The Potential Economic Impact of

Ryder Cup Wales 2010

Introduction

The Ryder Cup is hosted on rotation by the PGA of America and the PGA European Tour at chosen venues. The Ryder Cup will be held at The Celtic Manor Resort in Newport, Wales in September 2010.

One objective of Ryder Cup Wales 2010 Ltd (RCW) is to help maximise the all Walesbenefits and return of hosting the event in the run up to the event, during the match and in terms of its legacy. In this context Sports Marketing Surveys (SMS) was commissioned by RCW to provide the following:

  1. Initial economic impact estimate of the event itself
  2. Identification of key influencing factors to help maximise return
  3. A detailed economic impact model to be used to measure the pre, during and legacy return for Ryder Cup Wales 2010

This work was completed in 2006 and further work was then undertaken to:

  1. Update the economic impact estimate with data from the 2006 Ryder Cup inIreland.

1Initial Economic Impact Estimate of the Event Itself

Based on the data provided from previous Ryder Cups, prior to the 2006 match, the following estimates were seen as realistic within the parameters of the analysis:

Low Level / Mid Level / Capacity Level
Total Economic Impact / Leakage from Sth Wales / Total Economic Impact / Leakage
From Sth
Wales / Total Economic Impact / Leakage
From Sth
Wales
Spectators / £23.4m / £6.9m / £28,9m / £8.2m / £43.4m / £15.9m
Hospitality / £8.6m / £1.0m / £10.8m / £1.3m / £14.4m / £1.7m
Media, Suppliers & Infrastructure Staff / £7.9m / £3.0m / £8.3m / £3.1m / £8.8m / £3.2m
Players & Entourage / £0.56m / - / £0.56m / - / £0.56m / -
Organisers & Management / £0.41m / - / £0.41m / - / £0.41m / -
Total / £41.0 m / £11.1m / £49.5m / £13.2m / £63.3m / £16.7m
Sth Wales Economic Impact / £29.9m / £36.3m / £46.6m

Note:

(i) Estimates for expenditure and accommodation outside South Wales have been shown as leakage. In previous economic impact studies this element has not been identified or separated from the overall total impact. Estimates have been based on information from the Ryder Cup held at the Belfry using Birmingham as the equivalent “local” area to South Wales.

(ii) Definitions are shown in Annex 1

1.1Results in Context

In calculating this initial economic impact estimate of the Ryder Cup 2010 at Celtic Manor Resort, key issues were raised to take forward as major influencing factors as well as designing the Ryder Cup Wales 2010 economic impact model:

  • The parameters for previous studies of Ryder Cup and for other similar economic impact studies, are around the event itself and therefore do not include any pre event and financial impact or a detailed legacy analysis.
  • The results compare well with the other Ryder Cup events and other published golf event data:

Economic Impact / Notes
Ryder Cup Wales 2010
Low
Mid
Capacity / £49m *
£59m
£75m / Estimates based on previous Ryder Cup data
Ryder Cup 2004
Detroit / $77m (£44m) / Includes sponsorship & tickets, and little estimation for leakage and deadweight
Ryder Cup 2002
The Belfry / £62m / Very little estimation of leakage and deadweight
The Open Championship 2005 / £32m / Estimate for Scotland plus £40m global media exposure (definition unknown)

* The low level capacity for Ryder Cup Wales has been based on figures from The Belfry 2002. However, figures have been adjusted to include deadweight within the Wales calculation that were not incorporated within the Belfry study.

  • SMS made best endeavours to show the impact for South Wales itself and the estimates of deadweight and leakage. These latter two factors are not seen in detail in previous Ryder Cup economic impact studies although estimates of “local” impact have been used in our assessment.
  • This finding will be taken forward to the final model itself, as it is a crucial element of the commercial calculations.
  • The leakage factor is of critical importance to Ryder Cup Wales 2010, due to the location of Celtic Manor Resort, close to the English border. There could be significant commercial leakage from the event and this is a very important area to be included in the influencing factor report.
  • Previous studies have made little use of factoring in leakage, deadweight and displacement factors. These will be critical in the final model. Multipliers were used within the Detroit 2004 model but SMS foresee this only as a measure of legacy.

