The Economic Impact - University of Minnesota...Bureau of Business and Economic Research Labovitz...

July 1, 2015

Research Report

For the Duluth Amateur Hockey Association

The Economic Impact

of the

Duluth Amateur Hockey Association

on the

City of Duluth

Bureau of Business and Economic Research Labovitz School of Business and Economics

University of Minnesota Duluth

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Research Team

UMD Labovitz School of Business and Economics

Bureau of Business and Economic Research

Monica Haynes, Director

Gina Chiodi Grensing, Editor/Writer

Michelle Scott, Undergraduate Research Assistant

Travis Eisenbacher, Undergraduate Research Assistant

Karen Haedtke, Executive Administrative Specialist

Bureau of Business and Economic Research

11 East Superior Street, Suite 210

Duluth, MN 55812

(218) 726-7895

www.d.umn.edu/lsbe/bber.php

Project Contact

Clarke Coole

Executive Director

Duluth Amateur Hockey Association

120 S. 30th Ave. W.

Duluth, MN 55806

(218)728-8000

[email protected]



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Table of Contents Research Team ................................................................................................................................. ii Table of Contents ............................................................................................................................ iii Table of Figures ............................................................................................................................... iii Table of Tables ................................................................................................................................ iv Executive Summary .......................................................................................................................... v I. Project Description ....................................................................................................................... 1

Deliverables ........................................................................................................................ 1 Study Area ........................................................................................................................... 2 Definitions Used in This Report .......................................................................................... 3

II. Impact Procedures and Input Assumptions ................................................................................. 4 Input/Output Analysis ......................................................................................................... 4 IMPLAN Data and Assumptions .......................................................................................... 4

III. Inputs Provided for Modeling the Impacts of DAHA Tournaments ............................................ 6 Tournament Survey ............................................................................................................ 6 Tournament Attendance .................................................................................................... 7 Visitor Spending .................................................................................................................. 9 Hotel Spending .................................................................................................................. 10 Total Spending .................................................................................................................. 14

IV. Inputs Provided for Modeling the Impacts of DAHA Operations ............................................. 17 Revenue Sources ............................................................................................................... 17 Expenditures ..................................................................................................................... 18

V. Inputs Provided for Modeling the Impacts of Other Local Hockey Tournaments ..................... 21 Tournament Attendance .................................................................................................. 21 Visitor Spending ................................................................................................................ 23

VI. Findings ..................................................................................................................................... 23 DAHA Tournaments .......................................................................................................... 23 DAHA Operations .............................................................................................................. 26 DAHA Tournaments and Operations Total ....................................................................... 27 Other Local Tournaments ................................................................................................. 29 All Local Hockey Tournaments .......................................................................................... 30 All Local Youth Hockey Combined .................................................................................... 32 Modeling Issues ................................................................................................................ 34

VII. Conclusions .............................................................................................................................. 34 Appendix A ..................................................................................................................................... 36

Duluth Amateur Hockey Association Tournament Survey ............................................... 36 Top 15 Impacted Industries .............................................................................................. 37

Table of Figures Figure 1. City of Duluth and Surrounding Zip Codes ........................................................................ 2 Figure 2. Non-Hotel Visitor Spending by Sector ............................................................................ 10 Figure 3. Number of Rooms Booked and Visiting Teams, Per Tournament .................................. 13



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Figure 4. Visitor Spending By Category, In Thousands .................................................................. 14 Figure 5. Visitor Spending, Averaged Per Person .......................................................................... 15 Figure 6. Duluth Amateur Hockey Association Revenue Sources .................................................. 17 Figure 7. DAHA Expenditures by Type ........................................................................................... 18 Figure 8. Top 15 Industries Impacted by DAHA Tournaments ...................................................... 25 Figure 9. Top 15 Industries Impacted by DAHA Operations .......................................................... 27 Figure 10. Top Fifteen Industries Impacted by DAHA Tournaments and Operations ................... 28 Figure 11. Top 15 Industries Impacted by Other Local Hockey Tournaments............................... 30 Figure 12. Top 15 Industries Impacted by Other Local Hockey Tournaments............................... 31 Figure 13. Top 15 Industries Impacted by Local Hockey Combined .............................................. 33

Table of Tables Table 1. Duluth Amateur Hockey Association Tournament Schedule and Attendance Estimates.. 8 Table 2. Survey Response Statistics from Visiting Team Managers ................................................. 9 Table 3. DAHA Sponsored Hotels and Selected Statistics .............................................................. 11 Table 4. IMPLAN Visitor Spending Industry Sectors and Distribution ........................................... 16 Table 5. IMPLAN Commodity Sectors Used for the DAHA Customized Industry ........................... 19 Table 6. Other Local Tournament Attendance Estimates .............................................................. 22 Table 7. Economic Impacts of DAHA Tournaments on Duluth ...................................................... 24 Table 8. Economic Impacts of DAHA Operations on the City of Duluth ....................................... 26 Table 9. Total Economic Impacts of DAHA Tournaments and Operations on Duluth ................... 27 Table 10. Economic Impacts of HAHA, PAHA, and CAHA Tournaments on Duluth ....................... 29 Table 11. Economic Impacts of All Local Hockey Associations’ Tournaments on Duluth .............. 31 Table 12. Economic Impact of All Local Hockey on Duluth ............................................................ 32 Table 13. Top 15 Industries Impacted by DAHA Tournaments ...................................................... 37 Table 14. Top 15 Industries Impacted by DAHA Operations ......................................................... 37 Table 15. Top 15 Industries Impacted by DAHA Tournaments and Operations ............................ 38 Table 16. Top 15 Industries Impacted by Other Local Hockey Tournaments ................................ 38 Table 17. Top 15 Industries Impacted by All Local Hockey Tournaments ..................................... 39 Table 18. Top 15 Industries Impacted by Hockey .......................................................................... 39



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Executive Summary

The Duluth Amateur Hockey Association (DAHA), established in 1963, serves the Duluth community by providing the services and infrastructure necessary to support youth hockey programs in the community. DAHA’s mission is to provide all youth an opportunity to participate and excel through the sport of hockey while building and developing sportsmanship, self-esteem, confidence, and respect for others.

DAHA contacted the Bureau of Business and Economic Research (BBER) to conduct a study on the economic impacts of the organization and the economic benefits that it provides to the city of Duluth and the surrounding area through its operations and tournaments.

The economic modeling software used was IMPLAN 3.1.1 The study used IMPLAN’s economic multiplier analysis and input/output modeling. The most recent IMPLAN zip code data available were used, for the year 2013. Results of this modeling, reflecting 2015 dollars, are presented here as a written report. The study areas for the impact were designated as all Duluth zip codes, including those extending beyond the city limits.

In total, the Duluth Amateur Hockey Association contributed to the creation of 58 full- and part-time jobs and added nearly $5 million in spending throughout Duluth’s economy during the 2014-15 season. Hotels and Motels saw the largest economic impacts. Other industries that benefitted economically include Fitness and

1 IMPLAN Group LLC, 16740 Birkdale Commons

Pkwy, Suite 212, Huntersville, NC 28078. www.implan.com

Recreational Sports Centers, Full- and Limited-Service Restaurants, and All Other Food and Drinking Establishments.

The impacts of DAHA’s tournaments make up the greatest share of the impacts to the city, and they represent entirely new spending in the economy, as they are bringing out-of-town visitors to Duluth. The sectors that are most impacted by this additional spending are Hotels, Restaurants, and Other Food and Drinking Establishments. In total, DAHA’s tournaments contribute nearly $3.7 million throughout the local economy.

The economic impacts of DAHA’s operations (including payroll and benefits, fundraising, officials, and ice rental) contribute a smaller but substantial share to the overall impacts. The club employs six individuals and directly contributes more than $560,000 to the local economy. That direct spending then leads to approximately $520,000 in additional spending throughout the city of Duluth, for a total impact of $1.1 million in output.

Finally, the impacts of all other local hockey tournaments is estimated to have increased local output by approximately $3.4 million and supported the creation of another 42 new jobs. When combined with the results from the DAHA analysis, it is estimated that youth hockey in Duluth created nearly 100 new full- and part-time jobs and contributed to more than $8 million in additional local output in the past year.

http://www.implan.com/



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The Economic Impact of the Duluth Amateur Hockey Association on the City of Duluth

I. Project Description

The Duluth Amateur Hockey Association (DAHA), established in 1963, serves the Duluth community by providing the services and infrastructure necessary to support youth hockey programs in the community. DAHA’s mission is to provide all youth an opportunity to participate and excel through the sport of hockey while building and developing sportsmanship, self-esteem, confidence, and respect for others.

DAHA contacted the UMD Labovitz School of Business and Economics’ Bureau of Business and Economic Research (BBER) to conduct a study on the economic impacts of the organization and the economic benefits that it provides to the city of Duluth through its operations and tournaments.

The economic modeling data and software used for the analysis was IMPLAN 3.1.2 The study used IMPLAN’s economic multiplier analysis and input/output modeling. Data was the most recent IMPLAN county data, which is for year 2013. Results of modeling, reflecting 2015 dollars, are presented here as a written report.

