leisure events and regional economic impact

LEISURE EVENTS AND REGIONAL ECONOMIC IMPACT

Authors: Tommy D. Andersson, Bodo Graduate School of Business, Norway and European Tourism Research Institute, S-831 25 Østersund, Sweden e-mail: [email protected] Harry A. Solberg,

Trondheim Business School, N-7005 Trondheim, Norway e-mail: [email protected]

Abstract: This article reports the results of an economic impact study of The World Championships in Nordic Ski which took place 1997 in Trondheim - a Norwegian town with 145.000 inhabitants. The event gathered 800 competitors and leaders, from 40 different countries. It received attention worldwide, and the most popular competitions were broadcast live on TV in 30 countries. The Championships and the activities related to it created a net direct income to the region amounting to NOK 283 million when an opportunity cost of NOK 21 million is considered. The spectators generated nearly 500.000 visitor-days, and the most important income category in terms of financial inflows to the region. A special study looking for differences in economic impact from different spectator categories revealed large and significant differences between the press & media-workers, invited guests, and other spectators.

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LEISURE EVENTS AND REGIONAL ECONOMIC IMPACT Tommy D. Andersson, Harry A. Solberg, 1. INTRODUCTION Nowadays there seems to be a tough competition to entertain big international sports events, where regions and countries are willing to spend significant amounts of money in their efforts to become hosts. There might exist several reasons explaining the eagerness to host the events. However, there are no doubts that hopes of economic profit, both in a short and long term perspective, is an important factor. The most popular events manage to gather thousands of spectators from outside the region and thus generate significant amounts of money to the local travel and tourism industry. Likewise the support from external sponsors, can create valuable stimulation for the local economy. Whether the region will gain economic benefits from the event, relies on two very important assumptions. First, the local producers must be able meet the extra demand, which directly and indirectly is created by the event. And second, these suppliers must have available idle resources. If not, there will be leakage and reduced effects for the local economy. What size the inflows can amount to, and also the volume on the “next-round” (indirect) impacts are issues which usually are given broad attention - especially in the planning and application process prior to actual events. Some relevant analyses have been carried out in recent years (e.g. Getz, 1992; Hall, 1992), but there have been few articles that give detailed presentations of surveys dealing with these issues. Events such as world championships can normally be categorized as special-events (cf. Hall, 1992). According to Getz (1994), not all the research in this field has been of high quality: “Even if the growth in the number of tourist-oriented events has been spectacular - the immature state of this field has been marked by exaggerated claims of economic impact, weak research methodology, and inadequate attention to the evaluation of costs and benefits”. On this background, Trondheim Business School and Bodo Graduate School of Business wanted to measure and categorize the direct economic impact, and also calculate the indirect impacts, when Trondheim in Norway, hosted the World Championship in skiing, the “Nordic Games”, in 1997. The municipal council in Trondheim financed the research program. The competitions took place from February 20 to March 02, 1997 in Trondheim, a town with 145.000 inhabitants. The event gathered 400 competitors, and 400 leaders, from 40 different countries. It received attention worldwide, and the most popular competitions were broadcast live on TV in 30 countries. From an economic point of view, the nearly 500.000 spectators were more important, at least in terms of financial inflows to the region. 2. ECONOMIC IMPACTS FROM SPECIAL EVENTS The primary beneficiary of an event is the audience. The basic force underpinning an event is the attraction it has to spectators living within a region - as well as people living outside the region. The value that the spectators attach to an event is decisive, not only for the economic result, but also for the future prospects of the event. The most convenient way from an economic point of view, is to assess the spectators evaluation of an event through measuring the willingness to pay for attending the event. This willingness to pay for an event includes all economic transactions relating to the event such as participation fees, lodging, meals, transportation etc. The spectators, being the primary beneficiaries, could thus calculate the benefit from attending the event as the difference in value between the total willingness to pay and their actual outlays during the event (and related to the event). This primary 2

