Since 1996, Arizona has hosted four Super Bowls, two World Series, 27 Phoenix Open golf tournaments, and a litany of other enormous sports events. Beyond these mega-events, however, Arizona hosts a multitude of smaller-scale but nonetheless impactful events which not only contribute to the state’s burgeoning cultural capital, but to the state’s economic output.
A new report co-produced by the Arizona Chamber Foundation and Rounds Consulting Group explores the economic impact of Arizona’s sports industry, and the potential for targeted investments and enhanced coordination between strategic partners to expand the industry’s positive effects on the state economy.
The report’s release coincides with Tuesday’s Game Changers Summit at Footprint Center in downtown Phoenix. Co-produced by the Arizona Commerce Authority, the Arizona Chamber of Commerce & Industry, Horizon Strategies, and the Global Sport Institute at Arizona State University, the inaugural summit is Arizona’s first sport-specific business, technology, and innovation event to bring together executives, academics, entrepreneurs, innovators, investors, athletes, and policy leaders to examine emerging tech trends in sport, sports performance, and adjacent industries, as well as to assess how the business of sports can help grow the Arizona economy.
Surveying past sporting events, the report calculates that the Cactus League, Phoenix Open, and past Super Bowls have generated between $180 million and $1.3 billion in economic impact per event. Medium-scale events, like the NCAA Championship and the MLB All-Star game, generated between $67 and $324.5 billion in economic impact each. “While larger scale sports events like the Super Bowl provide substantial economic benefits to the state, the sum of the mid-tier and smaller annual sports events will also display very large economic impacts,” the report reads.
As an example of the massive benefit these sporting events can have on the state economy, the report compares the Cactus League and the Phoenix Open to an average high-wage manufacturing firm, which generates an annual economic impact of $50 million. “This means that spring training baseball in Arizona provides the economic equivalent of 14 such manufacturing businesses operating throughout the entire year, every year. The Waste Management Phoenix Open would equal 9 such businesses.”
Beyond these initial estimates, the report’s authors recommend several areas for further research and analysis: locating thorough data that can be used to calculate the economic impact of specific sports events, calculating how important mega-events are to the state economy, understanding the role of smaller sports events in total economic output, and measuring the economic impact of minor and mid-level events, such as high school soccer tournaments.
Diving deeper into how such events generate such an outsized impact on the state’s economy, the report outlines certain industries that stand to benefit from a thriving sports industry. Tourism and local spending are obvious winners, with local businesses benefiting from tens of thousands of tourists coming to town. Beyond this, however, the report’s authors highlight how related industries such as sports medicine, health technology, sports gambling, and charity and philanthropy stand to benefit.
The report insists that the state should consider return on investment (ROI) when investing taxpayer dollars on sports industry proposals.
“In instances where public/private partnerships are favored,” ROI calculations will be demanded by private investors, the report reads. The report’s authors argue that state actors — who are spending money earned through taxation, not through voluntary economic transactions — should hold themselves to the same standard.
In addition to calculating ROI, advocates for specific proposals must be able to articulate these numbers and community members’ support for such proposals in public venues if they intend to succeed in bringing their efforts over the finish line, the report reads.
As Arizona continues to lead the nation as a hub for sports events and sports tourism, state leaders in both the private and public sectors are looking to capitalize on this competitive advantage to grow the economic pie. This report might just be the launching point for future strategies to grow the state’s sports industry and, in turn, fuel investments from job creators and put more money into taxpayers’ pockets.