The research objectives of this study included the following:

To model the economic impacts of the DAHA organization and tournaments.

To model the additional economic impacts of other youth hockey tournaments in Duluth.

Deliverables

The BBER will report the direct, indirect, and induced economic impacts of DAHA activities and other youth hockey tournaments in the City of Duluth, measured in employment, output, and value added.

The BBER will draft a final written report that will present the findings and analysis. The report will be provided to the Duluth Amateur Hockey Association in Adobe PDF and Microsoft Word formats.

2 IMPLAN is used by state government and federal government agencies, among others. IMPLAN Group LLC, 16740

Birkdale Commons Pkwy, Suite 212, Huntersville, NC 28078. www.implan.com

http://www.implan.com/



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Study Area The geographic scope for this economic impact analysis is proposed to be the city of Duluth. Figure 1,

below, shows an outline of the Duluth city limits and shaded regions for the included zip codes. All

Duluth zip codes3 were used for the study area, including those located only partially within the city

limits (i.e. 55803, 55804, 55810, and 55811).

Figure 1. City of Duluth and Surrounding Zip Codes

SOURCE: http://www.zipmap.net/Minnesota/St._Louis_County/Duluth.htm

3 Duluth zip codes include 55801, 55802, 55803, 55804, 55805,55806, 55807, 55808, 55810, 55811, 55812, 55814,

55815, and 55816.



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Definitions Used in This Report

Backward Linkages: The interconnection of an industry to other industries from which it purchases its inputs in order to produce its output. It is measured as the proportion of intermediate consumption to the total output of the sector (direct backward linkage) or to the total output multiplier (total backward linkage). An industry has significant backward linkages when its production of output requires substantial intermediate inputs from many other industries4.

Direct Effect: Initial new spending in the study area resulting from the project.

Employment: Estimates (from U.S. Department of Commerce secondary data) are in terms of jobs, not in terms of full-time equivalent employees. Therefore, these jobs may be temporary, part-time, or short-term jobs.

Gross Output: The value of local production required to sustain activities.

Indirect Effect: The additional inter-industry spending from the direct impact.

Induced Effect: The impact of additional household expenditures resulting from the direct and indirect impact.

Labor Income: All forms of employment income, including employee compensation (wages and benefits) and proprietor income.

Leakages: Any payments made to imports or value added sectors that do not in turn re-spend the dollars within the region.

Multipliers: Total production requirements within the Study Area for every unit of production sold to Final Demand. Total production will vary depending on whether Induced Effects are included and the method of inclusion. Multipliers may be constructed for output, employment, and every component of Value Added.

Value Added: A measure of the impacting industry’s contribution to the local community; it includes wages, rents, interest, and profits.

4 IMPLAN, 2015



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II. Impact Procedures and Input Assumptions

Input/Output Analysis Input/Output analysis is a type of applied economic analysis that tracks the interdependence among various producing and consuming sectors of an economy5. Specifically, it depicts inter-industry relations and shows how each industry is dependent on all the others in the economy, both as a consumer of outputs and as a supplier of inputs. Input/Output analysis has been used to study regional economies within a nation and as a tool for national and regional economic planning. It predicts the effect of changes in one industry on the others and on consumers, government, and suppliers. In addition, a common use of input/output analysis is to estimate the economic impacts of an organization or event. It is this technique that is implemented in this study. This study uses the IMPLAN Group’s input/output modeling data and software (IMPLAN version 3.1). The IMPLAN database contains county, state, zip code, and federal economic statistics, which are specialized by region, not estimated from national averages. Using classic input/output analysis in combination with regional-specific Social Accounting Matrices and Multiplier Models, IMPLAN provides a highly accurate and adaptable model for its users.

IMPLAN Data and Assumptions IMPLAN data files use the following federal government data sources.

US Bureau of Economic Analysis Benchmark Input/Output Accounts of the US

US Bureau of Economic Analysis Output Estimates

US Bureau of Economic Analysis Regional Economic Information Systems (REIS) Program

US Bureau of Labor Statistics Covered Employment and Wages (CEW) Program

US Bureau of Labor Statistics Consumer Expenditure Survey

US Census Bureau County Business Patterns

US Census Bureau Decennial Census and Population Surveys

US Census Bureau Economic Censuses and Surveys

US Department of Agriculture Census

IMPLAN data files consist of the following components: employment, industry output, value added, institutional demands, national structural matrices, and inter-institutional transfers.

The data used was the most recent IMPLAN data available, which is for the year 2013. All data are reported in 2015 dollars.

Economic impacts are made up of direct, indirect, and induced impacts. The following are suggested assumptions for accepting the impact model: IMPLAN input/output is a production-based model, and

5 Bureau of Economic Analysis (www.bea.gov/glossary/glossary)



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employment numbers (from U.S. Department of Commerce secondary data) treat both full- and part-time individuals as being employed.

Regional data for the impact models for Value Added, Employment, and Output are supplied by IMPLAN for this impact. Employment assumptions were provided to the model to enable construction of the impact model. From these data, Social Accounts, Production, Absorption, and Byproducts information were generated from the national level data and was incorporated into the model. All region study definitions and impact model assumptions were agreed on before work with the models began.



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III. Inputs Provided for Modeling the Impacts of DAHA Tournaments

In the 2014-15 season, DAHA hosted 16 tournaments between November and March as well as a state tournament in mid-March. Each tournament averaged 26 teams, local and visiting, along with coaches, parents, and other family members. The state tournament drew an additional 16 teams.

Inputs required for modeling the economic impacts of DAHA’s tournaments include the number of annual visitors as a result of the tournaments and the average spending per visitor. These data were collected from a variety of sources. To calculate the number of annual visitors, tournament information was provided by DAHA, including the number of participating teams and the length of each tournament. This data was combined with information collected via a tournament survey, including the average number of players, coaches, parents, and family members per team. The tournament survey was also used to collect visitor spending information on items such as meals, recreation, and shopping. Finally, hotel rate and occupancy information was collected directly from hotels and verified using DAHA records. Throughout the project, the BBER worked closely with DAHA to ensure the accuracy of the assumptions and resulting models.

The economic impact attributable to DAHA’s tournaments relates only to new money injected into the Duluth economy by visiting tournament attendees. Expenditures by Duluth residents represent only a recycling of money that already exists in the local economy. Most likely, if local hockey players and their families did not spend their money as a result of their participation in the local tournaments, they would have spent it elsewhere in town. It is for this reason that the analysis is concerned only with visitor spending as a result of DAHA’s tournaments.

The following sections provide details on the distribution and results of the tournament survey along with the methodology and assumptions used to determine tournament attendance and visitor spending, including hotel spending.

Tournament Survey To estimate total tournament attendance and visitor spending, information on team size and spending habits was collected through a tournament survey6. Specifically, the survey asked team managers to provide the number of players, coaches, parents, and additional spectators in their group, to indicate the number of nights their group stayed in Duluth, and to estimate the amount that their group spent on various items, including meals, shopping, and entertainment. It was determined that team managers would be the best audience for the survey, as they coordinate all events and activities for their teams and family members and would be able to accurately estimate spending for the entire group. Furthermore, DAHA officials have the email addresses of a large proportion of team managers, which allowed for additional follow-ups with non-respondents after each

6 See tournament survey in Appendix A for more details.



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tournament. One final benefit to surveying team managers, as opposed to individual tournament attendees, is that team managers have a greater interest in the DAHA organization and the hockey facilities in Duluth and are more likely to participate in a survey that supports DAHA’s efforts to improve hockey facilities for future tournaments.

The survey was distributed through a variety of methods. Upon tournament check-in, paper surveys were distributed to team managers by DAHA Executive Director, Clarke Coole. At that time, managers were given an explanation of the purpose of the research, instructions for returning completed surveys, and a link to the electronic version of the survey (distributed using Qualtrics software). Following each tournament, DAHA sent a reminder email to team managers who had not completed the survey. One final reminder was sent to team managers from the BBER’s undergraduate research assistant in late March at the end of the tournament season.

In the end, 50 team managers completed the tournament survey, representing 2,750 visiting tournament attendees, for a response rate of 16.5% of the 303 visiting teams. These 50 responses were used to calculate average per-person spending for the tournaments. However, three surveys were completed incorrectly, as participants likely misunderstood the instructions and responded on behalf of only themselves or their immediate family and not their team. As a result, 47 of the completed surveys (15.5%) were used to calculate average team attendance7.

Tournament Attendance

Tournament attendance for the 16 DAHA tournaments held during the 2014-15 season was estimated through a variety of methods. Table 1, on the following page, lists all annual DAHA tournaments, including the State Tournament in mid-March. The first four columns, Number of Teams, Visiting Teams, Days, and Overnights, represent information collected by DAHA. The organization was responsible for all tournament registrations and, therefore, had accurate records of the number of participating teams per tournament and their locations. Throughout the 2014-15 season, DAHA tournaments hosted 366 total teams with 303 coming from outside the Duluth area.

7 This percentage of participants in the survey is likely lower than the actual portion of visitors represented by the

results, as teams returning to later tournaments likely did not fill out additional surveys after each trip.