surplus of the event will be similar to total consumer surplus from the event. Impacts like this are fundamental in cost-benefit analysis which is aiming at evaluating both the tangible and intangible costs and benefits in a short as well as in a long-term perspective. It will also assess the opportunity costs of investments and examine the distribution of impacts. One of the best known studies, which deal with these issues is Burns, Hatch & Mules (1986). Events of this size can lead several categories of financial inflows (direct income) in to the region, and the main amounts are normally generated by: • the visitors’ expenditure • support from external sponsors • support from the governmental sector • income from media-activities (including sales of TV-rights) The visitors’ outlays in the region are the costs of the primary beneficiary. But at the same time these were also the revenue for secondary beneficiaries such as the championship-committee, the hotels, the restaurants, transport companies and the shops in the region. Thus the revenue from the event for secondary beneficiaries includes all outlays for the visitors in the region in relation to the event. One can anticipate that such events also are able to gather visitors that are not interested in sports. We find it likely that some arrived because of expectations of an exciting nightlife, and not to watch the competitions. Ideally, the impact-study should also take the outlays from such visitors into account. But measuring the impacts for those who did not enter the arena, inside or outside the fences, can be very difficult. To get an overview of the magnitude of this group and their economic impacts for the region, it would have been necessary to carry out studies at other places than at the sport arena which was not done. Not all of the revenue, however, for secondary beneficiaries, is a benefit since secondary beneficiaries also have costs to cover. Purchases for restaurants of inputs such as food and beverages will increase. Salaries will go up for the organizer as well as for restaurants and hotels. It is the difference in value between revenues from output and costs for inputs that will determine the benefit or economic gross profit for secondary beneficiaries. A controversial issue among researchers in recent years, is whether local expenditure during the event, should be regarded as incremental for the region (Baade and Dye, 1990; Burns, Hatch and Mules, 1986; Crompton, 1995; Getz, 1997). Lately, the most common practice has been only to measure the money from outside the region as the net contribution to the region. The argument for such a practice is that money coming from sources within the region will in general represent a regional or internal redistribution of the object in spending, and not be a net increase in the level of spending. However, some researchers have included a part of the local spectators’ expenditure, in similar studies. Under certain conditions, such a practice can be recommended. But to avoid exaggerating the net contribution from the event, it is important that such a practice is based on reliable surveys – and among the whole local population. The researcher must be aware of the difficulties related to deciding whether the locals (and how many) that really stay at home. For some of those who do not leave the region in the “event-period”, it is a matter of time switching. The event may either force them to advance or postpone the trip, but not to cancel it. In such cases, their expenditure should not be taken into account and regarded as incremental for the region. There are also those who will go away because they dislike the crowds and congestion created by the masses that come to town. Others rent out their houses or apartments and go away during the actual period, in order to make “easy-money”. To find out about these proportions, one has to carry out surveys among all the citizens in the town, both before and after the event. The analysis presented here does not include the locals’ consumption as a part of the direct income for the region. The same strategy was also applied for the other financial flows, for instance regarding the support from sponsors. The activity caused by the direct and indirect impacts will also increase the general local consumption and cause so called induced impacts. These impacts were however not included in this analysis where the attention is concentrated on the direct- and indirect impacts.

