Sunday, May 30, 2010

Economic Value Added During Wicked Compared to Previous 12 Months

As Durham’s Destination Marketing Organization, DCVB regularly documents overall value added to the local economy.  But given the right inputs, DCVB also partners to drill down to compute accurate assessments of the economic impact for individual, local, cultural or sports events and facilities using the highly accurate Implan methodology.

Beyond the value of the metrics, this deepens this DMO’s relevance to stakeholders including the community overall by leveraging skill sets beyond internal uses.wicked_chart_big

For instance, working with the partnership managing DPAC – The Durham Performing Arts Center, several weeks ago DCVB crunched the estimated impact of the just completed run of the Broadway musical, Wicked inclusive of what was spent to attend the performance and other related expenditures in Durham overall.

And then for another request, DCVB recently ran an analysis of the impact of all attendees at various performances from March last year through this last April (which also included a portion of Wicked.)

Attendees to Wicked’s extensive run of back to back performances in Durham at the DPAC generated an estimated net value added to the community of $6.3 million from gross visitor spending of $7.1 million.  Attendees to see this production also generated a return on investment in revenues to local government and tax payers of $300,000.  The facility is owned by the City of Durham, NC and operated by a partnership between Nederlander and PFM.

Back to back shows over an extended run of a very large scale production though isn’t at all typical but it sure is impressive.  You’ll often see much computations that are much higher in other cities but typically they fail to use information from actual local visitor expenditure studies and/or fail to distinguish spending by day trip attendees vs. overnight or deduct leakage or even include resident spending, all definite no-no’s.

Attendance at the variety of events sprinkled over the 12 months from March of last year through this past April (including a portion of Wicked) generated $18.4 million in value added to the Durham economy from gross visitor spending of $20.1 million and another $5.7 million induced or indirectly generated by that spending.  The value added is net leakage for spending that leaves the community immediately or goes outside for supplies etc.

Attendee spending over that time also generated more than $1 million in revenues for local government including more than $500,000 from a fee charged per seat, half of which fund future upkeep or up fit of the facility when needed.

A note of caution – please don’t just pick up Durham’s numbers and apply them to events or facilities in other communities regardless of how close by or distant they may be.  Any analysis needs to be carefully calibrated using inputs specific to each county including research on visitor spending etc.  Similarly for something like the world touring premier of Billy Elliot in Durham, the impact will need to be calibrated for instance to include rental of performance space over many weeks.

It also isn’t wise to try to apply the numbers from Wicked to other musicals.  It was a significantly much larger production and it had much longer run here.  Theaters are typically dark many nights of the year so a sold-out musical of this scale over that many days is unusual.  For example, Wicked with attendance near 90,000 was nearly a third as much as the attendance at events over all of the prior 12 months of performances.

Also, as always with good economic impact analysis, these numbers do not include spending from attendees who are residents of Durham.  Economists know that resident spending is not value added to an economy because they would have been spending on other things, if not that same day.

By the way, two good ways for anyone to readily tell if they are being snowed by a report on economic impact is to ask two questions, does it include resident spending?…and/or is it net or gross?  Either should sound an alarm.

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