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Table 1. Duluth Amateur Hockey Association Tournament Schedule and Attendance Estimates

Tournament (a) Participating Teams

(b) Visiting Teams

(c) Days

(d) Overnights

(e) Visiting Playersa

(f) Additional Spectatorsa

(e+f) Total Visitors

DeerHunter's Daughter Showcaseb -- -- -- -- -- -- --

Duluth East 14 11 3 2 165 473 638

Portman Thanksgiving Tournament 18 12 3 2 180 516 696

DAHA Up North 22 18 3 2 270 774 1,044

Spirit of Duluth 40 31 4 3 465 1,333 1,798

Glen Avon - Head of the Lakes Hockey Classic 32 30 3 2 450 1,290 1,740

Lake Superior Classic 32 26 3 2 390 1,118 1,508

Duluth East - Cold Steel on Ice 19 15 3 2 225 645 870

DAHA Mid-Winter Classic 28 28 3 2 420 1,204 1,624

Glen Avon Winter Classic 8 2 3 2 30 86 116

Girls - St. Luke's Icebreaker Invitational 68 60 3 2 900 2,580 3,480

Portman - "Skate on the Edge Tournament" 22 18 3 2 270 774 1,044

Jr. Gold-A 12 11 3 2 165 473 638

Zenith City Invitational 25 16 4 3 240 688 928

DAHA Northern MN Blades of Steel 10 9 4 3 135 387 522

DAHA - Jamboree Mite 1b -- -- -- -- -- -- --

State Tournament 16 16 4 3 240 688 928

AVERAGE 24 20 3.5 2.4 303 869 1,172

TOTAL 366 303 52 36 4,545 13,029 17,574

SOURCE: DAHA AND TOURNAMENT SURVEY aThe number of visiting players was calculated by multiplying the number of visiting teams, from column (b), by 15, or the average number of players per team. The

number of additional spectators was calculated by multiplying the number of visiting teams by 43, or the average number of parents, coaches, and other spectators. Both estimates were based on averages from survey responses. bThe DeerHunter’s Daughter Showcase was scheduled for November 7-9, 2014 but was canceled. The DAHA Jamboree Mite 1 tournament was for local

participants only. Therefore, these tournaments were not included as part of the analysis.



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Estimating the number of visitors and spectators accompanying each team proved to be more difficult. DAHA does not maintain records of the number of players, coaches, parents, and other family members that attend each tournament. Therefore, survey responses were used to determine the average number of visitors per team. Columns (e) and (f) are estimates based on tournament survey responses. From surveyed responses, it was estimated that the average visiting team brought with it 15 players and an additional 43 coaches, parents, and family members to each DAHA tournament, yielding a calculated constant of 58 visitors per visiting team. Because the number of visiting teams participating in each tournament was highly variable, the corresponding number of visitors estimated to be in attendance at each tournament was also proportionately variable. In total, DAHA tournaments last season brought to Duluth an estimated 17,574 visitors. Among the largest contributors to that total were the St. Luke’s Icebreaker Invitational, the Spirit of Duluth, the Head of the Lakes Hockey Classic, the Mid-Winter Classic, and the Lake Superior Classic – each with over 1,500 estimated visitors.

Visitor Spending Visitor spending was calculated using the results of the tournament survey described earlier. Table 2 shows summary statistics for team managers’ responses to each of the spending-related survey questions. Please note that in calculating the average per-person visitor spending, all survey responses were used. While three responses were likely filled out on behalf of only a single person or family rather than on behalf of an entire team, the spending information provided by these individuals is still considered valid and is included as part of the statistics shown below. The average per-team spending for each category is given in the second column. This amount was divided by the average number of visitors per team (estimated at 55) to calculate the per-person breakdown for each category8. The final column, Total Spending, multiplies the per-person contribution by the estimated number of visitors for the season. Total Spending values are shown rounded to the nearest thousand.

Table 2. Survey Response Statistics from Visiting Team Managers

Money Spent On Responsesa

(n) Average Spending

Per Team Per-Person

Contribution Total Spending

(2014-15 Season)

Food/Beverage 48 $2,116 $38.48 $676,000

Retail 42 $636 $11.57 $203,000

Private Auto 42 $361 $6.56 $115,000

Bars 40 $336 $6.11 $107,000

Entertainment 41 $307 $5.58 $98,000

Other (Non-Hotel) 23 $82 $1.49 $26,000

Rental Car 31 $0 $0 $0

Total 47 $3,838 $69.78 $1,226,254 aNote that not all respondents supplied spending information for all items listed in the survey

SOURCE: TOURNAMENT SURVEY

8 The average number of visitors per team cited here of 55 is slightly lower than the value indicated on page six of

58. This is due to the small group of respondents who completed their survey on behalf of themselves and their immediate family, rather than their team, and whose responses were excluded from team attendance calculations, but were included in visitor spending calculations.



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As seen in Figure 2, surveyed team managers spent more money in the Food/Beverage category than any other listed by a large margin. Retail spending was found to be the second greatest expense in the survey at 17% of the total, while Auto, Bars, and Entertainment expenses all came in at similar levels of approximately 9%, 9%, and 8%, respectively. Comments on spending in the Other category included things such as UMD Bulldog hockey games, liquor stores, and gambling and were reallocated for the impact analysis into other industries where appropriate. Responses from the survey indicated that very few visitors, if any, spent money on rental cars and related expenses, so this category was excluded from the figure above and subsequent analysis. Hotel spending was not included in the visitor survey and is discussed in the following section.

Figure 2. Non-Hotel Visitor Spending by Sector

SOURCE: Tournament Survey

Hotel Spending Rather than include hotel spending as part of the tournament survey, it was determined that hotel occupancy and rate information would be collected directly from DAHA and its hotel partners. This method was thought to be more accurate than survey responses, which can be highly variable. The majority of the hotel occupancy and rate information was provided by DAHA. Hotels were then contacted directly (via email, phone, and in person) to confirm the numbers provided by DAHA and to collect additional information if necessary. In the end, occupancy and rate information was collected for 13 of the 20 hotels selected for the analysis. The DAHA Executive Director provided estimates for the remaining hotels, based on his knowledge of team lodging.

Food/Beverage 55%

Retail 17%

Private Auto 9%

Bars 9%

Entertainment 8%

Other (Non-Hotel) 2%



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Table 3. DAHA Sponsored Hotels and Selected Statistics

Hotel

Rooms

Averaged Room

Rate

Total Rooms Booked by

DAHA Visitors

Average Tournament

Bookingsb

% Visitor Occupancyb

Per Tournament

Percentage of Total

Bookings Estimated

Total Revenue

Estimated Revenue

Per Tournament

Canal Park Lodge 116 $164 769 96 83% 16% $298,808 $19,517 Holiday Inn 340 $115 958 64 19% 20% $269,000 $17,123 Radisson 268 $109 687 98 37% 14% $163,936 $11,588 Hampton Inn Canal Park 103 $139 352 32 31% 7% $109,368 $7,599 Comfort Suites Canal Park 123 $139 330 55 45% 7% $105,640 $7,099 Edgewater Hotel & Waterpark 296 $114 334 30 10% 7% $81,524 $5,909 Comfort Inn-West 81 $105 344 49 61% 7% $86,100 $5,590 Suites Hotel Canal Park 127 $115 308 77 61% 6% $85,932 $5,505 Park Point Marina Inn 68 $116 128 26 38% 3% $33,408 $2,298 Holiday Inn Express & Suites 84 $97 144 29 34% 3% $27,936 $2,162 The Inn on Lake Superior 174 $134 96 96 55% 2% $38,592 $1,991 Sheratona 147 $149 80 16 11% 2% $26,820 $1,845 Barkers Island Inn 111 $94 97 49 44% 2% $24,628 $1,411 Days Inn Duluth Lakewalk 64 $89 64 13 20% 1% $12,816 $881 Country Inna 82 $116 48 10 12% 1% $12,528 $862 Best Western Plus Spirit Mtn 69 $114 40 40 58% 1% $9,120 $706 Fairfield Inna 61 $139 32 6 10% 1% $10,008 $688 Best Western Bridgeview 96 $83 50 50 52% 1% $8,300 $642 EconoLodge 87 $80 32 6 7% 1% $5,759 $396 AmericInn 62 $92 0 0 0% 0% $0 $0

Total 2,559 4,893 842 100% $1,410,223 $93,812

SOURCE: DAHA WEBSITE a Hotels not included on the website but were part of the analysis, as DAHA officials indicated that they hosted teams during busy tournament weekends.

bNote: the Average Tournament Bookings and the % Visitor Occupancy Per Tournament values are based on the average from tournaments when that hotel

had bookings rather than on the average from all tournaments. What this means is that the numbers represent the averages each hotel received if booked but not that each hotel can expect to receive such numbers during each tournament.



