Economic Impact Studies – Broaden Your Understanding of the Tennis Industry

Economic Impact Studies – Broaden Your Understanding of the Tennis Industry 

Economic impact studies (EIS) are a tool for measuring the impact of a business, industry, change in policy, or event(s) based on defined economic parameters. They are a valuable tool for leaders in the tennis industry because they require a slightly different thought process for measuring impact. Four examples follow.

• USTA Florida recently released an EIS stating that 1,134 USTA tennis tournaments in Florida had a total economic impact of $145.9 million.

• On January 3, 2025, the About Boulder website stated that the six home University of Colorado football games (2024) at Folsom Field generated an economic impact of $146.5 million.

• The Common Sense Institute estimated the economic impact of the two Taylor Swift shows in Denver during July 2023 was about $140.0 million. According to Bloomberg Economics, the Eras Tour contributed $4.3 billion to the U.S. GDP.

• A couple of years prior (2021), the Colorado Golf Coalition (CGC) conducted an EIS that showed the economic impact of the golf industry in Colorado was $2.0 billion. Not bad for a ski state. In addition, the CGC also submitted an environmental impact study.

So, which is more impactful to the economy, playing tennis tournaments in Florida or being a CU Buffs football fan, a Swiftie, or a golfer in Colorado?

This document provides a brief overview of impact studies to help answer that question and help tennis leaders understand the value and limitations of impact studies and how to use them.

Definition and History

An EIS uses a model that measures the impact of employment, wages earned, and output generated from businesses, industries, or event(s).

About fifty years ago, the United States Forest Service (USFS) was required to establish a five-year plan that provided land management strategies that measured resource outputs and the socioeconomic effects on local communities. A group called IMPLAN developed a model that measured the economic impact of the USFS plans. In time, IMPLAN became a private corporation that supported other organizations that wanted to perform similar analyses.

The foundation of the model developed by IMPLAN uses data from the Bureau of Economic Analysis to create an Input-Output model that provides multipliers to estimate the indirect and induced changes in economic activity.

Economic Effects or Impacts

An EIS measures the direct, indirect, and induced impact of the operations, events, or policy changes.

The direct impact measures output produced, the number of employees, and employee wages.

The indirect impact occurs when businesses buy inputs, i.e., it measures the effect of the supply chain.

The induced effect measures the spending in the local economy by the employees of businesses in the supply chain.

In many cases, an EIS will also list intangible benefits. For some studies, these benefits will resonate more than the data or technical aspects of the report.

Factors that Affect the Level of the Impact

There are technical reasons for high and low levels of impact.

• Size Matters - The size of the impact is a result of the number of employees, wages paid, output, and size and mix of industries in the region.

• Size of Multipliers - Manufacturing and technology-based industries (such as aerospace, software, and breweries) often have larger multipliers, and employees often have higher-than-average wages. These industries generate above-average revenue per employee. Segments of this supply chain are more sophisticated than other industries. On the other hand, the hospitality and retail industries (and much of the tennis industry) have smaller multipliers than technology-based companies. These industries typically pay lower wages, and employees generate less revenue per worker.

• Location of Supply Chain - The location of the supply chain is critical. The multipliers will be more significant when the supply chain is within the region.

• Location of employees - On a similar note, employee spending is distributed by the location of their residence. There is a greater impact when more employees live within the defined region.

• "New Money" - Some EIS studies measure the impact of "new money" on the region or expenditures that occur within the region by people who live outside it.

• Assumptions and Technical Issues - Before conducting an EIS, it is necessary to make assumptions and establish parameters, such as the study timeline and regional definition. In addition, primary and secondary data are essential to complete the study.

• "Wow Factor" - Impact studies generally have a "Wow Factor." The impact is usually in millions or billions of dollars. By definition, the effects (direct, indirect, and induced) and the multipliers are positive numbers. The "Wow Factor" results when they are added and multiplied. The impact will always be a positive number.

Consider a final word of caution about the "Wow Factor." It is only one number that should be part of the larger EIS story that includes a discussion of intangible benefits, other economic variables, and information used to prepare the report.

Using Impact Studies

The original use of impact studies was resource management and planning. Additional uses follow.

• Decision-making for planning purposes - Impact studies can measure whether a facility or site for a future facility is feasible. An EIS can evaluate the value that amenities might contribute to a facility (pool, fitness, food and beverage, or other racquet sports).

• The EIS for the University of Colorado Football program helped build community support for the football team, the athletic department, the university, and the Boulder community. That support is worth as much, if not more, than the $146.5 million impact reported in the study.

• The EIS for Colorado Golf created economic value for the sport. On top of that, the environmental statement demonstrated that Colorado Golf focuses on more than revenue generation. Colorado Golf is a great corporate citizen for many reasons.

• In some cases, impact studies provide content used to increase awareness. They also provide content for other marketing purposes.

EIS Reports - Looking Ahead

USTA Florida was on the right track by using an EIS to advocate for tennis. Hopefully, they will produce additional impact studies that are useful for increasing tennis participation in the future. A few suggestions follow.

• USTA Florida could provide significant grant funding for public facilities in Florida focused on introducing underserved populations to tennis. An EIS for each facility would be invaluable in quantifying the value of inclusion.

• Conduct an EIS to measure the economic impact of high school tennis in Florida. According to the NFHS, Florida has 524 boys' high school programs with 4,752 athletes and 534 girls' high school programs with 5,327 athletes.

• A similar EIS study could measure the impact of Florida parks and recreation tennis programs. High school tennis and parks and recreation tennis programs are a critical part of the pipeline from youth to adult tennis.

• Conduct an EIS in Florida for facilities with at least three racquet sports.

• Replicate the EIS study conducted by the Colorado Golf Coalition in Florida. It would measure the impact of the tennis industry along with an environmental review. By some standards, tennis is not an environmentally friendly sport. At some point, the industry must address that issue.

The following studies add value to the industry. They may also provide ideas for future EIS studies.

• Great things are happening in tennis all over the country - 2024 Economic Impact of Facilities in Cary, NC.

• Although this report is from 2012, it thoroughly covers the EIS process, Market and Economic Analysis for a Proposed New Tennis Complex at Troy Park in Howard County, Maryland.

• The Impact of the 2024 BNP Paribas Open was $852 million.

• USA Pickleball announced $3.6 million in economic impact during the 2024 Biofreeze USA Pickleball National Championships.

Closing Comments

Economic Impact Studies use a different thought process and consider a mixture of variables for measuring the impacts of segments of the tennis industry, thus allowing tennis leaders to view the industry from a broader perspective. Hopefully, industry leaders will be intentional in planning future EIS studies that provide information to advance the industry.

In addition, Gary Horvath has conducted extensive business and economic research that has largely supported the state of Colorado's economic development efforts.