All figures have been measured on a gross impact base using income to the area and expenditure. The final net figure is defined as the inclusion of any displacement, leakage and deadweight figures – all of which have been included within this study. However, multipliers have not been used at this stage.

1.2Additional Elements

There are some critical income and expenditure areas not included within the estimate as they may not be income generators for Wales or are not possible at this stage to determine. These include:

  • Concessions
  • Event/Production/TV Rights
  • Media Coverage
  • Merchandise
  • On-Site Facilities
  • Sponsorship
  • Ticket Revenues
  • Tolls
  • Tourism

2Identification of Key Influencing Factors to help Maximise Return

  • SMS have identified a wide range of factors that could influence the economic impact of hosting the Ryder Cup:

  • Accommodation
  • Business/ Investment
  • Conferences
  • Employment
  • Entertainment
  • Environment
  • The Event
  • Golf
/
  • Image/PR
  • Infrastructure
  • Local Government/ Authorities
  • Marketing
  • Media
  • Merchandise/Logo
  • Newport
  • Operations/Supply
/
  • Popularity
  • Property
  • Sponsorship
  • Tickets
  • Timing
  • Tourism (excl Golf)
  • Travel
  • Weather

  • It is apparent that many of these factors interlink and are reliant on Ryder Cup Wales and its partners driving and supporting initiatives as well as providing information and promotional material.
  • A common image and message reflecting the status of the Ryder Cup and its unique association with Wales, needs to run through all factors for the country to benefit to the full.
  • It is also clear that not all the benefits are quantifiable or measurable. Some are intangible, however, they are no less important to the overall opportunities to maximise economic impact for example raising the profile of Wales in key markets.
  • Essential throughout is timing. All these key conditions must be reviewed, understood and included within plans and strategies at a very early stage. Many rely on more long-term decision-making, and preparation is key. During our discussions and work on this project SMS has established that in many areas the groundwork has already been undertaken with processes being put into place.
  • The partnership approach involving Ryder Cup Wales with the organisers, PGA European Tour, is very important to ensure that objectives from both sides are understood. This will ensure that the benefits are maximised for all those concerned.
  • It must be noted that some factors may have a negative influence if not addressed appropriately – for example – congestion and transport.

This “audit” provided critical insight into the wide range of influencing factors and conditions that will affect the economic impact and return of hosting the Ryder Cup in Wales 2010.

3A Detailed Economic Impact Model To Be Used To Measure The Pre, During And Legacy Return For Ryder Cup Wales 2010

3.1Introduction

The future economic impact model has been designed to expand its measurement beyond hosting of the event itself. SMS recommendation is to have a model that allows flexibility, analysis by Wales regions, and provision of gross and net estimates for:

  • Pre 2010
  • The event itself
  • Post and legacy of 2010

The model needs to include any aspect, either tangible or intangible, which by association with Ryder Cup Wales, has had an impact on the economy of Wales.

In addition to aspects which will have an impact around the event, impact from the event itself at Celtic Manor will be included and based on the initial economic impact model. This has been updated from previous studies by Sports Marketing Surveys, and includes factors to allow net and gross measurement.

SMS recommendation is for the model to be implemented in “Ryder Cup Years” of 2008 and of course 2010. However, the legacy will continue and hence the measurement should continue from 2012 onwards.

3.2Approach

In the build up to creating the economic impact model critical background research was undertaken:

  • The historical assessment of Ryder Cup matches and economic impact studies of other events.
  • Estimate of the gross economic return for Ryder Cup Wales 2010 based on previous data and models. Leakage and deadweight factors to provide a net figure were included.
  • The identification of key influencing factors and highlighting the importance of both tangible and intangible elements.

The combination of this information formed the basis of the model ensuring that it also fulfilled the following criteria:

  • Flexibility – the ability to add or amend any elements as conditions change.
  • Time – for the model to be updated at regular intervals – 2008, 2010 and the legacy.
  • Wales regions – to be able to analyse the impact by regions.
  • Gross and net estimates – the inclusion of factors to provide a net value – leakages, deadweight, displacement and multipliers.
  • Additional event analysis – giving a direct impact for the event itself.