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Table 3 on the previous page includes all hotels listed on DAHA’s website as well as a few additional Duluth hotels that DAHA officials knew to host teams during busy tournament weekends. The table displays a variety of information and booking statistics for each of DAHA’s hotel partners. The first two rows show each hotel’s number of available rooms9 and the average per night room rate, respectively. The average room rate was estimated using information collected directly from hotels, when available. If unavailable, the DAHA rate listed on their tournament website was used. In a few cases, the rate listed on the hotel’s website was used. The next two rows, the Average Tournament Bookings and the % Visitor Occupancy Per Tournament, respectively, are based on the averages each hotel received if booked. For example, on weekends where the Canal Park Lodge hosted DAHA tournament visitors, they could expect to book, on average, 96 rooms equaling 83% of their available occupancy. Please note that this does not imply that each hotel can expect such numbers during each tournament, but rather that when they were booked, these were the averages. The Percentage of Total Bookings is the percentage of rooms booked at each hotel out of all DAHA-visitor-booked rooms over the course of the season. Frequently used hotels for DAHA visitors include the Holiday Inn, the Canal Park Lodge, and the Radisson, together accounting for about 50% of all rooms booked. Using the estimated number of teams in conjunction with an estimated average of 16 to 17 rooms per visiting team10, it was calculated that an additional 384 rooms should have been expected from the hotels that had not reported occupancy information. This was also consistent with the average statistics of rooms per team and the number of rooms expected based on the number of visitors, which was calculated from the existing hotel booking data collected. These additional rooms were then divided among the remaining hotels based on an evaluation of tournaments that showed the greatest amount of variance between the actual number of rooms booked and the expected number of rooms booked. Based on the room booking data collected from DAHA and the hotels, the total number of nights spent in each hotel was found as a function of the length of each tournament (see column d, Overnights, in Table 1). The total tournament related revenue per hotel (visitors’ per-hotel expenditure) was then calculated by multiplying the number of room nights by the average room rate for that hotel, as reported by DAHA and/or the hotel. In total, it was estimated that nearly 4,900 rooms were booked by visiting teams and spectators for over 11,000 total room nights as a result of DAHA hockey tournaments, bringing Duluth hotels over $1.4 million in combined revenue. Each visitor last season spent an average of approximately $80 per tournament on lodging11. There were several hotels last season that saw revenue gains from DAHA visitors in excess of $100,000. Two of these hotels, the Canal Park Lodge and the Holiday Inn, each received nearly $300,000 last season (see the column labeled Estimated Total Revenue in Table 3). Conversely, the AmericInn was

9 These data were collected from www.travelweekly.com

10 Based on estimates from DAHA

11 Calculated by dividing the total hotel revenue ($1.4 million) by the estimated number of visitors for the season

(17,574).



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cited by the DAHA Executive Director to have not received any tournament guests last season and is, thus, shown to have gained no additional revenue as a result of the tournaments.

Figure 3. Number of Rooms Booked and Visiting Teams, Per Tournament

SOURCE: DAHA, PARTICIPATING HOTELS

Figure 3 above shows the relationship between the number of visiting teams participating in each tournament and the corresponding number of hotel rooms booked. A secondary scale was used for the y-axis on the right to better display both variables, as the number of rooms booked was significantly higher than the number of teams. Visiting Teams follows the numbers along the left axis, while Rooms Booked follows the axis on the right. As the graph shows, the relationship between the number of rooms and teams was both closely interrelated and highly consistent throughout the season. This result supports the estimates calculated above, which were predicated on an assumed constant of 16 to 17 rooms per team.

11 12 18 30 26 15 28 60 18 11 31 16 9 16

298

634

774

0

100

200

300

400

500

600

700

800

0

10

20

30

40

50

60

70

Visiting Teams

Rooms Booked



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Total Spending By scaling the per-person spending patterns found in the DAHA tournament survey up to the estimated level of total visitor attendance throughout the hockey season, the estimated total non-hotel visitor spending was calculated at a value of over $1.2 million. Combined with the total hotel spending ($1.4 million) discussed in the previous section, the estimated total direct spending of all visitors of DAHA sponsored tournaments was in excess of $2.6 million.

Figure 4. Visitor Spending By Category, In Thousands

SOURCE: DAHA, TOURNAMENT SURVEY

Figure 4 above shows total visitor spending and the breakdown by survey category. The expenditure for the Hotel category was the total found from the hotel and DAHA data discussed previously, while the remaining categories’ expenditures were calculated the tournament survey results. Hotel expenditures made up the majority of total spending, accounting for more than 53% of visitors’ expenses. At scale, the additional spending in the Food/Beverage category was estimated at just over $676,000 or about 26% of total spending. Retail was estimated at more than $200,000 or roughly 8%, while Private Auto, Bars, and Entertainment each made up about 4% of visitors’ spending at around $100,000 each. After combining all of the various spending data collected and estimated on a per visitor basis, it was

$26

$98

$107

$115

$203

$676

$1,410

$2,636

Other (Non-Hotel)

Entertainment

Bars

Private Auto

Retail

Food/Beverage

Hotel

Total

Thousands of Dollars



15

estimated that the average DAHA tournament visitor last season spent slightly more than $150 each per tournament. Figure 5 provides a summary of the relative breakdown of this estimated total into each of the primary industries used in the visitor survey. Keep in mind that actual spending by individual visitors can vary significantly from this estimate due to choices in lodging, restaurants, retail stores, etc. and that the estimates in the figure represent the average of all visitors.

Figure 5. Visitor Spending, Averaged Per Person

SOURCE: DAHA, TOURNAMENT SURVEY

For the analysis, all expenditures provided by visiting team managers through the survey were re-categorized into IMPLAN industries. Table 4 on the following page shows a list of those commodities used to create the visitor spending pattern for economic impact analysis. The estimated spending allotted to each industry sector became the basis for the impact model discussed later in the Findings section.

Because the survey questions did not distinguish between individual types of retail, entertainment, restaurant, or travel related industries, the relative amount of money placed in each subcategory was first determined by simply dividing each amount by the number of representative industries in IMPLAN. Specific categories within each area were then evaluated for relative weight based on local availability, generatl consumer spending, and conversations with DAHA officials regarding the types of activities and

$150

$80

$38

$12

$7

$6

$6

$1

Total

Hotel

Food/Beverage

Retail

Auto

Bars

Entertainment

Other (Not Hotel)



16

spending in which tournament visitors typically participate. For example, while Full- and Limited-Service Restaurants were given equal weighting, it was determined that the Amusement Parks and Arcades sector should be weighted more heavily than the Performing Arts Companies sector.

Table 4. IMPLAN Visitor Spending Industry Sectors and Distribution

IMPLAN Industry Code

Description Survey Category

398 Retail - Electronics and appliance stores Retail

400 Retail - Food and beverage stores Retail

401 Retail - Health and personal care stores Retail

402 Retail - Gasoline stores Private Auto

403 Retail - Clothing and clothing accessories stores Retail

404 Retail - Sporting goods, hobby, musical instrument, book stores Retail 405 Retail - General merchandise stores Retail

406 Retail - Miscellaneous store retailers Retail

423 Motion picture and video industries Entertainment

466 Travel arrangement and reservation services Entertainment

488 Performing arts companies Entertainment

489 Commercial sports except racing Entertainment

493 Museums, historical sites, zoos, parks Entertainment

494 Amusement parks and arcades Entertainment

496 Other amusement and recreation industries Entertainment

497 Fitness and rec sports centers Entertainment

499 Hotels and motels, plus casino hotels Hotel

501 Full-service restaurants Food/Beverage

502 Limited-service restaurants Food/Beverage

503 All other food and drinking places Bars

504 Automotive repair and maintenance, except car washes Private Auto

SOURCE: IMPLAN, 2015



17

IV. Inputs Provided for Modeling the Impacts of DAHA Operations

Operating assumptions required for the models include employment estimates, payroll and benefit information, and annual expenditures. For this analysis, DAHA provided budget worksheets for the 2014 fiscal year, which included revenue sources, annual expenses, employment numbers, and payroll. The BBER worked closely with DAHA in the development of the IMPLAN models to ensure the accuracy of the results.

Revenue Sources Figure 6 shows the revenue sources for the Duluth Amateur Hockey Association (DAHA) as a percentage of total sales. While revenue sources were not used in the impact modeling, they provide a unique perspective on DAHA as an organization. For example, as a non-profit, DAHA’s largest revenue source (39%) comes from Contributions and Fundraising (e.g. the Teammates in Success program and other fundraising efforts). Other major revenue sources include Ice Rental (23%), Tournament Entry Fees (14%), Membership Fees (9%), Officials (8%), Tournament Admissions (3%), Other (2%), and Advertising (including sign rental) (2%).

Figure 6. Duluth Amateur Hockey Association Revenue Sources

SOURCE: DAHA, 2014

Fundraising 39%

Ice Rental 23%

Tournament Entry Fees 14%

Membership Fees 9%

Officials 8%

Admissions 3%

Other 2%

Advertising 2%



18

Expenditures For the purpose of the economic impact analysis, DAHA provided the BBER with company expenditures for fiscal year 2014. Figure 7 shows all of DAHA’s expenditures for 2014, grouped into ten major categories. Payroll represents the largest share of DAHA spending, followed by Fundraising Costs, Other Labor costs (including coaches and referees), Ice Rental, and Donations. DAHA’s annual expenditures represent the organization’s economic contribution to the city of Duluth, through wages, equipment, utilities, and other local spending.

