Read the following description of an economic impact study and answer the following questions. When you have finished you will have measured the economic impact of a large sport event.

You have been commissioned to analyze the economic impact on the city of Houston of the MLB All-Star Game recently played. Specifically, the community wants to know the direct spending impact, the indirect spending impact, and the fiscal/tax impact. Houston officials want to know whether it would be profitable to fund and bid for similar future events for the city. This event cost the city about $8 million to host.

You created a survey (Exhibit 12.2) and administered it to 342 people around Minute Maid Park during the game, making an effort to obtain a random sample. Only 325 of the surveys were usable because of various errors by the respondents. Imagine you entered the data into a spreadsheet and are now ready to analyze the economic impact. To allow you to do this analysis, you will utilize the Excel file containing two spreadsheets: Survey Data and Key. Survey Data is the spreadsheet in which the data have been entered while the Key spreadsheet describes and explains each column of data. Be sure to measure economic impact for all visitors not just those who responded to the survey (remember, a survey is a sample of the target population).

Based on the local organizing committee and Houston government officials, you determine that:

• Minute Maid Park seats 40, 950
• The game was sold out.
• The city sales tax is 7.75% and is collected on all goods and services except hotels.
• The city hotel occupancy tax is 15%.
• Hotel capacity in the city is 45,000 rooms. The typical occupancy rate is 83%.
• The average number of persons per room for large events such as this 2.4.
• Total spending by the local organizing committee was $4.5 million, with 60% of that amount coming from organizations outside the city. This is in addition to the amount the city itself spent. Minute Maid spent $1 million in town activating its sponsorship.
• The spending multiplier for the city of Houston is 1.6 (based on info from Minnesota IMPLAN Group).
• Of spending inside Minute Maid Park (including tickets) for this event, 20% went to the city government (fiscal impact).

Questions

• Note: A few data entry or survey respondent errors have been included in the spreadsheet.

1. What is the fiscal or tax impact of the event on the city?