the area. The RIMS II model generates six types of multipliers for more than 400 industrial sectors for any region in the United States. The multipliers include four final-demand multipliers and two direct-effect multipliers. Final demand multipliers indicate the impact of changes in final demand for the output of a particular regional industry on total regional output, earnings, employment and value added. Direct-effect multipliers indicate the impact of changes in regional earnings or employment within a particular industry on total employment or earnings within a region. Final-demand output multipliers indicate the total regional output (direct, indirect and induced expenditures) that results from an increase in direct expenditures for a good produced by a particular regional industry. For example, if an industry in a particular region is said to have a final demand output multiplier of 2, this tells us that a $1 increase in final demand for the good produced by that industry results in a $2 increase in total output or expenditures within the regional economy. Finaldemand earnings multipliers indicate the impact of an increase in final demand for the good of a particular regional industry on the total earned income of households within the region. Final-demand employment multipliers indicate the increase in total regional employment that results from a $1.0 million increase in final demand for the good produced by a particular regional industry. Final-demand value-added multipliers indicate the increase in total regional value added that results from a $1.0 million increase in final demand for the good produced by a particular regional industry. Direct-effect earnings multipliers indicate the impact of a $1 change in earnings within a particular regional industry on total earnings in all industries within a region. Direct-effect employment multipliers indicate the impact of a change in employment in a particular regional industry on total employment in all industries within a region. Theoretically, changes in final demand drive the total change in economic output, earnings, and employment. However, these multipliers relationships can be used to estimate impacts in other ways if only limited information is known about a project. For example, the multiplier relationships can be used to estimate the increase in direct economic output based on a given level of employment in a specific industry. Additional Notes on RIMS II RIMS II multipliers are based on the average relationships between the inputs and outputs produced in a local economy. The multipliers are a useful tool for studying the potential impacts of changes in economic activity. However, the relative simplicity of input-output multipliers comes at the cost of several limiting assumptions. Firms have no supply constraints Input-output based multipliers assume that industries can increase their demand for inputs and labor as needed to meet additional demand. Firms have fixed patterns of purchases Input-output based multipliers assume that an industry must double its inputs to double its output. Firms use local inputs when they are available The method used by RIMS II to develop regional multipliers assumes that firms will purchase inputs from firms in the region before using imports. RIMS II, like all input-output models, is a static equilibrium model. This means that there is no specific time dimension associated with the results using the model. For the RIMS II model, it is customary to assume that the impacts occur in one year because the model is based on annual data. Total Impact 13

14 MISSOURI SOUTHERN STATE UNIVERSITY ATHLETICS DEPARTMENT METHODOLOGY The fiscal impacts calculated in this report are described in the text of the report. About Impact DataSource Impact DataSource is an Austin economic consulting, research, and analysis firm founded in The firm has conducted over 2,500 economic impact analyses of firms, projects, and activities in most industry groups in Texas and more than 30 other states. In addition, Impact DataSource has prepared and customized more than 50 economic impact models for its clients to perform their own analyses of economic development projects. These clients include the New Mexico Economic Development Department and the Metro Orlando (Florida) Economic Development Commission. The New Mexico Department of Economic Development uses Impact DataSource s computer model to project the economic impact of new or expanding firms in the state, including costs and benefits for the State of New Mexico, as well as each local taxing district. The model also analyzes the amount of eligible state and local incentives and calculates a rate of return and payback period for these incentives. Total Impact 14