Figure 7. DAHA Expenditures by Type

SOURCE: DAHA, 2014

IMPLAN classifies DAHA as a Fitness and Recreational Sports Center (sector 497). This sector includes facilities such as athletic clubs, dance centers, health clubs, swimming pools, tennis courts, and ice skating rinks. However, DAHA’s revenue sources and expenditures (e.g. ice rental) are likely very different from other businesses and industries within this sector. Rather than use IMPLAN’s default spending pattern for this industry (which is developed using an aggregate of all facilities included in sector 497), the BBER modeled the DAHA operations using a technique called Analysis by Parts. This technique allows the user to specify the amount of commodity inputs, the proportion of local labor income, and the proportion of local purchases, and yields more accurate results.

$11,669

$16,283

$19,475

$34,682

$41,860

$54,722

$65,655

$84,921

$90,016

$147,454

Maintenance/Repairs

Insurance

Supplies

Other

Utilities (Electric, Natural gas)

Donations (Ice time, New player)

Ice Rental

Other Labor (Coaches, Referees)

Fundraising Costs

Payroll/Benefits



19

Table 5. IMPLAN Commodity Sectors Used for the DAHA Customized Industry

IMPLAN commodity number

Description

3049 Electricity transmission and distribution

3050 Natural gas distribution

3051 Water, sewage and other systems

3062 Maintained and repaired nonresidential structures

3154 Printed materials

3395 Wholesale trade distribution services

3402 Retail services - Gasoline stores

3403 Retail services- Clothing and clothing accessories stores

3406 Retail services - Miscellaneous store retailers

3427 Wired telecommunications

3428 Wireless telecommunications (except satellite)

3434 Nondepository credit intermediation and related activities

3437 Insurance

3443 General and consumer goods rental servicesexcept video tapes and discs

3448 Accounting, tax preparation, bookkeeping, and payroll services

3451 Custom computer programming services

3457 Advertising, public relations, and related services

3464 Employment services

3465 Business support services

3466 Travel arrangement and reservation services

3467 Investigation and security services

3470 Other support services

3471 Waste management and remediation services

3474 Other educational services

3481 Other ambulatory health care services

3489 Commercial sports except racing

3496 Other amusement and recreation

3497 Fitness and recreational sports center services

3501 Full-service restaurant services

3503 All other food and drinking place services

3507 Commercial and industrial machinery and equipment repair and maintenance

3518 US Postal delivery services




20

To model DAHA’s impacts using the Analysis by Parts method, all expenditures provided by DAHA were re-categorized as IMPLAN commodities, to create a customized industry based on an existing budgetary spending pattern12. Table 5 shows a list of those commodities used to create the customized industry. Results in Tables 7 and 8 (shown on pages 23 and 25) are reflective of the Analysis-by-Parts method.

12

IMPLAN, 2015



21

V. Inputs Provided for Modeling the Impacts of Other Local Hockey Tournaments DAHA is just one of many local organizations that host hockey tournaments in the city of Duluth and the surrounding area. More than 30 additional youth hockey tournaments took place in the region during the 2014-15 season, hosted by organizations such as the Hermantown Amateur Hockey Association (HAHA), the Proctor Amateur Hockey Association (PAHA), the Cloquet Amateur Hockey Association (CAHA), various AAA hockey organizations, and local high schools. These tournaments provide an additional positive impact on the city’s economy, and were therefore included in the analysis to fully demonstrate the economic impact that youth hockey provides to the city of Duluth and the surrounding area.

Tournament Attendance Of the 37 tournaments hosted by other local hockey associations, 28 took place within the city of Duluth or the surrounding area. Because the study area consisted of all zip codes entirely or partially within the limits of the city, additional spending in Hermantown (55811) and Proctor (55810) would occur fully within the area previously established. Nine of the tournaments included in this portion of the analysis took place in Cloquet (55720 zip code). At a little over 20 miles from downtown, CAHA tournaments were located the furthest from Duluth, and fall outside the established study area. However, Cloquet is home to only two hotels, each with a capacity of 47 rooms. Considering that each team typically requires between 16-17 hotel rooms, and many of Cloquet’s tournaments host 16 teams, we would expect that many of the visitors coming for these tournaments would have to stay in Duluth or the surrounding area. In fact, CAHA lists two hotels located within the study area, the Duluth Spirit Mountain Inn and the Edgewater Resort and Waterpark, on its website as lodging options. Therefore, is was estimated that 50% of CAHA tournament visitors would likely stay in Duluth as a result of the tournament. A summary of local hockey tournaments hosted by other youth hockey associations can be found in Table 6. The number of annual tournaments, the length of each tournament, and the number of participating teams was estimated by DAHA, and confirmed using information from the associations’ websites. The percentage of visiting teams was calculated using the average for the 2014-15 DAHA tournament season (83%). In total, the 37 tournaments brought nearly 400 visiting teams and more than 20,000 total visitors to the city of Duluth during the 2014-15 season. Again, tournament attendance was calculated using the same assumptions as with the DAHA tournaments, with the exception of the tournaments hosted in Cloquet, where it was predicted that 50% of visitors would stay in Duluth or the surrounding area.



22

Table 6. Other Local Tournament Attendance Estimates

Tournament

(a) (b) (c) (d) (e) (f) (e+f)

Teams Visiting Teams

Days Over-nights

Visiting Players

Additional Spectators

Total Visitors

AAA Tournament 1 30 25 3 2 375 1,075 1,450 AAA Tournament 2 30 25 3 2 375 1,075 1,450 AAA Tournament 3 30 25 3 2 375 1,075 1,450 AAA Tournament 4 30 25 3 2 375 1,075 1,450 AAA Tournament 5 30 25 3 2 375 1,075 1,450 Cloquet 1: Cup

13 16 13 3 2 98 280 377

Cloquet 2: Barn Burner 16 13 3 2 98 280 377 Cloquet 3: Kerry Roe 8 7 3 2 53 151 203 Cloquet 4: Barn Burner 16 13 3 2 98 280 377 Cloquet 5: Founders 16 13 3 2 98 280 377 Cloquet 6: Flamingo 8 7 3 2 53 151 203 Cloquet 7: Heartbreaker 8 7 3 2 53 151 203 Cloquet 8: Jam-Berrr-ee 16 13 2 1 98 280 377 Cloquet 9: Jam-Berrr-ee 16 13 2 1 98 280 377 Proctor 1: Girls 8 7 3 2 105 301 406 Proctor 2: Cross-Ice 16 13 2 1 195 559 754 Proctor 3: Squirt B 8 7 3 2 105 301 406 Proctor 4: Bantam B 8 7 3 2 105 301 406 Proctor 5: Pee Wee 8 7 3 2 105 301 406 Proctor 6: Pee Wee 8 7 3 2 105 301 406 Proctor 7: Mite 1 16 13 2 1 195 559 754 Proctor 8: Mite 2 12 10 2 1 150 430 580 Hermantown 1 8 7 3 2 105 301 406 Hermantown 2: Girls 8 7 3 2 105 301 406 Hermantown 3: Squirt 8 5 3 2 75 215 290 Hermantown 4: PW 8 7 2 1 105 301 406 Hermantown 5: Bantam 8 7 3 2 105 301 406 Hermantown 6: Bantam 8 7 2 1 105 301 406 Hermantown 7: Squirt 8 7 3 2 105 301 406 Hermantown 8: PW 8 7 3 2 105 301 406 Hermantown 9: Girls 8 7 3 2 105 301 406 Hermantown 10: Mite I 10 5 3 2 75 215 290 Hermantown 11: Mite II 10 5 3 2 75 215 290 Girls' HS Tournament 10 8 2 1 120 344 464 Boys' HS Tournament 8 7 2 1 105 301 406 Denfeld 14 12 3 2 180 516 696 Marshall 7 6 3 2 90 258 348

Total 485 393 102 65 5,243 15,029 20,271

13 The estimated number of visiting players (e) and spectators (f) was reduced by 50% for Cloquet tournaments.

SOURCE: DAHA



23

Visitor Spending Because spending and hotel booking information was not collected specifically for the visitors of other hockey association tournaments14, all of the inputs used for the impact modeling of these tournaments were calculated as estimates from averages and percentages found from the DAHA model. The non-hotel- and hotel-related inputs were extrapolated to the level estimated for the additional tournaments using values from the DAHA model on a per visitor-day and visitor-night basis. The non-hotel spending of DAHA visitors was calculated to be approximately $1.2 million last season at a level of almost 57,000 visitor-days, for an average per-person per-day spending of $21.50. Hotel related spending was found to be about $1.4 million at a level of just over 39,000 visitor-nights15, resulting in an average per-person per-night spending of $36.90. It is important to make the distinction between non-hotel spending on a per day basis and hotel spending on a per night basis in order to better ensure the accuracy and flexibility of each estimate for use with the additional tournaments’ visitors. The total number of visitor-days and visitor-nights as a result of other local hockey association tournaments were estimated at 55,284 and 35,352, respectively. Combining this information with DAHA visitor spending estimates equates to an estimated direct expenditure of approximately $1.2 million in non-hotel related expenditures and $1.3 million in hotel-related spending for other local youth hockey tournaments. These totals, almost $2.5 million combined, were distributed among the same industry sectors, shown in Table 4 on page 16, using the same weighted coefficients as with the DAHA model.