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3. METHODS Direct Impacts To collect information about the direct income, we found it necessary to use both the expenditureand the income method. More than 1.600 interviews were carried out among the different categories of people that came to Trondheim because of activities related to the event. This included 180 control interviews via phone 1 - 3 weeks after the original interview. The interviews revealed that a significant part of the respondents did not pay for their main expenditures during their stay in Trondheim. As a consequence, many of them were unable to inform us about their costs. To compensate for this lack of information, we established a co-operation with a wide range of local and external producers that were involved in the event. However, such a phenomenon represents an important methodological problem that researchers who investigate economic impacts from events, have to be aware of. Nowadays it seems very common that firms and organizations use popular sports events as a way to cultivate the contact with each other, and invite each other as guests. To collect the necessary data to estimate the economic impact, the surveys may come to rely on whether the actual firms are willing to let researchers have the necessary information. Therefore the links to the actual firms and producers have to be established in advance, before the event takes place. A special survey, attempting to investigate the direct economic impact from press- and media activities, was carried out. This included interviews with 125 media-persons about their expenditures. We also collected information from local firms, which conducted tasks for some of the external media-firms. In addition we received information about the economic activities of The Norwegian Broadcasting Corporation (NRK), which were entertaining the international TV-broadcasting companies. The championship committee had entered into three different categories of sponsorship agreements; 1. The main sponsors supported the championship committee, mostly with financial resources, but in some few cases it included free services. Most of these firms had their headquarters outside Trondheim, but some of them also had local branches. 2. The second category was firms and organizations, which delivered free products and services to the championship-committee. The majority of these were locals. 3. The third category contains firms who entered into license-agreements with the championship committee. These agreements gave them admission to put “championship-badges” on their products – as marketing means. Some of the external sponsors in category one also had local branches. We therefore found it necessary to carry out a special survey trying to investigate how funding was divided between local and external branches. This survey also contained questions as to how and where the resources alternatively would have been spent - if not on the championship. The main issue was whether the alternative spending would have been inside or outside the region. We carried out a similar survey among the sponsors in the second category. Unfortunately the response rate did not reach a statistical acceptable level. Therefore our information for this category came mainly from the championship committee. There were two ways as to how the activities from the sponsors in the third category led financial flows into the region. First, the external firms paid the championship committee to have the licenses, which gave them the rights to use badges on their products. Second, the local firms in this category sold a part of their products to consumers from outside the region. This sale took place over a long period of time, before, during, as well as after the event. Unfortunately, our material does not contain the salesincome before and after the event, and therefore the regional inflows (in this field) will be underestimated. The championship-committee, and sources in the local municipality delivered information about the other financial inflows – necessary for the analysis. Indirect Effects and Input- Output Analysis Very few regions, if any, have data on the cost-structure of regional industries. A specific survey of average effects of an event at the business level would not be infeasible, but complicated and costly to perform. An alternative, more handy albeit less precise way to get hold of these estimates, is to take

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advantage of the input-output data prepared on a regional level (preferably) or on a national level which most developed countries have. The origin of input-output analysis dates long back in the history of economics. Quesnay published his Tableau Economique in 1758 where he showed the successive "rounds" of economic effects from a given increment in output (cf. Newman 1952). The major theoretical break-through is due to (the 1973 Nobel laureate) Leontief (1936, 1951). There are two types of consumption: final demand such as household consumption or exports and intermediate demand as when one industry is using products from another industry as input for production. Similarly, there are two types of production: intermediate "semi-products", which are used as inputs for other industries and "basic inputs", such as labor and capital. There are several ways to categorize the economy into a number of sectors/industries. The following categorization was used in this study: • Primary industry • Processing industry • Building and construction industry • Travel and tourism • Other services By calculating the "inverted Leontief matrix" (see for example Miernyk, 1965 for an introduction to the techniques) one can construct an instrument for determining the final regional economic effects (direct as well as indirect effects) from an infinite number of "rounds". Thus the initial incremental regional revenue described by a matrix will reverberate throughout the regional economy in a maze of economic interdependencies and the combined increase in total output of all sectors of the regional economy will be considerably more significant than the initial stimulus. The calculation of the indirect impacts was based on data from statistics from the Norwegian Statistical Bureau regarding input-output tables and income statistics for the local counties (SSB, 1996). Both the direct- and indirect impacts are most often calculated by means of input-output models, based on coefficients, which normally are calculated from the average expenditure in a previous year. It is not obvious that such coefficients are a perfect means to calculate the pattern for extra expenditure, when the main part of it, refers to a short period (two-weeks). First, it is not obvious that the regional firms are able to meet all the extra demand as usual. Second, it cannot be taken for granted that the extra demand from the local consumers will follow the usual pattern, when the extra money is spent. At least a part of the local labor-force, may prefer other goods and services than normally, if their ordinary income increase considerably, it is also likely that events can create a “peak-situation”, and lead to a different split between consumption and investment. In the macro-economic literature it is well accepted that the marginal consumption rate will decrease when the income level rises (Keynes 1936; Parkin & Bade 1982). Therefore it is likely that an input-output model based on average behavior on a yearly basis, can exaggerate the volume of the indirect impacts. Shortages among the “ordinary” suppliers, can force the local firms to use additional suppliers outside the region, which will lead to bigger leakages than what happens in more normal periods. Wanhill (1988) has documented that capacity constraints can reduce the multiplier-impacts significantly. If the indirectand induced impacts from short-term events are calculated, based on average- input-output coefficients, it is obviously necessary to carry out further investigations, at least among the producers who are most involved. These sorts of questions can be raised both regarding the indirect- and induced impacts. However, there were far fewer direct local producers, than all the employees who received extra wages. Therefore it was easier to control the pattern of the extra expenditure - at least in the first round – among the direct local suppliers. Informal conversations with some of the main hotels in the region indicated that most of the firms extraordinary deliveries in the actual period came from their ordinary suppliers. Our impression was that the “peak-situation” because of the event, did not cause higher leakage than normally for the majority of the local producers. To make a correct judgement of the net economic-contribution from championship-activities to the local economy, it is absolutely necessary to take in to consideration the opportunity costs. It is obvious that such a big event can displace other activities in a town of 145.000 inhabitants. Some of the monetary 5

