Study Shows MU Athletics’ Economic Impact: Past, Present and SEC

Researchers predict that the MU Athletics Department will generate more than $184.7 million in additional spending in Columbia during the 2012-2013 fiscal year, the school’s first year in the Southeastern Conference.

The Columbia Convention & Visitors Bureau and Columbia Chamber of Commerce released the study done by a team of graduate students at the MU Trulaske College of Business last week.

According to the study, the department contributed more than $147 million of additional spending in Columbia in the 2010-2011 fiscal year, beginning July 1, 2010 and ending June 30, 2011. According to last year’s study, the department brought in almost $118.7 million in the 2009-2010 fiscal year.

The revenue increase percentage, if calculated by subtracting the 2010-2011 value from the projected 2012-2013 value and dividing by last year’s value is 25.6 percent.

Although the projected revenue increase for the first year in the SEC is significant, the percent increase from the 2009-2010 fiscal year to the 2010-2011 fiscal year if calculated the same way was similar — 23.8 percent.

The 2009-2010 study was the first one of its kind.

The value for total economic impact represents “additional local expenditures that would not have otherwise existed, including salaries, purchases from local businesses and student tuition,” according to the study.

The study also projected football revenue and out-of-town football revenue for the 2012-2013 will be more than $41.5 million with almost $30 million from out-of-town revenue, compared to $31.6 million in football revenue and $22.6 out-of-town football revenue in 2010-2011.

The team used a sum of “the direct revenue (immediate effects of changes in tourism expenditures), the indirect revenue (near-term re-spending of the direct sales, such as company re-spending and increased wages) and the induced revenue (delayed household spending of income earned directly or indirectly, such as housing, food, transportation etc.)” to estimate economic impact.

The value for direct revenue reflects both fan and corporate revenue. Fan revenue includes ticket sales, concessions, parking and team store merchandise. Corporate revenue includes in-stadium advertising, Big 12/SEC proceeds, Tiger Scholarship Fund donations and camps.

Indirect and induced revenue were calculated using the U.S. Department of Commerce’s BEA RIMS II multiplier of 1.6432, used to account for secondary financial financial effects.

The team used data collected from ticket sales records, TV revenue, donor contributions and fan spending.

The study estimates a 17 percent increase in overall revenue from the athletics department. The discrepancy between that number and the aforementioned 25.6% stems from a changing fan spending estimate, according to MU professor Gregg Martin who oversaw the study.

Martin said the “conservative” estimate of 17 percent reflects the revenue increase using the fan spending numbers from the first year of the study, as derived from the University of Nebraska study. The 25.6 percent increase reflects the use of an updated fan spending estimate, based on a survey of Missouri State High School Activities Association Basketball Championships fans.

“The fan spending number is the most challenging aspect of any economic impact study,” Martin wrote in an email.

He said students will continue to study the athletic department’s economic impact this fall, and the students will survey to estimate their own per capita fan spending numbers for the first time.

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