VI. Findings

DAHA Tournaments Table 7 shows the economic effects from the Duluth Area Hockey Association’s tournaments on the city of Duluth16. The results of this model were based on the estimated total direct spending of all visitors of DAHA sponsored tournaments (Figure 4, page 14), and modeled using the IMPLAN sectors shown in Table 4 on page 16. The impacts of direct expenditures (i.e. money flowing into local businesses from visiting players, families, and spectators while in the city for tournaments) are listed in the row titled Direct Effect. The row labeled Indirect Effect is a measurement of the impacts of increased spending between commercial and governmental industries as a result of visitor spending. The third row, Induced Effect, relates to the

14

DAHA tournament surveys described in Chapter III were not distributed at the other local hockey tournaments, as the host associations were not involved in the study. 15

Visitor-days and visitor-nights were calculated by multiplying the number of visitors for a given tournament by length of the tournament (in days or nights), then summing to get a total for the season. 16

Note: inputs were modeled for St. Louis County as well, but no significant difference in impact was found. Therefore, results were not included in the final report.



24

impact of increased household spending as a result of income earned by employees of direct and indirect industries supporting tournament visitors. Total Effect is the sum of each of the three effect levels and represents the total economic impact of visitor spending at DAHA tournaments on the Duluth economy.

Table 7. Economic Impacts of DAHA Tournaments on Duluth

Impact Type Employment Labor Income Value Added Output

Direct Effect 35 $751,985 $1,316,008 $2,395,836

Indirect Effect 5 $194,234 $344,484 $675,774

Induced Effect 5 $182,215 $336,890 $586,490

Total Effect 45 $1,128,435 $1,997,382 $3,658,100


The left column in Table 7, Employment, is an estimate of the number of new jobs created and supported by visitors to Duluth for DAHA tournaments. It is important to note that this estimate is in terms of jobs created and does not necessarily represent full-time equivalent employees. These jobs may include full- or part-time, temporary, or short-term positions. From the results produced by this analysis, an estimated total of nearly 45 new jobs in Duluth can be attributed to spending within the city by visitors to DAHA’s tournaments. 35 of these jobs are a direct result of tournament visitors, and 10 are due to indirect or induced impacts resulting from the tournaments. Labor Income, the column to the right of Employment, is the estimated compensation of all employees related to visitor spending, including wages, benefits, and proprietor income. During the 2014-15 hockey season, this model estimated that DAHA tournament visitors contributed over $1.1 million to wages and benefits in the city of Duluth. The next column, labeled Value Added, represents the estimated contribution to the city’s gross regional product (GRP) made by an individual producer, industry, or sector. This impact includes additional employee compensation, taxes on production and imports, and gross operating surplus across the local economy due to tournament visitors’ spending. In the 2014-15 season visitors at DAHA tournaments had an estimated Value Added impact of nearly $2 million in Duluth. The far right column in Table 7 shows Output, the total value of all local industry production related to visitor spending during DAHA tournaments. From the data collected for the 2014-15 season, DAHA hockey tournaments brought in just over 17,500 visitors to the city of Duluth who directly increased output by an estimated $2.4 million. Through the multiplying effect of this direct spending, overall local output increased by a total of approximately $3.7 million.



25

Figure 8. Top 15 Industries Impacted by DAHA Tournaments


Figure 8 shows the top 15 industries impacted by visitor spending in Duluth17. The first four industries, Hotels and Motels, Full- and Limited-Service Restaurants, and All Other Food and Drinking Places, were all among the highest direct expenditures seen based on the results of the tournament survey. The remaining industries most impacted by DAHA’s tournaments (e.g. Real Estate, Owner-Occupied Dwellings, Management of Companies, Hospitals) ranked high because of the indirect and induced spending that resulted from tournament visitors. This shows the significant impact the ripple effect of direct spending can have on backward-linked industries and on an economy as a whole. In summary, visitor spending as a result of DAHA’s annual tournaments adds almost than $2.4 million in direct spending to the city of Duluth’s economy. Through the multiplying effect of this direct spending, overall local output increased by a total of almost $3.7 million. The industries that are most positively impacted by this spending are hotels, restaurants, and bars.

17

Detailed tables with all direct, indirect, and induced economic impacts are available in the Appendix.

$1,419,082 $356,928

$356,834

$143,668

$108,842

$88,629

$72,333

$49,868

$49,764

$45,512

$44,477

$40,360

$35,811

$35,717

$34,308

Hotels and motels, including casino hotels

Full-service restaurants

Limited-service restaurants

All other food and drinking places

Real estate

Owner-occupied dwellings

Management of companies and enterprises

Hospitals

Electric power transmission and distribution

Insurance carriers

Radio and television broadcasting

Wholesale trade

Advertising, public relations, and related services

Retail - General merchandise stores

Other local government enterprises

Direct Indirect Induced



26

DAHA Operations Table 8 summarizes the economic effects from the operational spending of the Duluth Amateur Hockey Association. The economic impacts from DAHA’s operations are much smaller than the impacts from its tournaments but still contribute over $1 million to the city’s economy. What’s more, while the overall impacts of the organization are smaller than the impacts from its tournaments, the economic multipliers are larger, meaning they have a larger ripple effect through the economy. DAHA’s operational spending contributes $566,737 directly to the city’s economy and results in an overall effect of $1,086,388, which equates to an economic multiplier of 1.9. This means that every dollar DAHA spends through its operations generates $1.90 in the local economy: the original dollar and an additional $0.90. Comparatively, the multiplier for DAHA’s tournaments is 1.5. Similarly, DAHA employs six individuals, but an additional 7 jobs are created as a result of indirect or induced spending from the organization. This equates to an employment multiplier of 2.2. Comparatively, the employment multiplier for the DAHA tournaments was 1.3.

Table 8. Economic Impacts of DAHA Operations on the City of Duluth


Direct Effect 6 $147,453 $154,408 $566,737

Indirect Effect 6 $97,139 $179,503 $366,672

Induced Effect 1 $47,533 $87,902 $152,979

Total Effect 13 $292,126 $421,813 $1,086,388


Figure 9 shows the top fifteen industries impacted by DAHA operational spending. Fitness and Recreational Sports Centers is the industry that is most heavily impacted, by a large margin. This industry sees more than $700,000 of combined direct, indirect, and induced impacts as a result of DAHA operational spending. This is not surprising, as DAHA is categorized within this industry, and many of their expenses (ice rental, fundraising costs) are paid to businesses in that same industry. Other industries that are impacted by DAHA’s operational spending include Real Estate, Electric Power Transmission and Distribution, and Travel Arrangement and Reservation Services. Please note that some sports facilities (e.g. Heritage Center, UMD Athletics) are classified within the Travel Arrangement and Reservation Services industry, as that industry includes ticket sales for sporting events.



27

Figure 9. Top 15 Industries Impacted by DAHA Operations


DAHA Tournaments and Operations Total Table 9 shows the combined impacts for DAHA tournaments and operations. The combined results show the sum of the two previous models and represent the largest impacts, totaling over $4.7 million in additional output and resulting in the employment of 58 full- and part-time workers.

Table 9. Total Economic Impacts of DAHA Tournaments and Operations on Duluth


Direct Effect 41 $899,439 $1,470,416 $2,962,573

Indirect Effect 11 $291,373 $523,987 $1,042,446

Induced Effect 6 $229,748 $424,792 $739,469

Total Effect 58 $1,420,560 $2,419,195 $4,744,488


$724,427 $29,958

$26,454

$23,110

$22,943

$21,025

$14,126

$13,004

$10,839

$9,465

$7,245

$7,099

$6,470

$6,194

$6,130

Fitness and recreational sports centers

Real estate


Travel arrangement and reservation services


Insurance carriers

Wholesale trade

Hospitals


Maintenance and repair construction of…

Other amusement and recreation industries



Offices of physicians

Monetary authorities and depository credit…




28

Figure 10. Top Fifteen Industries Impacted by DAHA Tournaments and Operations


Figure 10 shows the top fifteen industries impacted by DAHA’s combined operations and tournaments18. Hotels and Motels see the largest economic impacts, as a result of DAHA tournaments and operations, with more than $1.4 million in direct, indirect, and induced economic impacts. Other industries that benefit from the organization include Fitness and Recreational Sports Centers, Full-Service Restaurants, Limited-Service Restaurants, and All Other Food and Drinking Establishments.

18

Detailed tables with all direct, indirect, and induced economic impacts are available in the Appendix.

$1,421,151 $732,717

$363,432

$361,064

$147,560

$138,894

$111,698

$77,727

$76,238

$66,600

$62,943

$54,522

$51,594

$45,177

$43,040






Real estate




Insurance carriers

Hospitals

Wholesale trade



Maintenance and repair construction of…




29

Other Local Tournaments Table 10 shows the economic summary of the impact of the other local hockey associations’ tournaments last season. Because the number of visitor-days and visitor-nights for the other local tournaments were both very similar to the values seen for DAHA tournaments, the economic change seen was nearly the same as before. An additional 42 new jobs were supported by the spending from other local hockey tournaments last year. The result of all this additional spending was an increase in local output of almost $3.4 million.