inflows to Trondheim, related to the event, displaced other inflows. Without the championship, other tourists might have come in the actual period. Some of the support from the external sponsors could also have been spent in the region – irrespective of the championship - but on other items. The economic flows that were displaced by the championship activities must be regarded as an opportunity cost, and withdrawn from the gross-impacts. If not, the net regional-contributions from the championship-activities will be exaggerated. Our assumptions (and calculations) about the volume of the opportunity cost, were based on statistics from the relevant economic activities in “normal” periods, and from the surveys we carried out among the sponsors. 4. RESULTS Total Direct Income Table 1 indicates the direct income that the activities related to the event generated in the region. As seen from the table, more than 90 % of the income was related to the visitors’ expenditures and sponsorship-support. About NOK 250-260 mill. (82-85 %) was received during the first three months of 1997. Table 1: Direct regional income. All the amounts in the table are in million kronor (NOK) 1 . Visitors expenditure Support from external sponsors Support from public funds Media activities Total

203,8 73,3 18,2 9,0 304,4

The support from external sponsors was absorbed during the period 1994-97, but more than 50 % was received in 1997. The amount for media-activities include the income received by the championship committee from selling the TV-rights, which amounted to NOK 7,8 mill. The total income for this was NOK 12,9 mill, but 40 % of it was for The International Ski Federation (FIS). It also includes some of the extra expenditures from the external press- and media-groups. It does not include the media person’s expenditure, which is included in the first item – visitor’s expenditure. The support by public funds does include financial support to build the arena – and was given in two terms 3 and 6 years prior to the Championship and was received in 1991 and in 1994/95. These amounts were adjusted according to the price index. Visitors' Expenditure The event gathered a total of 480.000 spectator-days. The championship-committee sold more than 300.000 tickets. The numbers watching the competition from outside the fences were calculated at 180.000, based on the arena surveys and a special survey from a random sample of the local population. 70 % of the all the spectators were locals (i.e. from one of the two Trondelag counties). Only 3 % of the visitors were foreigners. The 41.000 visitors from outside the Trondelag counties created almost 200.000 bed-nights. The ordinary spectators stayed 4,3 nights in Trondheim on average. Those who came because of tasks related to the event, had significantly longer stays. Especially the media-workers stayed for long periods – more than 12 nights on average. The visitors’ total expenditure represented 67 % of the regions direct income. More than 95 % of it was received from February 20 to March 2, 1997. Established local firms absorbed the main part, but both the accommodation-industry and other businesses put up temporary establishments. Most of these mediate producers were owned by local firms. The exception was cruise-ships hired in by the Championship Committee as a supplement for the local hotel industry. These ships represented the only significant direct leakage, which amounted for more than NOK 30 mill. This leakage represented 10 % of the regions total direct income and 15 % of the income related to the visitors’ expenditure. 1

The exchange rate used between US-dollar and Norwegian kroner is; USD 1 = NOK 7,60 (January, 1988) 6

The surveys revealed significant differences in economic behavior among the various categories of visitors. Table 2 indicates the visitor’s aggregate expenditure – and how it was distributed among the local producers. The group “ordinary spectators” consists of spectators outside and inside the arena. 25 % of the visiting spectators inside the arena were guests invited as by firms or organizations. Consequently this group did not pay for most of their expenditures in Trondheim themselves. One third of the actual firms were situated in Trondelag, which means the expenditure for their guests cannot be regarded as incremental income for the region. The other firms that invited guests to this event, had their headquarters in “the rest of Norway”. The group “others accredited” consisted of several categories of people with different kind of tasks related to the event. It also include guests that were invited by the Championship Committee and official sponsor firms. Table 2: Aggregate expenditure visitors All the amounts are in million kroner (NOK): Accommodation Serving Tickets to the arena Local transport Groceries Other services and goods Total

