A comprehensive study released on Wednesday, conducted by a team
of graduate students from the UCLA Anderson School of Management,
found that the sports industry in the greater L.A. area generated
more than $4 billion in total economic impact in 2005.
The study, released by the Los Angeles Sports Council and the
Los Angeles Area Chamber of Commerce, used data from 52 sports
organizations (UCLA being one of them) across Los Angeles, Orange,
Riverside and San Bernardino counties to judge the economic impact
of sports in Los Angeles .
“We’re grateful to the sports industry because it
had a substantial economic impact on this region,” said David
Fleming, vice chair to the board of the L.A. Area Chamber of
Commerce. “Sports is one of the major contributors to a
better life for everybody. In the past, we’ve noticed that
people tend to underestimate the impact of sports on a
region.”
“Anything that contributes a $4 billion impact each year
is significant,” said Alan Rothenberg, chairman of the L.A.
Sports Council. “We are always grateful to the sports
industry for its recreation and entertainment value, but we must
also recognize the industry’s substantial economic value as
well.”
Only aggregate totals were released, as confidentiality was
given to the sports organizations, most of which are privately
owned and ordinarily do not publicly release their financial
data.
But the study found that a total of $1.66 billion was generated
in revenue by the L.A. area sports organizations in 2005, up 14.2
percent from 2003, the last time such a study was done. The present
study pointed out that this percentage is higher than annual
inflation, which is 3.9 percent.
To calculate the total economic impact from the revenue, the
Anderson School students calculated an economic multiplier to
multiply the $1.66 billion by. The economic multiplier of 2.46,
which is used to estimate the ripple effect of direct event
spending to the economy, was derived from data from the Bureau of
Economic Analysis.
College sports accounted for $116 million in total revenue in
2005, up from $109 million in 2003. UCLA was one of the 10
universities in the Southern California area investigated by the
study. Horse racing and annual events also experienced a similar
percentage of revenue growth from 2003, but none of those fields
experienced as much revenue growth as professional sports, which
are up to $1.049 billion from $860 million in 2003. The growth rate
was slightly down from 2003 (to 3.7 percent from 5 percent), but
the study attributed some of that to the lockout that cancelled the
2004-2005 season of the National Hockey League.
The four UCLA students who worked on the study ““ Michael
Bland, Sean Corson, Quang Do and Will von Bernuth ““ are all
MBA candidates who expect to graduate in June. They presented their
data to local media Wednesday and to the members and boards of
directors of the Sports Council and Chamber of Commerce ““
some of the most important people in the local sports industry
““ last week.
“We were given exposure to the sports community and we got
to meet the Alan Rothenbergs of the world,” von Bernuth said.
“This was a great experience.”
The study also looked at employment and attendance trends in the
sports industry. The total number of full-time employees went up to
3,135 from 3,020, a growth rate of 1.9 percent, and at the
collegiate level the number of full-time employees went up from 741
to 784. Part-time employment in the college sports industry went up
by a significantly greater amount, from 1,134 to 1,491, while
part-time employment at the professional level went up only
slightly, from 7,434 to 7,488.
The total attendance figure in 2005 for greater L.A. area
sporting events was 28.6 million, up 1.8 million from 2003. The
collegiate attendance actually went down about 90,000 to a total of
1.97 million.
Also addressed were the study’s potential implications on
the prospects of bringing an NFL franchise to the L.A. area.
“We hope (the study) will entice them,” Fleming
said. “It scuttles any thought that the region’s sports
industry is floundering without pro football.”
While the study was not done with the NFL in mind, Fleming and
Rothenberg both suggested that Los Angeles would be a good fit for
an NFL team, citing the increased number of tickets sold and
overall revenue as good indicators that an NFL franchise could
thrive in Los Angeles.