Sports Pumps $5 Billion Annually into L.A. Economy

L.A. Sports Council, L.A. Area Chamber Release Study Showing L.A. Sports Industry’s Economic Impact at All-time High

May 14, 2008 12:00 pm

LOS ANGELES – The sporting events industry in Southern California generated an all-time high of more than $5 billion in total economic impact last year and the industry’s annual growth rate is double the annual growth rate of Californians’ personal income during this period, according to a comprehensive field study released today by the Los Angeles Sports Council and the Los Angeles Area Chamber of Commerce.  In addition, nearly 25 million people attended area sporting events in 2007.

These key findings of the report show that the sports industry continues to be a source of economic growth for the region.

“Sports is not just a section in the newspaper, it’s also a sector of the economy, and an underrated one at that,” said Alan Rothenberg, chairman of the Sports Council.  “Anything that contributes a $5 billion impact each year is substantial.”

The extensive three-month study, sponsored by the Sports Council and the L.A. Area Chamber, was conducted by a four-person team of MBA graduate students from the UCLA Anderson School of Management to measure the total economic impact of the sporting events industry in Greater Los Angeles, including Los Angeles, Orange, Riverside and San Bernardino counties.

Using data obtained confidentially from 55 local sports organizations (the study excludes high school sports and certain special one-time events) the study examined annual revenue, employment and attendance figures for the calendar year 2007.  The survey included professional franchises, sports venues, horse racing tracks, major colleges and universities, as well as annual recurring events such as the Nissan Open (renamed the Northern Trust Open), the Long Beach Grand Prix and the Rose Bowl Game.

The study is the sixth in a series dating back to 1993 and is the only report of its kind for the L.A. region.
Due to its conservative nature, the study examined only the sporting events industry and does not attempt to capture sports-driven revenues from visitors’ travel expenditures (i.e. hotel, restaurant, car rental), retail merchandising, secondary ticket sales and merchandise manufacturing.

“With 18 professional teams, 11 college teams and more than 10 large-scale annual sporting events like the L.A. Marathon, the sports events industry is a significant economic engine in our regional economy,” said Gary Toebben, President & CEO, L.A. Area Chamber.  “The diversity of the sector – ranging from professional baseball to college football to horse racing – will also help to ensure its continued growth in the future.”

The results were presented at the L.A. Area Chamber by Gary Toebben, President & CEO, Los Angeles Area Chamber of Commerce; Alan Rothenberg, chairman, L.A. Sports Council; David Simon, president, L.A. Sports Council; and the UCLA Anderson team.

Significant findings in the study include:

  • Sports pumped $2.1 billion directly into the local economy last year, which, after factoring in the customary economic multiplier provided by a federal government agency, translates into an overall gross economic impact of $5.1 billion.  The weighted multiplier of 2.44 was derived from data from the Bureau of Economic Analysis (BEA) and was used to quantify the ripple effect that consumer spending within the sporting events industry has on the overall regional economy.
  • The majority of growth in direct revenue from the previous study in 2005 -- $2.1 billion from $1.6 billion -- can be attributed to several factors, most notably 1) Significant increases in ticket prices for most college and professional events. 2) The NHL playing a full schedule (the 2005 season was cancelled due to a lockout) coupled with the Anaheim Ducks’ Stanley Cup run. 3) Increases in League TV rights fees.
  • From 2005-07, the sporting events industry’s 12.5% annual growth rate is double the annual growth rate (6.2%) of Californians’ personal income during this period.  The 12.5% annual growth is the largest since the study’s inception.  Reflecting the broad-based strength of the sports industry, all four sub-categories (Annual Events, Pro/Venue, College and Horse Racing) saw revenues grow at a faster rate than Californians’ personal income growth.  The growth rate also was faster than the U.S. Nominal Gross Domestic Product (GDP) from 2005-07 (5.5%).
  • Consistent with previous studies, L.A. County accounted for roughly 79% of the total revenue generated, while Orange County comprised 16%. Riverside/San Bernardino was at 4% and Long Beach was 1%.
  • Total combined attendance topped 24.9 million people in 2007 compared to a reported 28.6 million in 2005.  We believe the difference is due primarily to inadvertent double counting of some of the attendance figures in past studies.  The Dodgers led all pro teams in total regular season attendance with a 2007 figure of over 3.8 million.
  • The sports industry was responsible for 3,385 full-time and 10,490 part-time jobs for Los Angeles area residents.  The combined total is 13,875. The industry also had nearly 28,000 volunteers.  This was the first time volunteer data was collected.
  • Based on media reports, the two highest paid attendances at single-day sporting events in 2007 were the Rose Bowl Game (93,852) and the UCLA vs. USC football game at the L.A. Coliseum (91,553). In non-college football events, the top two were the Sharp Aquos 500 (est. 85,000) and the Auto Club 500 (est. 80,000) at the California Speedway.
  • Horse racing revenues continued to increase at a 9.9% annualized clip, however, attendance has declined 16.8% annualized since the previous study in 2005. This is likely attributed to the proliferation of on-line and satellite wagering.

“You cannot quantify the psychological impact of sports, but you can measure its economic effect and our studies have shown consistently that sports are a growth industry, even in tough economic times,” said Simon.  

A Power Point presentation of the report and a list of the 55 local sports organizations and events participating in the study  is available upon request.

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The Los Angeles Sports Council is a non-profit civic organization whose primary purpose is to promote economic development through sports in the Los Angeles/Orange County area. For more information, visit www.lasports.org.

The Los Angeles Area Chamber of Commerce represents the interests of business in L.A. County. Founded in 1888, the Chamber promotes a prosperous economy and quality of life in the Los Angeles region. For more information, visit www.lachamber.com.


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MEDIA CONTACTS:
Gwen Oldham, 213.580.7532 (L.A. Area Chamber)  
Mark Meyers, 714.318.2332 (L.A. Sports Council)