Ordinary spectators 38,5 55,4 11,7 8,6 8,5 20,7 143,4

Press & media 12,3 4,4

Others accredited 22,8 12,8

0,9 0,4 1,5 19,4

0,5 0,4 4,5 41,0

Total 73,6 72,6 11,7 10,0 9,3 26,7 203,8

1200 press- and media-workers covered the event, and 1000 of them were external. Totally the press & media-workers created almost 13.000 bed-nights, and nearly all of them in downtown hotels in Trondheim. The Championship was broadcast live on TV in almost 30 countries, and The Norwegian Broadcasting Corporation (NRK) was the host broadcaster for the international TV broadcasting. To execute all their tasks it was necessary to “import” 300 external media-workers from outside the region. Live-TV programs need a big staff of co-workers, and lots of preparations had to be done prior to the main event. Therefore many of them arrived in Trondheim several weeks before the event started. The press & media-workers had the highest expenditure per person, as seen from Table 3, mainly for two reasons. First, they stayed for longer periods than all the other did. On average the press- and mediaworkers spent nearly 13 nights in Trondheim – while the average for “ordinary spectators” and “other accredited” were 4,4 and 8,5 nights. Second, their accommodation-costs per day were well above the majority of the other visitors, although there were some groups that spent more per day. The press & media workers' food-cost per day was not significantly different from the average for other visitors. Some in the “Others accredited” group also used expensive accommodation alternatives, and also had a very high average expenditure per day. But most of these persons did not stay for longer periods. Therefore the costs per person for this group were significantly smaller than for the press & media group. As seen from the table, those who were invited as guests had the highest average expenditure per day. But the majority in this group stayed for shorter periods (4.2 nights on average), and therefore the expenditure per person was significantly smaller than for the press & media-workers. Table 3: Expenditure per day and per person – different categories. (NOK). Category

Accommodation Serving Other Total

Ordinary spectators (paid self) Per Per day person 105 517 241 1.186 222 1.092 568 2.792

Ordinary spectators (guests) Per Per day person 1.074 4.457 901 3.739 324 1.345 2.299 9.541

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Press & media Per day 1.001 325 204 1.530

Per person 11.916 4.232 2.652 18.800

Others accredited Per day 785 442 188 1415

Per person 6.673 3.757 1.598 12.028

In the “others accredited” group and among “ordinary spectators” we found the highest average expenditure per day among those who were invited as guests – either by firms or by the Championshipcommittee. For these persons both the accommodation-costs and the serving costs were significantly higher than for most of the other groups. Mainly because most of those who financed their own expenditures, used non-commercial accommodation instead of hotels. Among the visiting spectators that paid for their tickets them self, 77 % stayed with relatives or friends. Among those who did not pay for the tickets, only 47 % stayed with relatives or friends. Therefore the accommodation-costs per day were more than ten times higher for those who were invited, than for the rest of the ordinary spectators. The same difference, although not as high, was found for the serving-costs per day. We also found other significant differences in the expenditures, according to t-tests both at 95 and 99 % significant level. But except from the accommodation and serving costs, the differences for the other items were to small to have a magnitude impact on the aggregate amounts – both per person and per group. Sponsorship Income As mentioned previously, there were three categories of sponsors. All the sponsors were Norwegian. As seen from Table 4, most of the income came from the main sponsors (category 1). From this group 87 % of the total amount came from externals firms outside Trondelag, but inside Norway. The surveys also indicated that almost all of the incremental sponsorship-income, was directly related to the championship. Less than one percent of the money from external sources would have been spent in the region irrespective of the championship. None of the local firms would alternatively have used the resources outside the region. Therefore the displacement of other activities (financial inflows) was hardly a phenomenon at all for the sponsorship income. Almost 100 % of it can therefore be regarded as net contribution for the region. Table 4: Income from sponsors. All the amounts are in million kroner (NOK): Main sponsors (category 1) Free services and products (cat. 2) License agreements (cat. 3) Total:

External 59.3 5.9 8.1 73.3

Internal 8.5 8.0 4.4 20.9

Total 67.8 13.9 12.5 94.2

Opportunity Cost The opportunity costs, which take into account that other activities were displaced in the actual period, was mainly a phenomenon in the travel and tourism industry. February is normally not a very busy month for the hotel industry in Trondheim. In 1996, i.e. the year before the Championships, the occupancy rate was 40%. Our estimate of the alternative cost is based on the assumption that these "normal" tourists represent "lost business" for Trondheim's tourism industry during the Championships. The same applies to tourists that are staying with friends and relatives in Trondheim, where we assume that 15% of the Championships numbers represent "normal" activity. This gives an opportunity cost based on 35,000 "lost" guest-nights, displaced by the Championships, which fits well with the results from research carried out by TÖI. This study (Jean-Hanssen, 1995) reported an average of 3.100 guests per day in Trondheim over a year (in 1993) and an average spending of 524 Kr per guest and day (in 1993). Our estimate of the alternative cost for the tourism industry is thus 35,000 visitor-days x 600 kr/day = 21 mill.kr distributed among various industries in the same proportions as tourism expenditure was distributed during the Championships. For industries other than the tourism industry, the direct economic impact of the Championships was less than 1% of annual output except for the construction industry where it was 2%. We have assumed that these industries had enough idle capacity to accommodate this extra demand and that there were no displacement effects and no opportunity costs for other industries than the tourism industry where, the income from the championship-activities represented 10 % of their total output last year.

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Indirect Impacts Every economic activity create indirect impacts. There can be significant differences, depending on the pattern of direct impacts. The self-sufficiency rate can vary significantly among the various industries as well as among different geographical areas, which is well documented by Archer and Fletcher (1990). Therefore the multipliers will vary, both among the different sectors in the same region, but also among regions. As table 5 indicates, the processing industry and other services received the major part of the indirect impacts. While the travel and tourism industry received 55 % of the direct impacts, they only received 17 % of the indirect impacts. Table 5: Total impact – divided among industries. All amounts in million Norwegian kroner (NOK):

Primary industry Processing industry Building and construction industry Travel and tourism Other services Total

Direct impact (a) 0 25 24 168 87 304

Indirect impact (b) 14 55 10 32 74 184

Opportunity costs (incl. indirect effects) (c) 1 5 1 19 8 35

Net impact (a+b-c) 12 75 34 181 152 454

An average multiplier of 1,6 – which is the ratio between the total and direct income (i.e. [304+184]/304=1.6) - is relatively high since most of the direct income was absorbed by labor intensive sectors, mainly by the local travel and tourism and “other services”. In Trondelag, these sectors receive a big part of their deliveries from local suppliers, at least in the first round. Another explanation is that Trondelag can be regarded as an economically diversified region. Compared to smaller regions with less variety of suppliers and producers, the leakage is significantly smaller. Sometimes, the multiplier also includes the induced impacts, but as pointed out earlier, this is not the case in this analysis. The fundamental question should therefore be whether the multiplier impacts caused by such events is bigger or smaller than if the direct impacts are caused by other activities and in other primary sectors. It is obvious that some of the biggest events will create peak-situations, and lead to shortages among the local suppliers and higher imports than usual. Even big and diversified regions may have to import a significant amount of resources when they host mega-events, like the Olympics. Such circumstances should logically be regarded as arguments for smaller multipliers. However this is obviously an issue that needs further research and investigations.

5. CONCLUSIONS One often hears that events of this size just have to be an economic success for the region. Although events often prove to be successful, there are also former studies that indicate this is not obvious. A survey carried out during the Olympics in Los Angeles 1984 (Laventhol & Horwarth 1984), proved that 80 % the local restaurants reported declines in their food business, and that many of the local tourist attractions measured an activity that was 20-35 % lower than normal for that time of the year. Mainly because ordinary tourists were displaced by the Olympic tourists, who had a significantly lower expenditure than those who were displaced. Similar results were experienced during the Olympics in Tokyo 1964 and in the Olympics in Montreal 1976 (Leibold & van Syl 1996). Also during the championship in athletics in Gothenburg, it was documented that the displacement of “ordinary tourists” can reduce the gross impact significantly (Hultkranz 1998). Based on our measures and calculations, the championship and the activities related to it, created a direct income to the region amounting to NOK 304 million After deducting an opportunity cost of NOK 21 million, the net direct impact was reduced to NOK 283 million. For the region, the number-one income was related to the visitors’ outlays, and it represented 67 % of the gross income. On this background it was no surprise that the economic winners from this 9