The diagram below illustrates the approach:

SMS’srole was to design the model in terms of all elements that need to be included. The status, availability and format of data for each of these elements will vary – much will already be available but may need to be adapted for the model and other information may need to be commissioned separately.

3.3Event Specific Measurement

This analysis focuses on the staging and attendance at the event itself in September 2010. SMS’s recommendation is to use the updated model used from this project to provide an initial economic impact estimate. The majority of the information is sourced through the following and SMS recommend that this continue:

  • Spectator studies
  • Hospitality studies – with the hospitality hosts
  • Desk research and provision of data from the organiser for infrastructure, players/teams and management of the event.

The model used to provide an initial estimate has been upgraded to include leakage, deadweight and displacement factors as well as clearly illustrating the local Wales economic impact.

3.4Pre Event & Legacy Information

The exact nature of the information that can be sourced around the event itself is still to be confirmed and will be dependent upon the process of established measurement systems. The listing below provides an audit of the type of information to be added to the main model and considerations to be included when formatting and assessing the data – mostly on a pre and legacy basis but also in some instances during the event itself.

This A-Z of key factors includes:

  • Accommodation – levels of occupancy around Ryder Cup Wales events.
  • Business/Investment – numbers involved and spend through the Ryder Cup Business Club.
  • Conferences – Attendees and spend for those linked to the hosting of the event
  • Employment – Additional employed and wages by licensees and supplies for Ryder Cup Wales contracts and those gained due to association of supplying products and services.
  • Entertainment –Entertainment within local events in the run up and legacy of the event e.g. locally based supplies and spend by attendees.
  • Environment – Development of a pro-active strategy linked to positive PR for golf features using pro environmental factors.
  • Golf – Both the local and tourism factors of attracting new players and visitors to play on courses and their relevant spend.
  • Image/PR – PR valuation of key words and images used to describe and show the event.
  • Infrastructure – Upgrades and refurbishments undertaken due to the need for hosting the Ryder Cup.
  • Marketing – Direct income from sponsorship, local suppliers, attendees, employment and media coverage of Ryder Cup Wales events and other events linked to Ryder Cup Wales.
  • Media – Pre and post coverage of the event giving direct and indirect mentions and strengthening the global profile.
  • Merchandise/ Logo – Benefits to Wales for official Ryder Cup merchandise sources through local suppliers and income from Ryder Cup Wales own official merchandise range and use of logo. This also applies to Celtic Manor Resort.
  • Operations/Supply – Any use of local supplies and services such as transport, electrics, plumbing and catering for functions and events around the event.
  • Property – Any increase in housing and prices around Celtic Manor Resort.
  • Sponsorship – Any income from official and local Ryder Cup sponsors who leverage their association around the event.

Tourism – both non-golf and golfing. Measured through the Visit Wales Tourism Monitors.

4Update The Economic Impact Estimate With Data From the 2006 Ryder Cup in Ireland

4.1Background

SMS were provided with detailed data relating to spectators and VIP guests attending the Ryder Cup in Ireland, September 2006. This data was assessed and compared to previous years’ information and discussions held to clarify points with PGA European Tour. SMS and RCW then looked at the data with respect to Wales and used the appropriate data to update the model.

It must be noted that no data relating to infrastructure was provided from the Ireland report and hence an assessment had to be made based on discussions with PGA European Tour.

The updated estimate is for the event itself only and does not include any benefits that Wales would receive before the event or within legacy. It also does not include any public sector, Celtic Manor Resort or tourism outlay – this is seen as a cost rather than a return and any impact would be measured in legacy. This is also the case with any media postcard effects of Wales as these are again seen as longer term benefits.

Some of these elements were included in the Ireland economic impact study and account for an additional £15 million gross impact.

4.2Considerations

The weather for the Ireland event was predominantly rain. Despite this, capacity crowds attended indicating that Wales can expect a full house for the event regardless of conditions.

