The Economic Contribution of Grizzly Athletics

Intercollegiate athletics play a major role in colleges and universities, individual communities and American culture. At the individual level, participation in intercollegiate athletics by student-athletes represents an opportunity for young men and women to grow, develop and ultimately realize their potential. The high visibility and popularity of organized sports activities have projected the brand of conferences and individual educational institutions into the limelight in ways that have benefitted everything from student recruitment to alumni involvement. And the business activity surrounding college sports in the American economy has grown to support what has become a multibillion dollar industry.

Communities that are home to colleges and universities that participate in intercollegiate athletics stand to reap considerable economic gain from those activities. These gains are both tangible and intangible. The spending and income flow that intercollegiate athletics at a local college or university add to the local economy can be directly measured and assessed. The ultimate benefits of media exposure, visitor impressions and branding that a community may experience due to its university athletic activities are harder to assess, but no less important.

This article summarizes a recent study conducted by the Bureau of Business and Economic Research on behalf of the University of Montana’s Department of Athletics, which examined the contribution of Grizzly Athletics to the Missoula economy. The study utilized financial records, attendance records and a survey of spending conducted over the fall of 2015 to assess the financial footprint of UM’s intercollegiate athletic activity. We then used an economic model to estimate how that activity translates into a larger economy.


 

About Grizzly Athletics

griz_athletics
Washington-Grizzly Stadium in Missoula, Montana.

The University of Montana is a member of the Big Sky Conference and affiliated with Division I of the National Collegiate Athletic Association (NCAA). Grizzly Athletics has had a long history of success both on and off the field in men’s and women’s sports. With the addition of women’s softball beginning competition in 2015, it now encompasses five men’s and eight women’s sports teams. In the fall of 2016, UM landed 58 student-athletes on the Big Sky Conference All-Academic teams and held a student-athlete wide grade point average of over 3.0. UM also announced and broke ground on a $14 million training facility, the Washington-Grizzly Champions Center, that includes a state-of-the-art weight room, as well as a new locker room and meeting space for the UM football team.

According to a recently published ranking of college and university athletic programs, Grizzly Athletics’ revenue of $22.9 million in academic year 2014-15 ranked no. 121 in the country, the highest in the Big Sky Conference.

How Grizzly Athletics Makes the Economy Larger

From the point of view of the economy, Grizzly Athletics can be thought of as a spectator sports business whose “employees” include – in addition to paid coaches, administrators, trainers and staff – the hundreds of student-athletes whose compensation comes in the form of scholarships, housing, and other aid.

As a $22.9 million business, Grizzly Athletics is itself a significant enterprise, with payroll and vendor spending supporting a broad range of Missoula businesses. This study utilized University of Montana financial records to track and classify the spending of Athletics – down to the level of individual purchase orders – for the academic year 2014-15.

Each home football game brings about $2.5 million of spending into Missoula from out-of-area attendees.

Of course, as a result of those activities, thousands of people visit Missoula to attend athletic events. Their spending, on everything from hotel rooms to health care, adds significantly to the local economy. From a survey conducted by the Bureau of Business and Economic Research based on season ticket holders for Grizzly football, we created a spending profile for out-of-area visitors who attend games. This spending is substantial. For example, each home football game brings about $2.5 million of spending into Missoula from out-of-area attendees, whose dollars would not be spent in Missoula if it were not for Grizzly Athletics. Spending by attendees of other sports adds to this total.

Table 1. Profile of Football Visitor Spending

Category Units Amount
Group Size Persons 2.7
Nights in Missoula Nights 1.98
Spending per Group per Day $ $200.60
Total Spending per game (excluding airfare) $ Millions 2.53

 
Because of Grizzly Athletics, non-resident student-athletes live in Missoula, and visiting teams come to Missoula, along with officials and sports media. All of these spending flows ultimately add to the Missoula economy.

Research Method

The fundamental question addressed by this study is, “What would the economy of Missoula look like if Grizzly Athletics did not exist?” This question requires us to construct a hypothetical economy, which removes all of the production, income and spending flows that are due to Grizzly Athletics’ existence. We accomplish this by (i) gathering data on the economic flows that are directly and indirectly associated with athletic activities, and (ii) presenting this information to an economic model to understand how those flows ultimately propel the economy to a new equilibrium – with less employment, income and output as a result. A comparison of the observed level of economic activity and the outcome for this no-athletics scenario yields a measure of the contribution of Grizzly Athletics to the Missoula economy.

There are three essential components to estimating the ultimate impact of new investment:

  • The direct impact (e.g., spending) the investment and activity itself represents.
  • The indirect impacts, which are the spending of other entities (e.g., the visitor spending) which are carried out by others because of the original investments.
  • The induced impacts that occur as the spending represented by the direct and indirect impacts propagates through the economy.

