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Economic Impact

Economic Impact. Should the City of Normal subsidize a 16 & under girls softball tournament when 75% of the teams are from outside the area?. Economic Impact. Net economic change in the incomes of host residents that results from spending attributed to an event, attraction, or facility

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Economic Impact

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  1. Economic Impact

  2. Should the City of Normal subsidize a 16 & under girls softball tournament when 75% of the teams are from outside the area?

  3. Economic Impact • Net economic change in the incomes of host residents that results from spending attributed to an event, attraction, or facility • Aimed to assure the public they are making “a profit” for subsidizing events.

  4. Conceptual Rationale for Economic Impact

  5. Multiplier Effect • When visitors to an event spend money in a community, their initial direct expenditure stimulates economic activity and creates additional business turnover, personal income, employment, & gvt. Revenue in the host community. • Assumes businesses are interconnected • Impacts initial business as well as their suppliers, the suppliers’ suppliers…. • Leakage – money that goes out of the community – outside suppliers, taxes

  6. Fig 4.3 • First round of spending • Localinterindustry purchases..within the community • Restock inventories for future sales • Maintain buildings, equipment, insurance • Direct household income • Employees, shareholders • Local gvt revenue • Sales tax, property tax, license fees Accounted for in economic impact studies

  7. Fig 4.3 • First round of spending • Non-local interindustry purchases • Businesses located outside community • Non-local household income • Workers outside the community • Non-local gvtrevenue • State income taxes, sales taxes NOT accounted for in economic impact studies…leakage

  8. Fig 4.3 • Successive rounds of spending • How local first round spending is spent

  9. 3 Effects • Direct effects • Indirect effects • Ripple effect if additional rounds of re-circulating dollars by local people & businesses • Re-circulating dollars = multiplier effect • Induced effects • Further ripple effects caused by employees of affected businesses spending their money on other businesses in the city.

  10. Collecting data • Business surveys • Least desirable as figures are inaccurate • Visitor surveys • Participants, officials, sponsors, vendors from outside community

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