Economic Impact Study Report
Subject: Proposed Hopkinsville, KY, Sports Center
Prepared by: Pinnacle Indoor Sports
Date: October 2016
P I Sports, LLC
2714 W. Rainmaker, Prescott, Arizona 86305
Telephone: (928) 308-2230 e-mail: [email protected]
Hopkinsville, KY, Court Sports Economic Impact Study 2016
Executive Summary
In the spring of 2016 Pinnacle Indoor Sports completed a market study for an indoor sports
complex to be located within Hopkinsville, Kentucky based on a request by the City of
Hopkinsville. During the summer of 2016 Pinnacle Indoor Sports then constructed Pro Forma
Projections for the proposed Hopkinsville, KY, sports complex for the City of Hopkinsville.
Utilizing those documents, and state and local sport activity and tourism spending figures,
Pinnacle has developed this report on the economic impact projection for the proposed indoor
sport complex development.
The report includes the estimated economic impact of:
 tournaments and special events for both local and out-of-town attendees of basketball,
volleyball and futsal tournaments (sustainable in Year 3 and beyond)
 re-occurring programming activities of basketball and soccer (sustainable in Year 3 and
beyond)
 construction impact (one-time impact during construction)
 on-going payroll and labor (Year 3 and beyond)
Pinnacle has calculated an estimated direct and indirect economic benefit to the community of
hosting 10 tournaments and eight annual re-occurring programming activities comprised of
basketball, volleyball, soccer and futsal plus the benefits of additional payroll and wages at the
facility to be approximately $3.4 million per year. This is the combination of:
 Tournaments and special events $1,969,228
 Re-occurring programming $1,160,352
 Payroll and labor $270,107
The one-time impact of construction is estimated to be $1,843,200, which is 40% of the total
estimated construction budget of $4,608,000.
See Attachment A - Economic Impact Calculations for Hopkinsville, KY.
Overview of the Economic Impact Study
The purpose of the economic impact study is to evaluate the potential contribution of the indoor
sports complex for positive economic impact within the City of Hopkinsville.
The economic impact and contribution of the sports center has also been analyzed by Pinnacle.
Pinnacle assessed the immediate economic impact of these facilities based on an assessment of
the facilities projected contribution to tourism through visiting teams and players and increased
local spending and payrolls. This economic impact includes an estimate for room nights and
daily expenditures.
The indirect benefit of the proposed complex would include additional benefits such as
repeat/return visits and other positive financial impacts that the advertising and marketing
campaigns would have on non-sports tourism visitations. Indirect benefits are the changes in
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Hopkinsville, KY, Court Sports Economic Impact Study 2016
sales, income or jobs in sectors within the region that supply goods and services to the tourism
sectors. These indirect benefits come from activities created by the direct benefits.
It should be noted that the Economic Impact Study is based on certain assumptions regarding the
financing structure, the business and management model, regional and national economic trends,
the need to market and effectively manage high-quality programs geared toward sports teams
from outside communities, and the competitive landscape. Changes or poor performance with
any of these factors will impact results. The projections for economic impact outlined within this
document will require the implementation of a comprehensive sports tourism campaign which
will require collaboration between conventions and tourism, parks and recreation, and
management of the indoor sports facility.
When assessing the economic impact of proposed facilities, it is important to recognize that
mega-sporting events or large-scale, national tournaments and events should not be the primary
focus of optimizing economic impact. For this reason, Pinnacle has focused its economic impact
analysis on smaller-scale tournaments and special events and re-occurring programming.
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Hopkinsville, KY, Court Sports Economic Impact Study 2016
Assumptions and Drivers to Success
In short, Pinnacle’s findings revealed that the City of Hopkinsville possesses significant
advantages and opportunities to attract sports tourism events.
Pinnacle’s findings have been based on a number of assumptions, outlined below.
1. The financing structure will provide 100% funding and the facilities will not carry debt
service.
2. The proposed indoor sports center will be professionally managed by experienced staff, and
the facility operating systems, software, marketing and other systems will meet local market
standards for excellence.
3. The operating expenses, salaries, fees, and cost of goods sold will meet the revenue-toexpense ratios outlined within Pinnacle’s pro forma.