Table 10. Economic Impacts of Other Local Tournaments on Duluth


Direct Effect 33 $702,960 $1,220,243 $2,225,419

Indirect Effect 5 $179,781 $319,725 $626,249

Induced Effect 5 $169,994 $314,295 $547,156

Total Effect 42 $1,052,736 $1,854,263 $3,398,823


The top 15 industries most impacted by the additional spending of visitors to other local hockey tournaments can be seen in Figure 11. Because the industries used to distribute the total expenditure of other tournaments’ visitors were the same as were used for DAHA’s, the impact was very similar for the additional spending from the other tournaments as well. Once again, the Hotels, Restaurants, and Food and Beverage categories all received the greatest share of the economic impact, though this time to a slightly smaller degree. Also similar to the earlier results, the remaining industries in the top 15 most greatly benefited from the indirect and induced effects of tournament visitors’ spending.



30

Figure 11. Top 15 Industries Impacted by Other Local Hockey Tournaments


All Local Hockey Tournaments The total impact of all local hockey tournaments, including those hosted by DAHA, HAHA, PAHA, CAHA, and local schools, can be seen in Table 11. The values seen there represent the combined total result for each effect and impact type from the two previous economic analyses done on tournament visitors’ spending in Duluth. The direct expenditure from visiting players, coaches, family, and spectators supports 67 new jobs in Duluth and has resulted in output increases of over $4.6 million for local businesses. The total outcome of this when combined with the indirect and induced effects it produces is 87 additional jobs and just over $7 million of added output in the local economy.

$1,276,023 $346,067

$345,952

$137,340

$102,296

$82,686

$67,715

$46,522

$45,902

$42,210

$41,004

$37,795

$33,449

$33,013

$31,857





Real estate



Hospitals


Insurance carriers


Wholesale trade







31

Table 11. Economic Impacts of All Local Hockey Associations’ Tournaments on Duluth


Direct Effect 67 $1,454,945 $2,536,251 $4,621,255

Indirect Effect 10 $374,015 $664,209 $1,302,023

Induced Effect 10 $352,209 $651,185 $1,133,646

Total Effect 87 $2,181,171 $3,851,645 $7,056,923


Figure 12 displays the top 15 impacted industries by all local hockey tournaments. The industries and their order are the same as seen for each analysis when done individually, but the figure provides totals of the combined added output to show the magnitude of each industry’s total benefit as a result of tournament visitors’ spending.

Figure 12. Top 15 Industries Impacted by Other Local Hockey Tournaments


$2,695,105 $702,996

$702,786

$281,009

$211,138

$171,315

$140,048

$96,390

$95,666

$87,722

$85,481

$78,155

$69,166

$68,824

$66,165





Real estate



Hospitals


Insurance carriers


Wholesale trade







32

All Local Youth Hockey Combined For an estimate of the combined impact of all hockey association and tournament related spending in the local economy, Table 12 shows the summary totals of all modeled impacts within the scope of study. Because it is not clear from the information available that other local hockey associations would have the same or similar spending patterns as DAHA, the operational impacts of HAHA, PAHA, and CAHA were not estimated or included in any way for this report. The values shown in the table represent the sum of the impacts of all local hockey tournaments and DAHA operational spending. In total, hockey in Duluth directly and indirectly supports nearly 100 full- and part-time jobs. The result of the combined spending related to hockey in the last year is estimated to have increased local output by over $8.1 million dollars.

Table 12. Economic Impact of All Local Hockey on Duluth


Direct Effect 73 $1,602,399 $2,690,659 $5,187,992

Indirect Effect 15 $471,154 $843,712 $1,668,695

Induced Effect 11 $399,742 $739,087 $1,286,625

Total Effect 99 $2,473,297 $4,273,458 $8,143,311


Figure 13 is the final summary of the top 15 industries impacted by hockey in Duluth and shows the total of direct, indirect, and induced effects on the output of each industry locally. As discussed previously, the Hotels and motels, Fitness and recreational sports centers, Full- and Limited-service restaurants, and All other food and beverage establishments industries filled in the top five impacted, together accounting for over $5.1 million or about 63% of the total impact. At almost $2.7 million, the Hotels and motels industry was by far the single most impacted by hockey of the industries in the study. Many of the other industries among those that benefited the most were in support or supply related areas to the top five and did so as a result of backward linkages and induced effects.



33

Figure 13. Top 15 Industries Impacted by Local Hockey Combined


$2,697,174 $740,709

$709,499

$707,016

$284,900

$241,190

$194,384

$145,442

$122,140

$109,465

$108,810

$92,598

$92,317

$77,034

$74,540






Real estate




Hospitals

Insurance carriers


Wholesale trade






34

Modeling Issues

There are some IMPLAN modeling issues that should be considered when interpreting the results of this study. First, a small area, like the one included in this analysis, can have a high level of “leakage.” Leakages are any payments made to imports or value added sectors which do not in turn re-spend the dollars within the region. What’s more, a study area that is actually part of a larger functional economic region will likely miss some important backward linkages. For example, linkages with the labor force may be missing. Workers who live and spend outside the study area may actually hold local jobs.

Regional indirect and induced effects are driven by assumptions in the model. With some models, one problem is that the assumptions can mask the true multiplier. This is especially true of the assumption of constant returns to scale. This assumption most affects induced effects and says that, for example, if I drink coffee, and my income increases, I will drink proportionally more coffee than before. The amount of weight placed on the induced effects (the percentage of the total induced effect you would want to use) can be further analyzed with an in-depth impact study, involving much more specific data collection and more detailed analysis, but that is beyond the scope of this analysis.

Finally, one general caution about a study like this is with regards to spending by local residents. In the case of the tournament impacts, the analysis focused on visitor spending only. However, the impacts of DAHA’s operations include revenues from fundraising, ice rental, and membership fees. Much of that spending is coming from local households, and that money might have been spent in the study area on something else were it not being spent on DAHA-sponsored activities. Therefore, it should be noted that the Operations and Total Impacts of the analysis include spending by local residents and may overestimate the amount of new spending that DAHA is bringing to the city of Duluth.

VII. Conclusions

Over the course of the 2014-15 season, the total impact of the Duluth Amateur Hockey Association on the economy of Duluth was found to be valued at over $4.7 million in additional local output, leading to the creation of 58 local full- and part-time jobs that would otherwise not exist. Area Hotels and Motels represented the single industry most impacted as a direct result of DAHA tournaments. In total, more than $1.4 million was allocated in this industry locally, through direct, indirect, and induced economic effects. Fitness and Recreational Sports Centers, Full- and Limited-Service Restaurants, and Other Food and Drinking Establishments also were among those industries that benefited the most from the additional business brought in by DAHA tournaments and operations – almost $1.6 million combined. Indicative of the ripple effect that additional spending can have on related industries, the remaining sectors in the top 15 impacted all received very little to no direct benefit from visitor spending yet were ranked among the highest overall as a result of indirect and induced economic effects.

DAHA’s tournaments produce the greatest share of the organization’s overall economic impact on the city. The expenditures of visiting teams, families, and friends represent entirely new spending in the region, bringing in money and people from around the state that would not necessarily contribute to Duluth’s economy if not for DAHA tournaments. From estimates calculated based on the surveyed



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responses of visiting team managers, tournament visitors directly spent over $2.6 million over the course of the 2014-15 season. Of this, more than $1.4 million went directly into local hotels, motels, and other related lodging facilities. The remaining portion of total direct spending, $1.2 million, was allocated to area businesses such as restaurants, bars, retail and convenience stores, entertainment and amusement venues, and automotive related industries.

From models based on these estimates, the total economic impact of tournament visitor spending was an addition of nearly $3.7 million in total output throughout the city after accounting for the indirect and induced effects produced as a result of direct expenditures. Moreover, an estimated 45 new jobs have been created and supported by this injection of new spending attributable to DAHA tournaments.

The economic impacts of DAHA’s operations (including payroll and benefits, fundraising, officials, and ice rental) contribute a smaller but substantial share to their overall impact. The association itself employs six individuals and directly contributes more than $560,000 to the local economy. This direct expenditure was found to produce approximately $520,000 in additional spending throughout the city of Duluth through indirect and induced spending. Furthermore, modelled projections estimate that seven more jobs were created beyond the six people directly employed by DAHA because of the operations of the association during the last year.

Expanding on the findings from the DAHA tournaments, the economic impact of local hockey included 37 additional tournaments hosted by other amateur hockey associations and schools in the Duluth area. From these tournaments, 393 more visiting teams were considered in the economic impact of hockey in Duluth. Using the same models and assumptions as were used with the DAHA analysis, these other tournaments were estimated to have brought in an additional $2.5 million to the city. As a result of this expenditure, the model projected that 42 new jobs were created and total output for the local economy increased by almost $3.4 million.