championship were the local travel and tourism industry. The local hotels and restaurants received NOK 132 million. Sponsorship income was “the number two” category of inflows and represented 24 % of the direct income. The majority of the local producers, who received the direct income, were situated in Trondheim, although a minor part of the income was absorbed by businesses surrounding the town – mainly in the hotel industry in the Trondelag counties. The main source of import leakage was due to the cruise-ships, hired by the Championship Committee to support the local accommodation industry, and amounted to NOK 30 million. However, this "import" was probably a clever solution for the region. The alternative would have been capacity problems and higher prices and/or more geographical dispersion of the impacts. Considering that the event was an international championship, it can be argued that it drew very few spectators from other countries (3 %). Although 60 % of the media-workers came from outside Norway, the total number of people in this group was too small to change the overall pattern. The same pattern was found among the sponsors, where 78 % of the income came from external sponsors – but inside Norway. Therefore one can conclude that most of the income Trondheim received from the event, was transfers from “the rest of Norway”. However, there are no doubts that the event lead valuable financial recourses in to the region, and that the net result was positive. It was mainly an economic success for the local travel and tourism industry, but in addition the sponsorship income was considerable, in the first round for the Championship Committee, but in the next rounds also for other local industries. Several reasons explain the success. First, it is obvious that 41.000 visitors will have a magnitude economic impact in a town with 145.000 inhabitants. Such a big number of visitors is far beyond the capacity in the local accommodation industry. Therefore it was also necessary to establish a wide range of mediate solutions. The majority of the visitors stayed with friends and relatives and this group had a low expenditure, both compared to those that used other accommodation alternatives but also compared with ordinary tourists. But since this group contained many visitors, it created a significant amount of money in the region. There were also other accommodation establishments, such as schools, tents, private families who rented out their houses and apartments, and cruise-ships at the harbor. Except from the cruise-ships, these establishments did not create regional leakage. In this case the crowding out impact was mainly a phenomenon in the local travel and tourism industry. However the event took place in a period when the normal activity is far below the capacity constraints, and therefor the displacement of ordinary tourists was not severe. The same period a year before the event, the occupancy rate in the local hotel-industry was 40 %, which is normal for that period of the year. In the other industries the activities related to the championship were too insignificant to cause displacement. Hotel guests in Trondheim, at this time of the year, are normally business travelers. Comparisons with former studies indicate that the average championship tourist had a lower expenditure per day than the ordinary business traveler (Solberg 1996). However, at this event the tourists consisted of several categories of people with different economic behavior. Our surveys documented that the gross expenditure for those who stayed at hotels or used commercial accommodation, did not differ from those who were displaced, i.e. ordinary business travelers. Trondheim is not a city with “a lot of expensive things to do and buy” for tourists. The average tourist typically spend most of his or her expenditure on accommodation and serving. Therefore there are not many local suppliers relying on tourists in Trondheim – especially not in February/March. The results from the special survey among the press & media-workers suggest that it is likely that their expenditure (which is the income for the local suppliers) very often can be regarded as a more stable income, than the income from the other groups. As pointed out before, there are many uncertain factors that influence the number of ordinary spectators and visitors, but it is likely that newspapers and TVcompanies judgements on whether or not to cover an event are based on different, and more stable factors. We believe that factors such as the weather forecast, do not matter for the media. If the media decide that the event is worth covering, it very often means that a lot of media-people will travel to the destination and stay there for several days. Our survey revealed that especially the live-TV broadcasting needs a big staff of co-workers and lots of preparations. For the host region, the income created by the 10

press/media group could therefore mean a valuable economic impact for the Championship Committee, as well as for the local travel and tourism industry. Consequently, the media can reduce some of the economic uncertainty that very often is related to big events. For future hosts of similar events, the issues above can have an influence on weather or not the event will be an economic success. Although the event itself can attract many visitors, it is not certain that the net impacts will be positive. One must also consider issues such as: • Do the event and its activities lead to a displacement of other tourists (crowding out)? • How is the expenditure for event tourists – compared with those who are displaced? • How many of the visitors are casuals (people that will come irrespective of the event? • Similar considerations can also be relevant for other categories of income for instance sponsor support.

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