Concluding Thoughts on SSE 2012-13 Impact Study
Yesterday, the University of Ottawa in consultation with Senators Sports & Entertainment released a study about the economic impact of SSE on the Ottawa-Gatineau region. I posted some initial thoughts on the study last night, and here are some additional thoughts on the document as well as my concluding assessment of its merit.
- I think the report does a fairly good job of articulating the impact of SSE philanthropic programs (such as Skate for Kids, Equipment for Kids, Senators Alumni Clinics, hospital visits etc.). The authors of the report estimate almost a half million people living in Ottawa-Gatineau have been impacted (478,000) by SSE initiatives between 1992 and 2011, many touched on multiple occasions (18). A combination of surveys and content analysis of articles and social media posts were examined to determine that between 75-90% of such posts depict the Sens and SSE positively, thus linking community outreach with positive branding. While this kind of outreach is nothing new for a sports organization, it's important to note that these activities are nonetheless important to the community.
- Chapter 2.3.11 states that the researchers were provided with "detailed SSE financials" to estimate the direct financial impact the organization has on the CMA (19). The researchers scrutinized external revenue (outside the CMA) earned by SSE (revenue-sharing, TV deals etc.), minus ticket revenue from external visitors (covered in a previous section of the report and my earlier post) and other leakages out of the CMA (salaries paid to players who do not permanently live in the CMA etc.). From this accounting, the authors conclude that an estimated $13.3 million generated by the organization remain in the CMA. Of course, the internal financials aren't shared in the document (probably a condition of SSE sharing the details with the researchers in the first place) but it would be interesting to know what numbers were shared and how much info was sent. In addition, the researchers provide only a cursory gesture to external revenue, but as a fan, I'd love specifics. Even if those specifics just indicate all external sources used to evaluate revenue, it would be better than reading "etc." as a fan. From what we know of accounting in the sports world, "etc." could cover any number of things. Finally, sure some Sens players don't live here year round, but they all live here for at least seven months of the year, and not in rent-controlled bachelor apartments. Just how much revenue is generated/earned by the team and how much leaves because of leakages is left unanswered.
- Chapter 2.3.12 estimates that "Ottawa residents would leave the CMA and spend approximately $3 million annually in attending NHL hockey games in other markets" if the Senators were in another market (19). The authors indicate that the estimate is conservative by a factor of 10% but without providing more information about survey data, it's difficult to put that estimate in context. As Sens fans know, "Ottawa resident" is not synonymous with "Senators fan". Moreover, is that $3 million in tickets alone? Or is that $3 million the direct economic impact that is no longer benefiting the Ottawa Gatineau CMA? Or is it some combination of the two?
- Chapter 2.3.13 evaluates the impact of Sens playoff games (19). Because the playoffs did not begin before the data collection period ended, the researchers used the average of 2.86 playoff games per year (60 home playoff games in 21-year history). It's interesting to me that the study uses the 25% from outside the CMA attendance figure from the regular season for the playoffs as well. I shared my concerns about that number in the first post, but at face value, it would seem that the "tourist ticket" would fluctuate greatly based on opponent (down if we face, say Florida, perhaps up if we play Montreal?). That number is also problematic for the playoffs because tickets are harder to get and season ticket holders get the first crack at playoff tickets.
- The study points out the intangible value of the five major facilities in the CMA that SSE either fully or partially funded (the Palladium now CTC, Bell Sensplex, Rogers House, Rink of Dreams, and the Richcraft Sensplex). It's hard to imagine either Sensplex being built without the considerable financial backing of the team. Without the CTC, Ottawa would not have an arena-sized concert venue. The study found that in 2014 dollars, SSE spent $258.8M on capital projects (these five buildings plus road and highway infrastructure).
- The "Summary Table of Estimated Impacts" on page 21 is worth a look. One interesting tidbit about francophones surveyed: 29% were Sens fans, 55.5% were Canadiens fans. The marketing department has some work to do there. 63% report (I'm assuming it's 63% of the 29% of francophones who are Sens fans, but the report doesn't specify) that the Sens have a positive impact on their lives, but only 4% link satisfaction to the team's performance.
- The report concludes the total annual direct income created by SSE is $100,019,862 and the total direct and indirect income created by SSE is stated at $204,643,374 annually with "numerous important intangible benefits" (24). The authors also provide a long term estimate over the course of the franchise's history (21 years) to be in excess of $1.5B (direct) and $3B (direct + indirect + induced). Obviously, there's not enough detail in this report to even guess at the accuracy of these numbers. A lot of information shared by the organization with the researchers to arrive at these numbers isn't shared with readers.
Ultimately, I think some interesting details emerge from the study. The Bell Sensplex and Bell Capital Cup are income generators. Individual and team registration information makes it easier to conclude that the facility and tournaments generate funds from outside the region ($21.7 million annually, direct and indirect) and that's not insignificant (25). The authors provide a variety of information (financial, surveys etc.) to quantify SSE's philanthropic contributions and the results seem positive. The organization received scores between 75% to 81% from respondents to questions about SSE community investment and reputation (26).
However, I think the report makes some analytical leaps that can't be ignored, especially when assessing the number of tourists attending games annually as well as their spending while in the capital region. One estimate in the report puts this spending anywhere between $500 and $5000 for some visitors without any justification (26). In addition, I think a more nuanced approach to Ottawa's unique status as capital with only one pro team (during the course of the study) needs to be part of any discussion of the Senators economic impact on the city. It's not surprising to me that a study led by sports finance experts advocates for the importance of a sports organization to a region's economic health. Without transparent accounting, I'm not sure any particular weight should be given to this study.