Because the same spending pattern was used for the additional tournaments, the relative breakdown of that impact fell into the same industries as DAHA’s. The effect of this was to greatly increase the estimated effect of hockey tournaments on the city of Duluth, especially for lodging, food, and beverage related industries in the area. When combined with the projections previously found for DAHA’s tournaments, the total impact was an increase in local output of over $7 million and the creation of 87 new jobs over the course of the last year. With the addition of DAHA’s operational impacts, the net effect of hockey in the region was an output increase of over $8.1 million and support for 99 jobs that otherwise might not exist.

NOTE - Readers are also encouraged to remember the UMD Labovitz School’s BBER was asked to supply an economic impact analysis only. Any subsequent policy recommendations should be based on the “big picture” of total impact.



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Appendix A

Duluth Amateur Hockey Association Tournament Survey Please complete this survey online at <https://umn.qualtrics.com/SE/?SID=SV_baumjgJ6qJedW05> or complete and return paper copies to Clarke Coole, tournament coordinator. Please provide the following information: Your name ________________________________________________________ Team name _______________________________________________________ Email address _____________________________________________________ Tournament date __________________________________________________ How many people (including you) are in your team's immediate group? ______ Players ______ Parents ______ Coaches ______ Other (siblings, grandparents, etc.) How many nights did/will you stay in Duluth? ____________________________ To better understand the economic impact of this tournament, we are interested in finding out the approximate amount of money you and other visitors in your immediate group will spend, including travel to and from your home. We understand that this is a difficult question, but please do your best because your responses are very important to our efforts. DURING THE COURSE OF YOUR VISIT, WHAT WAS THE APPROXIMATE AMOUNT YOUR IMMEDIATE GROUP SPENT/WILL SPEND IN EACH OF THE FOLLOWING CATEGORIES:

Within City of Duluth ($)

Outside City of Duluth ($)

Food & Beverages (restaurants, concessions, cafeterias, etc.)

Night Clubs, Lounges & Bars (cover charges, drinks, etc.)

Retail Shopping (souvenirs, gifts, clothing, etc.)

Private Auto Expenses (gas, oil, repairs, parking fees, etc.)

Rental Car Expenses

Entertainment (movie theater, water park, Adventure Zone, etc.)

Any other expenses (Please be as specific as possible)

https://umn.qualtrics.com/SE/?SID=SV_baumjgJ6qJedW05



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Top 15 Impacted Industries

Table 13. Top 15 Industries Impacted by DAHA Tournaments

Industry Direct Indirect Induced Total

Hotels and motels, including casino hotels $1,410,223 $3,560 $5,300 $1,419,082 Full-service restaurants $338,084 $4,794 $14,050 $356,928 Limited-service restaurants $338,084 $4,133 $14,617 $356,834 All other food and drinking places $107,295 $26,585 $9,789 $143,668 Real estate $0 $74,336 $34,506 $108,842 Owner-occupied dwellings $0 $0 $88,629 $88,629 Management of companies and enterprises $0 $65,898 $6,436 $72,333 Hospitals $0 $0 $49,868 $49,868 Electric power transmission and distribution $0 $39,841 $9,922 $49,764 Insurance carriers $0 $23,662 $21,849 $45,512 Radio and television broadcasting $0 $40,649 $3,828 $44,477 Wholesale trade $0 $21,656 $18,704 $40,360 Advertising, public relations, and related services $0 $32,827 $2,984 $35,811 Retail - General merchandise stores $10,173 $14,874 $10,669 $35,717 Other local government enterprises $0 $17,807 $16,501 $34,308

SOURCE: IMPLAN

Table 14. Top 15 Industries Impacted by DAHA Operations


Fitness and recreational sports centers $566,737 $157,507 $183 $724,427 Real estate $0 $20,915 $9,043 $29,958 Electric power transmission and distribution $0 $23,861 $2,592 $26,454 Travel arrangement and reservation services $0 $23,072 $39 $23,110 Owner-occupied dwellings $0 $0 $22,943 $22,943 Insurance carriers $0 $15,385 $5,640 $21,025 Wholesale trade $0 $9,280 $4,846 $14,126 Hospitals $0 $0 $13,004 $13,004 Other local government enterprises $0 $6,558 $4,280 $10,839 Maint/repair of nonresidential structures $0 $8,103 $1,362 $9,465 Other amusement and recreation industries $0 $6,742 $503 $7,245 Radio and television broadcasting $0 $6,107 $992 $7,099 Full-service restaurants $0 $2,826 $3,644 $6,470 Offices of physicians $0 $0 $6,194 $6,194 Monetary authorities/ credit intermediation $0 $2,286 $3,845 $6,130 SOURCE: IMPLAN



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Table 15. Top 15 Industries Impacted by DAHA Tournaments and Operations


Hotels and motels, including casino hotels $1,410,223 $4,261 $6,652 $1,421,135 Fitness and recreational sports centers $573,739 $158,083 $893 $732,715 Full-service restaurants $338,084 $7,620 $17,694 $363,398 Limited-service restaurants $338,084 $4,546 $18,408 $361,037 All other food and drinking places $107,295 $27,922 $12,327 $147,544 Real estate $0 $95,251 $43,549 $138,800 Owner-occupied dwellings $0 $0 $111,572 $111,572 Management of companies and enterprises $0 $69,580 $8,105 $77,685 Electric power transmission and distribution $0 $63,703 $12,515 $76,217 Insurance carriers $0 $39,047 $27,489 $66,536 Hospitals $0 $0 $62,872 $62,872 Wholesale trade $0 $30,936 $23,550 $54,486 Radio and television broadcasting $0 $46,756 $4,819 $51,576 Other local government enterprises $0 $24,365 $20,781 $45,147 Maint/repair of nonresidential structures $0 $36,419 $6,608 $43,028

SOURCE: IMPLAN

Table 16. Top 15 Industries Impacted by Other Local Hockey Tournaments


Hotels and motels, including casino hotels $1,267,763 $3,315 $4,945 $1,276,023

Full-service restaurants $328,494 $4,465 $13,108 $346,067

Limited-service restaurants $328,494 $3,822 $13,637 $345,952

All other food and drinking places $104,251 $23,957 $9,132 $137,340

Real estate $0 $70,107 $32,189 $102,296

Owner-occupied dwellings $0 $0 $82,686 $82,686

Management of companies and enterprises $0 $61,711 $6,004 $67,715

Hospitals $0 $0 $46,522 $46,522

Electric power transmission and distribution $0 $36,645 $9,256 $45,902

Insurance carriers $0 $21,826 $20,385 $42,210

Radio and television broadcasting $0 $37,433 $3,571 $41,004

Wholesale trade $0 $20,345 $17,450 $37,795

Retail - General merchandise stores $9,884 $13,611 $9,954 $33,449

Advertising, public relations, and related services $0 $30,229 $2,784 $33,013

Other local government enterprises $0 $16,463 $15,394 $31,857

SOURCE: IMPLAN



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Table 17. Top 15 Industries Impacted by All Local Hockey Tournaments


Hotels and motels, including casino hotels $2,677,986 $6,875 $10,244 $2,695,105 Full-service restaurants $666,578 $9,259 $27,158 $702,996 Limited-service restaurants $666,578 $7,954 $28,254 $702,786 All other food and drinking places $211,546 $50,541 $18,921 $281,009 Real estate $0 $144,443 $66,695 $211,138 Owner-occupied dwellings $0 $0 $171,315 $171,315 Management of companies and enterprises $0 $127,608 $12,440 $140,048 Hospitals $0 $0 $96,390 $96,390 Electric power transmission and distribution $0 $76,487 $19,179 $95,666 Insurance carriers $0 $45,488 $42,234 $87,722 Radio and television broadcasting $0 $78,082 $7,399 $85,481 Wholesale trade $0 $42,001 $36,154 $78,155 Retail - General merchandise stores $20,057 $28,485 $20,623 $69,166 Advertising, public relations, and related services $0 $63,056 $5,768 $68,824 Other local government enterprises $0 $34,270 $31,895 $66,165

SOURCE: IMPLAN

Table 18. Top 15 Industries Impacted by Hockey


Hotels and motels, including casino hotels $2,677,986 $7,584 $11,604 $2,697,174 Fitness and recreational sports centers $580,543 $158,611 $1,555 $740,709 Full-service restaurants $666,578 $12,100 $30,822 $709,499 Limited-service restaurants $666,578 $8,374 $32,065 $707,016 All other food and drinking places $211,546 $51,882 $21,473 $284,900 Real estate $0 $165,403 $75,787 $241,190 Owner-occupied dwellings $0 $0 $194,384 $194,384 Management of companies and enterprises $0 $131,325 $14,118 $145,442 Electric power transmission and distribution $0 $100,354 $21,784 $122,140 Hospitals $0 $0 $109,465 $109,465 Insurance carriers $0 $60,905 $47,905 $108,810 Radio and television broadcasting $0 $84,202 $8,396 $92,598 Wholesale trade $0 $51,291 $41,026 $92,317 Other local government enterprises $0 $40,836 $36,199 $77,034 Advertising, public relations, and related services $0 $67,994 $6,545 $74,540

SOURCE: IMPLAN

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