This study does not analyze a shutdown scenario for Grizzly Athletics – e.g., where existing buildings, facilities and other assets are sold or used for other purposes. Rather, we compare the economy as it is today, to how it would be if Grizzly Athletics had never existed. In the no-athletics scenario:

  • No athletic teams exist, and student-athletes who were part of those teams attend other higher education institutions.
  • Athletic events, such as football and basketball games do not take place, and those who visit Missoula to attend those events stay home.
  • The operations of the athletic department, which can be viewed as a spectator sports business with a $22.9 million budget in academic year 2015, are no longer present in the economy.
  • Construction and maintenance activities for athletic facilities does not take place.
  • Any tax support for Grizzly Athletics is returned to taxpayers.

The data that were used to construct the hypothetical no-athletics scenario for the Missoula economy were drawn from a variety of sources.

  • Operations data on the athletic department were obtained from administrative records, using the 2014-15 academic year as a baseline.
  • A complete spending record for Grizzly Athletics was obtained from the purchase order records for 2014-15.
  • A survey of football season ticket holders from outside Missoula was performed as part of this study to assess spending and other relevant information for football games.
  • ZIP code information from ticket sales was used to derive out-of-area attendance at football and basketball events.
  • Previous BBER survey results on student spending at the University of Montana was used to estimate spending of student-athletes.

The construction of the no-athletics scenario as part of this study places emphasis on athletic-related spending that comes from sources outside of Missoula. This includes ticket sales from out-of-area, spending by visitors from other areas and the spending of student athletes. This spending is lost to the area economy if Grizzly Athletics did not exist. Spending by residents of Missoula connected to athletics and athletic events, in contrast, could be directed to other Missoula businesses and organizations in a no-athletics scenario.

Table 2. Impact Summary

Category Units Impact
Total Employment Jobs 1,384
Personal Income $ Millions 52.8
   Disposable Pers. Income $ Millions 44.9
Output $ Millions 120.8
Population People 1,334

 

Summary of Findings

The results of this research show that the Missoula economy is significantly impacted by the operations of Grizzly Athletics. We find that the presence of athletics results in 1,384 more jobs, $120.8 million in output or gross sales, $52.8 million in personal income and 1,334 additional people added to the Missoula County.

The impacts are significantly larger than the direct contributions of Grizzly Athletics described in the previous section. This is due to the nature of a prominent collegiate athletics program, which brings significant numbers of visitors to Missoula, as well as adding students to the local population. In the non-athletics scenario neither of these groups are present in the local economy and their spending on everything from accommodations to entertainment to food and beverages is absent.

Grizzly Athletics results in 1,384 more jobs, $120.8 million in gross sales and $52.8 million in personal income added to the Missoula economy.

These impacts are also larger in magnitude than athletics operations alone, due to the propagation of spending through the local economy. Simply put, the additional spending shows up as income to local merchants and vendors, some portion of which is spent again in the community. These effects are captured using the economic model, which tracks the interrelationships in the area economy and produces an estimate of total impact.

Employment Impacts

Jobs in the Missoula economy that are ultimately supported by the presence of Grizzly Athletics can be found in a broad spectrum of industries. While the industry most affected is the arts, entertainment and recreation classification, which includes the spectator sports industry in which Grizzly Athletics itself is classified, there are significant gains in other industries.

The 116 jobs with retail trade industry employers, come about in part through the spending of visitors to UM athletic events, as well as the vendor purchases made by Grizzly Athletics. But they also are induced through the overall growth in the economy that comes about because of athletic activities. The same can be said of the 152 jobs supported in the accommodations and food services, primarily restaurants, in Missoula.

The connections between the presence of Grizzly Athletics and other, less clearly related sectors of the local economy are made clear from the employment impacts shown in Table 3. Eighty-five permanent jobs for Missoula construction employers result from both the building and maintenance activities of athletics itself, as well as the indirect impacts of higher income and population. The increases in health care, professional services and other industry classification jobs, also illustrate the broadness of these employment impacts.

The increase in state and local government employment due to Grizzly Athletics are largely due to increases in the school-aged population and the increased demand for local public school workers. They also reflect population increases and increased tax capacity of the community.

Table 3. Employment Impacts

Industry Impact
Construction 85
Retail Trade 116
Real Estate and Rental and Leasing 13
Professional and Technical Services 19
Health Care and Social Assistance 20
Arts, Entertainment and Recreation 886
Accommodation and Food Services 152
Other Private Employment 19
State and Local Government 76
TOTAL 1,384

 

Conclusion

Grizzly Athletics plays a major role at the University of Montana. It provides an opportunity for young athletes to both compete at a high level, as well as earn a college degree. The University benefits from the high profile nature of college sports in media exposure, branding and visitor impressions. As detailed in this report, all of these activities benefit the Missoula economy.

Using an approach that compares the actual Missoula economy to what it would look like if Grizzly Athletics did not exist, we find that:

  • Athletics both increases the student body as well as staff at the university, as well as hosting events drawing visitors from outside Missoula.
  • Athletics operations produce a total impact on the economy that is significantly larger than its own direct contribution.
  • Grizzly Athletics supports permanent jobs and recurring income streams in the Missoula economy.

The conclusion of this study is that the operations of Grizzly Athletics provide a significant economic impact to Missoula resulting in a more prosperous local economy.