4. The proposed facilities will include the types of sports surfaces, offices, and other program
areas outlined by Pinnacle. These facilities meet a set of standards that are critical to
tournaments and event competitions.
5. If a private management group is engaged to oversee a portion or all of the facility
management, this group will operate in a manner consistent with promoting economic impact
within the City and have a performance-based compensation agreement.
7. Conventions and Tourism will play a major role in marketing sports and other group events.
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Hopkinsville, KY, Court Sports Economic Impact Study 2016
The Real and Potential Costs and Benefits of Sports Facilities
Source: Tim Chapin, Identifying the Real Costs and Benefits of Sports Facilities
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Hopkinsville, KY, Court Sports Economic Impact Study 2016
Economic Impact Study - Methodology
It is important to understand the basis of this economic impact projection, and the limitations
inherent in any economic forecast. The practice of calculating the direct economic impact of an
entity on the local economy by ascertaining the amount of additional local spending by visitors
to an event from outside the immediate area is a longstanding one with near universal agreement
that local spending from these outside sources is a direct impact on the local economy that would
otherwise not have occurred but for the event. Additionally, the calculation includes annual reoccurring programming activities that will be attended by members of the local populace and
result in increased local spending along with the new payroll and wages that will accompany the
operations of the proposed complex.
Pinnacle utilizes national and regional data
compiled by the National Association of
Sports Commissions (NASC), which is then
localized using direct data gathered from
local sources. From those organizations
Pinnacle obtained numbers of participants
and estimates of the number of participants
from out of the area that have attended past meets.
Utilizing expenditure averages for
lodging, meals and incidentals
obtained through the NASC, state of
Kentucky and local tourism
organizations, and using the known
duration of each event, Pinnacle has
calculated the estimated amount of
direct spending in Hopkinsville.
These are conservative figures
because direct, local sport tourism
spending amounts are not readily
available. The HopkinsvilleChristian County Convention & Visitors Bureau provided information noting that the average
spent for overnight day visits by all out-of-town guests was $177.16.
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Hopkinsville, KY, Court Sports Economic Impact Study 2016
Sport Tourism – State of the Industry
Sports Tourism Business Model
The goal of the sport tourism business model is to attract teams, players, and spectators to the
market to generate revenue for the facility and to create economic impact through direct
spending in the community.
According to the National Association of Sports Commissions (NASC) Sport Tourism State of
the Industry Report the following are key findings as of 2015.
VISITOR SPENDING IS ON THE RISE - Estimated visitor spending associated with sports
events was $9.45 billion in 2015 (2014 - $8.96 billion; 2013 -$8.7 billion; 2012 - $8.3 billion).
This is an indicator of the strength of sport tourism industry with growth occurring the past three
years.
Another similar study by Sports Marketing Surveys USA (SMS) shows that in 2014, there were
34.9 million people who traveled with an overnight stay to participate in or watch an amateur
sports event, a figure that has remained fairly consistent going back to 2008. While 18 percent of
these sports travelers were ages six to 17, about 51 percent were ages 25 to 54, more evidence
that families are accompanying their young players to events. On average, according to the SMS
study, sports travelers in 2014 spent $256 per person per year—which might seem low on the
face of it, but that number is consistent with the George Washington University (GWU) study for
visitor spending, when you consider spending a night or two at an event, sharing rooms, etc.
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Hopkinsville, KY, Court Sports Economic Impact Study 2016
Kentucky Tourism
Cabinet of Tourism, Arts and Heritage Secretary Don Parkinson announced that Kentucky’s
tourism industry has experienced the strongest overall economic impact growth rate the state has
seen since 2005. All nine of the state’s tourism regions registered gains for 2015 compared with
2014.
Kentucky's tourism industry generated $13.7 billion in economic impact during 2015, an
increase of five percent over the previous year. The industry supported more than 186,000 jobs,
including 6,200 jobs created in 2015.
Kentucky tourism generated more than $1.43 billion in taxes, with $184.9 million going directly
to local communities. These are the strongest overall numbers the Commonwealth has seen in
the past 10 years.
Hopkinsville-Christian County Tourism
Christian County ranks 14th out of 120 counties in tourism, with an economic impact of $143
million for 2015. The Western Waterlands, Christian County’s tourism region, had a 5.8%
increase over 2014, with Christian County having a 4.02% increase.
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Hopkinsville, KY, Court Sports Economic Impact Study 2016
This increase in general area tourism can be construed to mean that a new, well-marketed sports
center could share in that increased tourism trend and attract new, sport team tourism that is not
currently in the market due to other attractions and non-sport specific marketing programs
already in place.
Tourism Analysis
Tourism has become an increasingly large part of the Hopkinsville economy. The proposed
sports facility will be located adjacent to the current James E. Bruce Convention Center and
within five miles of numerous hotels and lodging establishments, as well as a multitude of retail
and shopping centers and dining establishments:
Lodging (within three miles)
 Comfort Suites
 La Quinta Inn
 Best Western
 Hampton Inn
 Roadway Inn
 Holiday Inn
Dining (within three miles)
 Buffalo Wild Wings (New)
 Logan’s Roadhouse
 O’Charley’s
 El Bracero
 Buffalo Wings & Rings
 Zaxby’s
 Holiday Burgers
 Joelle’s Café
 Senor Lopez Grill & Cantina
 Little Caesar’s
 McDonald’s
 Taco John’s
Retail
 Hopkinsville Towne Center (New)
The proposed indoor sports facility will benefit from the close proximity of supporting services
such as hotel, retail, dining, and entertainment developments. The presence of these types of
establishments will make the facility more desirable for participants and visitors. Furthermore,
the proximity of these amenities will make the destination more attractive for tournament and
event organizers as well as out-of-town guests participating in tournaments and events.
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Hopkinsville, KY, Court Sports Economic Impact Study 2016
Assumptions
It is important to understand the basis for the projected number of tournaments included in this
Economic Impact Statement (EIS). Pinnacle conducted a market feasibility study and financial
pro forma of the proposed project in the spring and summer of 2016. Pinnacle has based these
economic impact calculations on the original market study and pro forma. Pinnacle’s tradition of
being conservative with projections is of note with these figures and subsequent calculations.
Based on national figures, it is Pinnacle’s assumption that court sport tournaments will result in
an average out-of-town element of 75% of the total number of attendees.
It is also important to understand that while the development of a sport complex in Hopkinsville
will allow for the hosting of events it cannot host today; it will not automatically confer
economic benefits from outside spending since such direct spending will accrue only to the
extent that events are successfully planned, marketed, and hosted.
Pinnacle has conservatively estimated that 10 tournaments, a combination of basketball,
volleyball, could be hosted at a new facility given the current plan for in-house management and
marketing, and local and regional teams which expressed an interest and willingness to travel to
Hopkinsville. Additionally, the calculation includes eight annual re-occurring programming
activities that will be attended by members of the local populace.
These numbers could, of course, be higher if a professional, concerted marketing effort and other
incentives (hotel rates, meal plans, area attractions, etc.) were utilized to attract outside sport
teams and organizations.
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Hopkinsville, KY, Court Sports Economic Impact Study 2016
Economic Multipliers
The calculation of direct economic spending due to identified events is not controversial and is
universally well-accepted. This cannot be said about the common practice of applying a
multiplier to the direct spending to obtain the expanded economic impact (indirect impact) of
outside dollars spent in a local economy. The theory is that some identifiable percentage of
direct spending, such as renting a hotel room and patronizing a local restaurant, will in turn be
spent locally by the hotel and the restaurant to obtain goods and services locally, such as labor
for cleaning and food ingredients for prepared meals, and that this multiplier effect is necessary
to recognize the full extent of the value of
outside dollars injected into the local economy.
Economists differ strongly on the validity of
such a multiplier effect, and those that endorse
the concept differ widely on the extent of that
effect. The average multiplier used is
approximately 1.7 times the amount of direct
spending. The range is roughly from 1.2 to as
high as 4 times the amount of direct spending.
For the purposes of this report Pinnacle has included an additional calculation with a multiplier
of 1.7 as shown in Attachment A – Economic Impact Calculation.
Conclusion
There are a number of considerations
that should be understood in
conjunction with the attached economic
impact calculation. The estimated
economic impact of nearly $3.4 million
is projected due to an assumption that
the City of Hopkinsville will employ a
professional sport-sales staff member
who can successfully market and host a
minimum of 10 annual tournaments
with an additional eight annual reoccurring programming activities with
accompanying payroll and wages to
support that programming. To the extent that a significant number of these events do not
materialize, the total calculated estimated direct economic impact will be significantly reduced.
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Hopkinsville, KY, Court Sports Economic Impact Study 2016
Attachment A
Economic Impact Calculations of a Proposed Sports Center in Hopkinsville, KY
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Economic Impact Summary for Hopkinsville, KY, Indoor Sports Center
CY 2020 Sustainable Year
Economic Impact
From Tournaments & Special Events
From Local Programming
From Payroll/Labor Wages
Total Economic Impact
$1,969,228
$1,160,352
$270,107
$3,399,687
*Note: The construction cost estimate that is in the pro forma was $4,608,000. Labor income typically
comprises approximately 40% of the cost of this type of recreational construction; the remaining portion
represents the cost of materials. The one time economic impact from construction is $1,843,200
Economic Impact Calculations for Hopkinsville, KY, Indoor Sports Center
Average Hotel Expenditure
504 2
1008 1.5
1344 2
2016 1.5
1512 1.5
6,384
Average Daily Hotel Rate
75%
75%
75%
75%
75%
Room Nights
168
336
448
672
504
2,128
Avg. Length of Stay (days)
25%
25%
25%
25%
25%
# Out-of-Area Attendees
3
3
3
3
3
Out-ofArea
% Out-of-Area Attendees
# Local Attendees
Total Event Attendees
672
1344
1792
2688
2016
8,512
% Local Attendees
1.8
1.8
1.8
1.8
1.8
Number per Family Unit
1 2.5 24 240
2 2 24 240
2 2.5 32 320
3 2 32 320
2 2 36 360
10
148 1,480
Guests per Player
# of Players per Tourney
# of Teams per Tourney
# of Event Days per Tourney
Event
Year 2020 - Sustainable Year
Volleyball
Volleyball
Basketball
Basketball
Futsal
Tournament Totals:
# of Tournaments & Speical Events
Local
2
1
2
1
1
$110
$110
$110
$110
$110
$220
$110
$220
$110
$110
Average
Average
Direct
Daily
Daily
Economic
Expenditure Expenditure
Impact
Total Direct Total Direct
per Family
per Family (excluding
Economic
Economic
Unit for Out
Units for
hotel) from
Impact from Impact from Economic Total Economic
of Area
Local
Out of Area
Hotel
Out of Area
Local
Impact
Impact (1.7
Attendees
Attendees Attendees Expenditures Attendees
Attendees Multiplier
multiplier)
$177
$177
$177
$177
$177
$67
$67
$67
$67
$67
$28,140
$90,048
$150,080
$270,144
$135,072
$73,920
$36,960
$197,120
$73,920
$55,440
$102,060
$127,008
$347,200
$344,064
$190,512
$3,752
$7,504
$10,005
$15,008
$11,256
1.7
1.7
1.7
1.7
1.7
$179,880
$228,670
$607,249
$610,422
$343,006
$1,969,228
Economic Impact Calculations for Hopkinsville, KY, Indoor Sports Center
27,648
4,838
22,118
54,605
100% 27,648
100% 4,838
100% 22,118
54,605
0%
0%
0%
0
0
0
0
Average Daily Rate
# Local Attendees
% Local Attendees
Number per Family Unit
2.4
2.4
2.4
# Out-of-Area Attendees
1.4
1.4
1.4
Out-of-Area
% Out-of-Area Attendees
11,520
2,016
9,216
22,752
Total Event Attendees
10
12
12
Guests per Player
8
3
8
# of Player Days
36
28
48
112
# of Players per Team
4
2
2
8
# of Games Per Session
# of Teams
Event
Year 2020 - Sustainable Year
Basketball Leagues
Indoor Soccer Tournament
Indoor Soccer Leagues
Re-occurring Programming Totals:
# of Reoccurring Programs/Sessions
Local
$30
$30
$30
Economic
Impact Total Economic
Multiplier
Impact
1.7
1.7
1.7
$587,520
$102,816
$470,016
$1,160,352