FIVE YEAR ECONOMIC AND FISCAL IMPACTS STUDY FOR THE
Rhode Island Convention Center, Dunkin Donuts Center & the Veterans Memorial AuditoriumApril 22, 2015
Conventions, Sports & Leisure International
520 Nicollet Mall, Suite 440 Minneapolis, Minnesota 55402 Telephone 612.294.2000 Facsimile 612.294.2045
April 22, 2015 Mr. James McCarvill Executive Director Rhode Island Convention Center Authority One LaSalle Square Providence, RI 02903
Dear Mr. McCarvill: Conventions, Sports & Leisure International (CSL) is pleased to present this draft report regarding the economic and fiscal impacts generated by the operation of various public assembly facilities in the Providence market. The study focuses on the Rhode Island Convention Center (RICC), Dunkin Donuts Center (DDC) and the Veterans Memorial Auditorium (The VETs). The impacts of Authority-controlled parking inventory are incorporated into the facility impact estimates. For example, per-capita spending for a consumer show at the RICC would include spending for parking. The attached draft report summarizes our research, analyses and findings. The information contained in this report considers various sources including historical facility operations, existing data as to potential attendee spending levels and other information developed from research of the market, knowledge of the industry and certain information provided by the Authority. We sincerely appreciate the opportunity to assist you with this project, and would be pleased to be of further assistance in the interpretation and application of the studys findings. Very truly yours,
Table of Contents
I. INTRODUCTION ........................................................................................ 1
II. STUDY METHODOLOGY .............................................................................. 4
III. KEY STUDY ASSUMPTIONS .......................................................................... 9
IV. ECONOMIC & FISCAL IMPACT ANALYSIS ....................................................... 14
Conventions, Sports, & Leisure International (CSL) was retained by the Rhode Island Convention Center Authority (Authority) to develop an independent estimate of the quantifiable benefits of various public assembly facilities in the Providence market. The impact study considers the past five years of facility operations. Typically, and for purposes of this report, quantifiable effects are characterized in terms of economic impacts and fiscal impacts. Economic impacts are conveyed through measures of direct spending, total output, personal earnings, and employment. Fiscal impacts denote changes in tax revenues. The assumptions underlying the estimates of economic and fiscal impacts are based on the historical operations of the facilities over the five-year period (2009 through 2013), industry data developed from similar studies, local market conditions, the use of IMPLAN multipliers, and CSLs extensive experience in quantifying the economic and fiscal impacts of similar facilities. The following types of data have been integrated into the analysis and development of impact findings.
Event levels by category.
Length of event data (event days).
Attendance data (by event where applicable) including overnight and daily visits.
Estimate of percentage of attendees from outside the area.
Per-delegate spending data.
Facility operational budgets by category.
This study is designed to assist the Authority, the City of Providence, the State of Rhode Island and other stakeholders in understanding the positive impacts that the Rhode Island Convention Center (RICC), Dunkin Donuts Center (DDC) and Veterans Memorial Auditorium (The VETs) have had on the community, and should not be used for any other purposes. This report should be read in its entirety to obtain the background, methods and assumptions underlying the findings.
A brief summary of the facilities analyzed as part of this study is provided below. Rhode Island Convention Center The Rhode Island Convention Center (RICC) opened in 1992, and currently offers 100,000 square feet of exhibit space, a 20,000 square foot ballroom and 23 meeting rooms. The 564 room Omni Providence Hotel is attached to the RICC, as is The Dunkin Donuts Center and the Providence Place Mall. The RICC has accommodated between 490 and 623 utilization days each of the past five fiscal years, with total event attendance ranging between 258,700 and 318,700. The five-year average total event level approximates 220. The recent recession has had a negative impact on facility event and attendance activity, however future bookings indicate a rebound. Major events held at the RICC have included the American Psychopathological Society, American Physical Society, American String Teachers Association, the New England Regional Turfgrass Conference & Expo, the Auto Show and the Spring Flower & Garden Show. The Dunkin Donuts Center The Dunkin Donuts Center (DDC) opened in 1971 as the Providence Civic Center, and a substantial renovation was completed in 2008. Today, the Center provides 14,000 seats with 31,000 square feet of arena space and 20 suites. Primary tenants include the AHL Providence Bruins and the Providence College Mens Basketball team.
The Center has hosted an annual average of just over 105 events annually over the past five years. Average annual attendance is just over 605,000. Major events held at the Center have included concerts such as The Who, Elton John, Carrie Underwood and Usher, as well as wide variety of other entertainment events including Disney on Ice, Cirque du Soliel,
American Idol and WWE. Veterans Memorial Auditorium Veterans Memorial Auditorium (The VETs) originally opened in 1950, though construction initially began as early as 1927. A 2011 renovation of The VETs included added meeting space and lounge area, new restrooms, carpet, sound lighting and other enhancements that significantly improved the atmosphere and functionality of the facility. The VETs has a seating capacity of approximately 1,900 seats, and has hosted an average of 104 events annually over the past five years. The VETs is home to the Rhode Island Philharmonic Orchestra, which hosts between 18 and 20 performances each year. Major events held at the VETs have included Bryan Adams, Kenny G and Willie Nelson. Summary Together, these venues have attracted an average of nearly 500 events on an annual basis over the past five years, generating attendance or attendee days in the downtown area averaging 1.3 million people per year. These statistics help form a basis for the economic impact estimates presented herein. Throughout this analysis, consideration has been given to the origination of event attendees, and the level of spending that impacts the area economy. Attendees that are from the local area generate spending that may have taken place in the community even without the event, and in the case of promoters and acts, spending will immediately leave the community and has been excluded from the analysis. A broad summary of key study methods and assumptions is presented in the following sections of this report.
II. Study Methodology
The facilities studied as part of this project provide significant quantifiable benefits to the City of Providence and the State of Rhode Island. Typically, and for purposes of this report, quantifiable effects are characterized in terms of economic impacts and fiscal impacts. Economic impacts are conveyed through measures of direct spending, total output, personal earnings, and employment. Fiscal impacts denote changes in tax revenues. Note that we have not audited information provided to us by third parties. Direct Spending
In assessing the economic impact associated with the facilities, the first important step involves defining and quantifying the existing sources of direct spending. When analyzing the direct spending generated by facility operations and events, three major areas of spending will be measured, as follows:
In-Facility Spending Spending by event patrons within the facility. This spending category (tickets, concessions, merchandise, etc.).
Out-of-Facility Spending Spending by facility patrons at other local businesses taking place in conjunction with attendance at the event including transactions at area restaurants, bars, hotels, retail centers, parking, service stations and other businesses. Other Facility Spending Spending that takes place within the facilities or as part of general facility operations that isnt captured in the In-Facility category, such as naming rights, sponsorships, certain premium seating charges, ticket fees and other various event and non-event revenue.
Gross direct spending represents the aggregate of the three streams of revenue defined above. Spending flows to various economic entities, including the facilities, restaurants, hotel operators, retail businesses and other such entities. The analysis presented later in this report segments the spending into purchases made by local residents, regional attendees (drive-in but with a potential to stay overnight) and non-local attendees. Multiplier Effects Economic impacts are further generated through re-spending of the direct spending. The total impact is estimated by applying an economic multiplier to initial direct spending to account for the total economic impact. The total output multiplier is used to estimate the aggregate total spending that takes place beginning with direct spending and continuing through each successive round of re-spending. These ssuccessive rounds
II. Study Methodology
are generally discussed in terms of their indirect and induced effects on the area economy. Each is discussed in more detail as follows:
Indirect effects consist of the re-spending of the initial or direct expenditures. These indirect impacts extend further as the dollars constituting the direct expenditures continue to change hands. This process, in principle, could continue indefinitely. However, recipients of these expenditures may spend all or part of it on goods and services outside the market area, put part of these earnings into savings, or pay taxes. This spending halts the process of subsequent expenditure flows and does not generate additional spending or impact within the community after a period of time. Indirect impacts occur in a number of areas including the following:
wholesale industry as purchases of food and merchandise products are made;
transportation industry as the products are shipped from purchaser to buyer;
manufacturing industry as products used to service complex vendors and others are produced;
utility industry as the power to produce goods and services is consumed; and,
other such industries. Induced effects consist of the positive changes in spending, employment, earnings and tax collections generated by personal income associated with or directly resulting from the facility and facility events. Specifically, as the economic impact process continues, wages and salaries are earned, increased employment and population are generated, and spending occurs in virtually all business, household and governmental sectors. This represents the induced spending impacts generated by direct expenditures.
Indirect and induced effects are calculated by applying the appropriate multipliers to the direct spending estimates. The appropriate multipliers to be used are dependent on certain regional characteristics and also the nature of the expenditure. Generally, an area which is capable of producing a wide range of goods and services within its borders will have high multipliers, a positive correlation existing between the self-sufficiency of an area's economy and the higher probability of re-spending occurring within the region. If a high proportion of the expenditures must be imported from another geographical region, lower multipliers will result.
II. Study Methodology
The following graphic illustrates the flow of direct spending through the successive rounds of re-spending including indirect and induced effects.
The multiplier estimates used in this analysis are based on the IMPLAN system. IMPLAN is a computer software package that consists of procedures for developing local input-output models and associated databases. Input-output models are a technique for quantifying interactions between firms, industries and social institutions within a local economy. The economic data for IMPLAN is supplied by the system of national accounts for the United States, based on data collected by the U. S. Department of Commerce, the U.S. Bureau of Labor Statistics, and other federal and state government agencies. Data are collected for 440 distinct producing industry sectors of the national economy corresponding to the Standard Industrial Categories (SICs). Industry sectors are classified on the basis of the primary commodity or service produced. Corresponding data sets are also produced for each county and zip code in the United States, allowing analyses at both the city and county level and for geographic aggregations such as clusters of contiguous cities, counties, individual states, or groups of states. For purposes of this analysis, economic multipliers specific to Providence County were used.
II. Study Methodology
Data provided for each industry sector include outputs and inputs from other sectors; value added, employment, wages and business taxes paid; imports and exports; final demand by households and government; capital investment; business inventories; marketing margins and inflation factors (deflators). These data are provided both for the 440 producing sectors at the national level and for the corresponding sectors at the local level. Data on the technological mix of inputs and levels of transactions between producing sectors are taken from detailed input-output tables of the national economy. National and local level data are the basis for IMPLAN calculations of input-output tables and multipliers for geographic areas. The IMPLAN software package allows the estimation of the multiplier effects of direct spending (also termed changes in final demand) for one industry on all other industries within a local economic area. The multiplier effects estimated in this analysis include:
Total Output represents the total direct, indirect, and induced spending effects generated by facility operations. Total output is calculated by multiplying the appropriate total output multiplier by the estimated direct spending within each industry.
Personal Earnings represent the wages and salaries earned by employees of businesses impacted by facility operations. Personal earnings are calculated by multiplying the...