University of Nevada Department of Intercollegiate Athletics. Economic Impact Analysis FY 09/10

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1 University of Nevada Department of Intercollegiate Athletics Economic Analysis FY 09/10

2 Economic Analysis University of Nevada Department of Intercollegiate Athletics Economic Analysis FY 09/10 The has partnered with the Center for Regional Studies at the University of Nevada to produce an economic impact analysis of the department on the regional economy. Executive Summary The Center for Regional Studies at the University of Nevada was hired by the Department of Intercollegiate Athletics to perform an economic impact analysis. The objective of the analysis was to provide a more thorough understanding of the economic value that the University Athletics Department returns to the Reno/Sparks area. s were estimated using actual FY 09/10 dollars. The offers six men s and ten women s sports with a commitment to the development and education of the student athlete. The intercollegiate athletics program competes under the auspices of the National Collegiate Athletic Association (NCAA). Nevada is currently a member of the Western Athletic Conference (WAC) and will be moving to the Mountain West Conference in the athletic seasons. For FY 09/10, the annual business operations of the department provided a local economic impact of $14 million. Additionally, out of area visitors for athletic events generated a local economic impact of $4.5 million. The combination of these two impacts shows a total local economic impact of $18.5 million. The department has an impact of 261 full time jobs in the region, of which 89 are direct employees of the department, resulting in 172 incremental jobs for the local community created by the department s economic impact. Methodology The analysis estimates local economic impacts generated by the department from operating and payroll expenditures and purchases made by out of area visitors to athletic events. These impacts are estimated using the following impact generators. Generators The purchases of goods and services during ongoing business operations Employee wages Capital improvements to facilities owned/operated by the department. s by non local visitors attending athletic events. Page 2 of 7

3 Economic Analysis These expenditures are ran through an economic input output model (IMPLAN) that estimates the direct impacts, the ripple effect (indirect impacts), household expenditures from new wages (induced impacts), and, finally, the total effect on the economy (total impact and multipliers). The results for the direct, indirect, induced, and total impacts and multipliers are separated into two categories, output (total economic value of goods and services) and employment (jobs supported). The economic impact analysis uses FY 09/10 dollars, resulting in FY 09/10 impacts. The section below analyzes the impact generators in detail: Section I examines the impacts generated by the annual business operations of the department broken down by Operational Expenses, Payroll, and Capital Improvements; Section II examines the impacts generated by out of area visitors to athletic events; and Section III examines the impact on employment. I. Purchases of goods and Services, Payroll s, and Capital Improvements economic impact occurs when goods and services are purchased from regional vendors during ongoing business operations of the department including operational expenses, payroll expenditures, and annual capital improvements to facilities owned/operated by the department. Once the purchase of goods and services is made by the department and its employees, vendors will purchase stock from their suppliers to replenish their inventories and will pay their employees who will spend their wages at regional businesses. This secondary purchase of products is known as the indirect impact. Once the secondary purchase of products happens it creates additional income for households not directly associated with the department, called the induced impact. This income will also have an impact on the regional economy in the form of spending. The following table summarizes the economic impacts from the purchases of goods and services, the payment of employee wages, and capital improvements during annual department operations for FY 09/10. Economic s - University of Nevada Athletics (FY 09/10) Type 1 Total Payroll $6,924,635 $3,957,371 $968,365 $938,340 $5,864,076 Operating $8,870,342 $4,749,346 $1,309,822 $1,373,856 $7,433,024 Capital Improvements $1,020,000 $508,083 $131,910 $134,076 $774,068 Total $16,814,977 $9,214,799 $2,410,097 $2,446,272 $14,071,168 Page 3 of 7

4 Economic Analysis As can be seen, total economic impacts are approximately $14 million over the course of FY 09/10. See attached schedule for details. Because the results are for just the local economy, the direct impacts are less than the total expenditures due to purchases made outside the region, taxes, benefits, insurance, and retail margins (price mark ups). s from commodity sales not manufactured in the region only include the retail mark ups. II. s generated by out of area visitors to athletic events economic impact occurs when out of area visitors attending athletic events at the University purchase goods and services from regional vendors during their visit to the region. Out of area visitor is defined as any visitor to the region who would require an overnight stay when attending an event. Once the purchase of goods and services is made by these visitors, as seen in Section I, an indirect and induced impact will occur. The following table summarizes the economic impacts from out of area visitors during FY 09/10. University of Nevada Athletic Event Visitation s (FY 09-10) Type 1 Total Visitors, spectators 3,5,6 $2,460,716 $2,192,890 $779,147 $554,768 $3,526,804 Visitors, team/staff 4,5,6 $591,494 $591,494 $156,525 $166,604 $914,623 Total $3,052,209 $2,784,384 $935,672 $721,372 $4,441,427 As can be seen, total economic impacts are approximately $4.4 million over the course of FY 09/10. See attached schedule for footnotes. III. Employment s The department generates jobs both by employing workers as well as supporting jobs through expenditures involving operational expenses, capital improvements, and out of area visitation. The department will also have an indirect impact as goods and services are purchased from area vendors, these vendors will have to pay employees to service the demand. Finally, the household income generated by the direct and indirect spending will be spent on goods and services creating jobs. The following table summarizes the employment impacts from general business operations of the department, payroll, capital improvements, and out of area visitors during FY 09/10. Employment s - University of Nevada Athletics (FY10) Page 4 of 7

5 Economic Analysis Total Payroll Operating Visitors Capital Improvements Total As can be seen, the department directly employed 89 full time employees during FY 09/10. The economic impact of the department during that same period, however, generated an incremental jobs in the local market through direct, indirect, and induced impact. The Input Output Model The economic impact generated by the department during FY 09/10 was generated using an input output analysis originally developed in 1936 by Harvard University. The software model used in this analysis to calculate the commodity flows is IMPLAN (Minnesota IMPLAN Group, Inc.). The model uses multipliers to estimate the impact of one industry or economic sector on another. See attached schedule for details. Glossary s s s Employment s Multiplier The initial, immediate economic activities (jobs and income) generated by the department. The production, employment and income changes occurring in other businesses/industries in the community that supply inputs to the department. The effects of spending by the households in the local economy as the result of direct and indirect effects from the department Number of employees at impacted industries required to support operations expenditures and the spending of new household income. The estimate of how much additional economic activity will result from the operations of the department Page 5 of 7

6 Economic Analysis Economic s - University of Nevada Athletics (FY10) Type 1 Total Payroll $6,924,635 $3,957,371 $968,365 $938,340 $5,864,076 Operating $8,870,342 $4,749,346 $1,309,822 $1,373,856 $7,433,024 Capital Improvements $1,020,000 $508,083 $131,910 $134,076 $774,068 Total $16,814,977 $9,214,799 $2,410,097 $2,446,272 $14,071,168 University of Nevada Athletic Event Visitation s (FY 09-10) Type 1 Total Visitors, spectators 3,5,6 $2,460,716 $2,192,890 $779,147 $554,768 $3,526,804 Visitors, team/staff 4,5,6 $591,494 $591,494 $156,525 $166,604 $914,623 Total $3,052,209 $2,784,384 $935,672 $721,372 $4,441,427 Multipliers Payroll Operating Capital Improvements Visitors Total EMPLOYMENT IMPACTS 2 Payroll Operating Capital Improvements Visitors Total Employment Multipliers Payroll Operating Capital Improvements Visitors Total Page 6 of 7

7 Economic Analysis Footnotes 1. Differences between total expenditures and direct impacts is the result of non disposable income (investments, retirement plans, taxes, insurance, etc.), expenditures applied to establishments located outside the region, and "retail margins" (commodity price "mark ups" after manufacturing). Only the retail margins have local impacts for commodities not manufactured in the region. 2. The employment totals (excluding payroll) and impacts that support the expenditures are estimated by the input output model. Payrolled employees provided by Athletics Department. 3. Visiting spectators are allotted one lodging room night. 4. Visiting teams and staff average 2.5 persons per lodging room during length of trip expenditure estimates based on change in Las Vegas visitor expenditure patterns (excluding gaming) due to the unavailability of 2009 data for Reno Sparks gaming estimate calculated from % change in gaming revenues between FY07/08 & FY09/10 in Washoe County (Gaming Control Board). Input/Output Data State of Nevada input output matrices developed by the Minnesota IMPLAN Group, Inc. using the following sources: Covered Employment & Wages (ES 202), Bureau of Labor Statistics, U.S. Department of Labor Regional Economic Information System, Bureau of Economic Analysis, U.S. Department of Commerce County Business Patterns, U.S. Census Bureau, U.S. Department of Commerce Consumer Survey, Bureau of Labor Statistics, U.S. Department of Commerce Page 7 of 7