Key considerations relate mostly to the geographic nature of the event in Ireland and have been incorporated into the updated estimate, namely:

  • The majority of income from the Ryder Cup in Ireland can be attributed locally or at least to Ireland itself.
  • For Wales this is not the case due to its proximity to England and the ability to travel to Celtic Manor Resort on a daily basis without overnight stays. Also the physical infrastructure needed to stage the event can be sourced from outside of Wales.
  • In previous Ryder Cup events the majority of tickets to spectators, and to some extent VIPs, had been sold on a “season ticket” basis. However, for Ireland this policy differed with more one-day passes being sold. Based on discussions with Ryder Cup Ltd, the day pass system has been used to update the model.
  • This had an impact for Wales in terms of travel and accommodation, offering less opportunity or need to stay overnight.
  • However, more individuals could attend the event.

4.3Summary of Results

Using the 2006 Ireland data the economic return for Wales at capacity attendance levels increased to £96 million (gross).

Note:

* No leakage has been applied in Ireland based on data shown to Sports Marketing Surveys

# Ireland based in Euros – Converted to £ as €1.5 = £1 (2006 figures)

The economic benefit of the Ryder Cup 2010 match to the economy of Wales was initially estimated to be between £41m and £63m,depending on attendance at the event (the upper estimate representing full capacity). This compared with post-event estimates of £44m for the 2004 Ryder Cup (Detroit), £62m for the 2002 Ryder Cup (Belfry), and £32m for the 2005 Open Championship (St Andrews).

When leakage (the proportion of outcomes benefiting those outside the target/ local area - defined in this study as South Wales) and displacement (the proportion of outcomes accounted for by reduced activity elsewhere in the target area) were accounted for, the estimated economic benefit to Wales was between £30m and £47m, again dependent on attendance, with the upper estimate representing full capacity.

Updating the full capacity estimates using information from the study of the 2006 Ryder Cup, Sports Marketing Surveys Ltd conclude that the economic benefit of the Ryder Cup 2010 match to the economy of Wales might be as high as £96m. This compares with the post-event estimate of around £114m (adjusted from original estimate of €143m) for the 2006 Ryder Cup (K Club). When leakage and displacement are accounted for, the estimated full capacity economic benefit to Wales of the Ryder Cup 2010 match is£73m.

It is important to note that the original and updated estimates represent only the estimated direct benefit to Wales from increased income and expenditure in the week of the Ryder Cup match. The estimates do not capture benefits accruing to Wales in the run up to the event, nor in terms of the legacy of the event post 2010. Furthermore, the estimates do not reflect intangible benefits, in particular raising the profile of Wales, which is seen by many as the most important benefit of hosting the 2010 Ryder Cup.

ANNEX 1

Definitions

Within this model the following definitions apply:

Economic Impact / Overall / The total amount of additional expenditure generated that can be directly or indirectly attributed to the staging of the Ryder Cup in Wales. – Definition – UK Sport – Major Sports Events – A Guide.
Timing / Pre / This includes any time up to the event itself – September 2010.
Event / This includes all time around the event from build up to take down
Legacy / This includes any time after the event and realistically up to 10 years after - this is based on research undertaken which shows that a golf venue can sustain premium green fees up to 10 years after hosting a major event, even if no other similar status event is undertaken in the meantime.
Factors / Tangible / Any elements that can be quantifiably measured in monetary terms.
Intangible / Any elements where Ryder Cup Wales is linked to provide a benefit. This is not directly quantifiable but implies an effect. E.g. Use of Ryder Cup Wales on generic advertising for Wales.
Impact Factors / Leakage / Any income directly related to hosting the Ryder Cup in Wales where the end beneficiary is not Wales based. E.g. hotels used by spectators in England.
Displacement / Crowding out of one visitor spending by another.
Deadweight / Those living locally who would have made the expenditure regardless. I.e. “Expenditure to promote a desired activity (Ryder Cup) that would have occurred without expenditure” – The Green Book.

Capacity at Celtic Manor Resort is ~45,000 per day to include all spectators, hospitality and staff. Ryder Cup Wales is contracted to provide at least 35,000 capacity per day. For the purpose of this report we have provided three cumulative estimates: