Economy: Tennis, Anyone?

Berry College recently asked me to estimate the potential economic impact of a proposed 74-court tennis center in Rome. If built, for an estimated $13.6 million, it would be the largest facility of its type in the nation, making Rome a major destination for tennis tournaments. The annual, or recurring, economic impact generated by the tennis center would vary based on the number of tournaments, which is difficult to predict.

So I provided the college with specific impact estimates for four possible activity levels that could be expected three to five years after opening, but did not consider the impact that might arise from hosting larger premier tournaments such as a national championship, an annual collegiate invitational or a Davis Cup match.

Nonetheless, the economic impact of the proposed tennis center will range from $16.1 million to $28.1 million, depending on the number of tournaments.

Twenty tournaments would mean $13.1 million spent by players and their guests, generating $16.1 million in sales or gross receipts and 240 new full- and part-time jobs.

Twenty-five tournaments would result in $16.4 million spent by players and guests; that would generate $20.1 million in sales or gross receipts and 300 new jobs.

Thirty tournaments would mean $19.7 million in spending, generating $24.1 million in sales and 360 new jobs; 35 tournaments would mean $23 million spent, generating $28.1 million in sales and 420 new jobs.

Of the projected monetary impact, 69 percent is direct spending by the players and their guests (primarily family members), and 31 percent is the induced or re-spending (multiplier) impact.

The employment impact, which ranges from 240 to 420 full- and part-time jobs, depends on the number of tournaments. On average, $54,703 in initial spending by players and their guests will support one full- or part-time job. So each job created will owe its existence to spending by 109 players and guests.

Three industries will account for nearly eight out of 10 of the newly created jobs – hotels and motels, food services and drinking places, and retail.

Estimating the economic impact of the tennis center on Rome’s and Floyd County’s economy involved several basic steps. I began by calculating spending by players and guests based on data from the United States Tennis Association (USTA). I estimated that each tournament consists of 620 players and 607 guests, the average numbers reported by the USTA for Southern tournaments studied in 2006; so the total number of attendees per tournament was 1,227.

The USTA also provided high and low estimates of expenditures per person per stay of $500 and $1,000 in 2006. I judged the low estimate ($500) to be more applicable to the proposed Rome tennis center. Expressed in 2009 dollars, the low estimate is $535, or $153 per person per day.

The $153 per night figure is 23 percent higher than the $124 per person per night estimate provided by the Georgia Department of Eco-nomic Development for a typical sporting event; but the figure reflects the upscale demographics of tennis players and their guests.

I estimated total initial spending by multiplying expenditures per stay ($535) by the number of attendees per tournament (1,227) by the number of tournaments to arrive at the dollar figures that could be as high as $19.7 million, although about 16 percent of the spending will actually take place in nearby communities in Georgia rather than in Rome.

Next, I used a regional economic model to calculate the total impact – as much as $28.1 million. Regardless of the number of tournaments, the total sales impact will be 1.22 times greater than initial spending by players and attendees. Because the Rome MSA consists of only one county, there is a high level of “leakage” to nearby counties. That is why the multiplier values are relatively low.

The actual annual impact is likely to be much higher than my conservative estimates; I did not consider any spending by exhibitors or sponsoring organizations.

In addition, programs, events and facilities may provide intangible benefits to the residents of Floyd County.

Categories: Economy