Remember me? The Big Bike Race™?
Photo by Casey B. Gibson
Late on a Friday afternoon the week before Christmas, the City kind of quietly announced the economic impact of the UCI Road World Cycling Championships, aka “The Big Bike Race™.”
There were, like, ten people in attendance at the press conference, which featured Governor Terry McAuliffe and Mayor Dwight Jones, along with Tim Miller (CEO of Richmond 2015) and Chris Chmura (CEO of Chmura Economics and Analytics). I saw more press at the opening of the newest VPI preschool–yet these numbers were the ones we’d all been scheming and hoping and prophesizing and pooh-poohing about since the BBR™ was announced years ago.
Plus, guys, doesn’t it feel so good to hear about the race again? Didn’t you miss it with your heart?
Turns out, you didn’t miss much at the press conference, which was tucked away in a corner event room at the Jefferson. The governor thanked the mayor and said the race helped put Virginia on the map, which makes his job easier when he travels around the world, Tim Miller thanked the mayor and a couple of governors, and the mayor said the race was responsible for “changing the trajectory of who we are and what we can accomplish.”
Then Chris Chmura stood up and gave a rapid rundown of the numbers her company found as part of their study: “The Economic Impact of Richmond 2015 in Richmond MSA and Virginia.”
Then we got some handouts and everyone went about their holiday festivity business. Unless, of course, your business is to go home and peruse PDFs at length!
In a nutshell
- Richmond MSA1 saw $161.5 million in total economic impact
- Virginia saw $169.8 million in total economic impact (which includes the Richmond MSA number, do not add those numbers together or you will be doubling data!)
But what does it all mean?
What does anything mean, you know?
First, you need to understand some terms:
- Direct impact: The total economic spending in an area because of an event
- Indirect impact: The re-spent dollars from the direct impact. Like “My restaurant was packed so now we have this extra money, so now I’m buying a new walk-in from a local dealer.”
- Induced impact: The household spending from the people who benefited from the direct spending. Like “I work at a hotel and made great tips during the races, so my family and I bought a new Gamebox, or whatever game systems are called right now.”
- Deep Impact: A 1998 film in which a tsunami from a giant meteor destroys both the East Coast and Téa Leoni. It is unrelated to this study.
Direct, indirect, and induced impact are added up to make the totals listed above. The ripple effects are calculated using IMPLAN Pro software.
What spending does the study include?
Two major types of spending:
- The money that was spent organizing the event, which includes administration, business development, technical and competition, event operations, marketing and communication, the collegiate championships2, and the value of in-kind services–that is, someone donating their services or goods to Richmond 2015. The event organization total impact was $23.0 million.
- The money that was spent by visitors, which includes cyclists, support staff, officials, media, other participants, and on-site spectators.
You might remember that “on-site spectators” does not just refer to unique visitors to the region. It refers to anyone (local or otherwise) who came out to watch the race on a given day–emphasis on the “day.” If you went to watch the race on two days, you were counted twice, three days, thrice, and so on. Richmond 2015 originally estimated this number to be 450,000, which caused some grumbling that we couldn’t handle that many people and then some more grumbling when that many people didn’t seem like they were showing up.. That very number was the source of many a misreported alarm piece and then an embarrassing scoff piece, in which media outlets expressed their dismay that John Q. Restaurant Owner had no use for the 450,000 extra napkins they, expressly, had told him to buy.
In the end, there were an estimated 645,000 on-site spectators.
How did they come up with the number of visitors?
Everything but those 645,000 on-site spectators (i.e. cyclists, support staff, etc.) was given by Richmond 2015 organizers.
Here’s where there’s some opacity–the Chmura report just says that the 645,000 number was “estimated by event organizers and industry experts with experience in cycling events.” That number’s so critically important because it’s a huge multiplier in the equation that gives us the total economic impact, so it’s surprising that they’re so vague about how it’s determined.
If you’re even the slightest bit prone to conspiracy theories, now is the appropriate time to say, “Oh it’s surprising, is it???”
How did they get the spending data?
Moving ahead, we’re going to take that 645,000 number as fact, for the sake of explaining the other numbers.
Richmond 2015 provided their own expenditure numbers, but the visitor spending was collected via “intercept surveys.” A Chmura person intercepts somebody at the race and asks them a few questions–407 somebodies, in this case, with a 5% margin of error. They used this 407 as a simple random sample, being careful to hit many areas of the course while not hitting the VIP tent too much, despite the lure of free beer.
They then asked them how much they’d been spending that day.
That blows my mind a little, because if someone asked me how much I’d spent today, I would drastically underestimate so as not to throw myself into a panic. If you delve deeper into the appendices of the report, you can see that the surveyed individuals were asked varied questions about spending (and different questions per person). The money questions give the respondents different ways to report–“Oh, I think it was $150 per night at my hotel,” might be easier to get than “I have spent exactly 657 American dollars upon my lodging, good sir!”
And then, they asked for the length of people’s trips. Spending analysis was broken out by day trippers and overnight guests.
Anyway, the number of visitors (about 650,000, including cyclists and support staff and stuff) multiplied by the number of days they stayed in town, and average spending per visitor, per day equals direct economic impact of visitor spending. Add that to the reported event organization spending, and that’s the total direct economic impact. Then, the software calculates the indirect and induced, and there you have it.
Please note that these are rounded every which way, and may not sum to your liking.
How about taxes?
Taxes revenue was included in this report, but only from the direct impact figures. You’ll remember that indirect impact and induced impact are more difficult to pin down and are more like educated guesses based on past experience.
Event organization brought in about $20,000 of business, professional, and occupational license tax for both the Richmond MSA and the state of Virginia. It also made possible about $318,000 of income tax revenue for the state.
Visitor spending was a different story, benefiting the local governments within the Richmond MSA, the local governments in Virginia, and the state government to the tune of millions of dollars (about $3 million each in the Richmond MSA and local governments in Virginia categories and $4.5 million for the state). The majority of this came from lodging tax, although the lodging spending ended up making up a smaller percentage of total visitor expenditure than originally estimated.
Sorry, that all means that people didn’t stay in hotels as much as everybody thought. There’s lots of speculation over whether this was because hotels raised their rates in expectation, pushing people out to the counties and the non-taxed Internet-based lodgings (i.e. Airbnb and its competitors).
Well, we wait and see. Will we be able to do this kind of thing in the future? Tim Miller let us down in a semi-joking manner when he said “No, I’m not here to announce the next big thing.” We wish, man. But the point is that we can do something like this if we are all convinced that it made us money without costing too much money.
The longer-term non-financial impacts are real and often tangible–better roads, more bike access, and a number of youth groups. And then there’s the non-tangibles, like the exposure we got in the media, those sweet helicopter shots, and tales of the wonderful interactions people had with Richmonders, whose generosity and good cheer will now be spread far and wide! (You guys better have been generous and cheerful, or else.)
But another event of the Big Bike Race’s magnitude depends if the generally favorable public perception continues as the ripples extend outwards. “We’re looking into it,” said Miller. “Stay tuned.”
- That’s Metropolitan Statistical Area, which includes Hopewell, Colonial Heights, and Petersburg. ↩
- That’s interesting! They included the Collegiate Championships from the previous year, which makes complete sense but slipped my mind entirely. ↩