22 April, 2016

How Sport Turns $1 into $4

How Sport Turns $1 into $4

Photo Credit: Simon Cunningham

This week I have had some really interesting discussions with a group of sports wanting to achieve greater collaboration off the field. The discussion turned to the business of sport and the impact that sport as an industry has on our local communities. It also turned to the perception by some that sport isn’t taken seriously as an industry that significantly contributes to our economy and community wellbeing.

So, I have decided to delve a bit deeper into this topic. Those involved in the sports industry know the benefits of sport and we know the amount of research that is out there. But at times we don’t have the numbers to back up our own perceptions.

Ultimate competition on the field, Ultimate collaboration off it, Ron Evans, Former AFL Chairman.

Government’s Role

One of government’s roles is in supporting a wide range of sectors of the community that make up our social fabric or culture. It is through this support that enables our community culture to achieve the social outcomes that sport aims to deliver. Sport is one sector that has become a part of the social fabric of not only Australia but many other countries as well.

Government’s role in supporting the growth of this culture by encouraging partnerships between different levels of government, between public and private organisations and the not-for-profit sector enables a sustainable industry. The support of government (through finance and policy) is key to this sustainability.

So what does the government get back? Often sporting clubs and State Sporting Organisations are seen as a cost to government. With the increasing difficulty to find volunteers and maintain capacity within the industry, upgrades to facilities, and contributing to the operating of playing fields and courts it can be demonstrated as a cost to government’s bottom line.

I feel that government must look towards the sport and recreation industry as providing a tangible benefit back to the community, to offset its costs in its primary roles of education, law and justice, health and defence.

There is considerable research and reports out there that discuss the contribution of sport to the economy. There are large datasets around sport participation. Social impact indicators are discussed at large. But still we fail as a community to take full advantage of the cost-benefits opportunities through sport and recreation activity.

Sport and Recreation Community Outcomes

The outcome that we are looking for with an investment in sport, with this investment coming from households, government and the private sector, is increased social utility. Social utility can be defined as a measure of society’s wellbeing. (1)

This wellbeing is further broken down into the following:

  • Social Outcomes: Providing connection to the community, social networks and an increased chance of securing employment.
  • Health Outcomes: Providing both physical and mental health increases.
  • Community Outcomes: The delivery of essential services such as childcare, education programs, developing community leaders, creating civic pride.
  • Economic Outcomes: Creating direct and indirect employment opportunities, developing economic stimulus events through sport tourism, increased productivity of individuals to the economy.

However, without a coordinated whole of government approach to the delivery of sport and active recreation into our community, we won’t be able to fully realise the benefits of our investment as taxpayers into the sports industry.

Some Compelling Numbers

Social Outcomes: An AFL Victoria research report (2) found that ‘for every $1 spent on community football clubs, there is at least $4.40 return in social value’. The report defines social return on investment as being an impact assessment on the value of increased social connectedness, wellbeing, mental health outcomes, employment outcomes, personal development opportunities, physical health, civic pride and support of other community groups. This is a pretty compelling list of reasons for investment, if a community club can deliver outcomes across all of these areas.

Health Outcomes: A recent study (3) commissioned by the Tasmanian Government found that the benefit to cost ratio on the health system in Tasmania is 19:1. This means that for every $1 spent on treating sport and recreation related injuries, $19 was saved as a result of its population living an active lifestyle.

Community Outcomes: Why support elite sport? Because it is the foundation of the whole sports industry. Behind one elite athlete there are thousands of other athletes and participants contributing to the economy and living healthy lives. Elite athletes are also great ambassadors for the sport economy. According to Fortune magazine, Michael Jordan has had an impact of $10 billion on the USA economy over his career (4).

The success of our elite athletes also has a direct impact on our own wellbeing and sense of National pride. Research showed that positive movements in the Australian wellbeing index was associated with success at the 2004 Olympic Games (1)

What about at the community level? Volunteers play a key role in the delivery of sport, we know that. But how much? About $4 billion worth of hours per year! This contribution to sport is not only valuable in terms of reducing a financial aspect of labour to the delivery of sport, but also in the social connectedness of people within our community. The Tasmanian report (3) estimated that without volunteers, the cost to households to fill the shortfall required to run sport, would be $9.97 per week, a 120% rise in the cost of sport to families. Furthermore, the contribution of volunteers is six times the value of corporate sponsorship and greater than the whole of government contribution.

Economic Outcomes: ABS statistics show that Australian governments provide financial support to the sport and recreation industry of around $1.5 billion, being approximately 17% of the combined income for the sport organisation sector. However the broader sports industry, which includes equipment suppliers, social clubs, sports media etc, has a total revenue of $27 billion (5). This is a significant multiplier for government investment in terms of economic stimulus!

Sport and recreation is a significant contributor to our local community economy. It has been found that for every $1 invested that there is a $4 return in benefits (1).

Conclusion

There are a myriad of reports, research articles and government reviews around the benefits of sport to our community. The challenge for the sports industry is to continue to identify and quantify these benefits to its funding providers and consumers to ensure ongoing investment and engagement.

Sport and recreation providers sell products. All products have features, benefits or value. Sport has some amazing benefits that we as sports administrators sometimes fail to highlight when we are marketing our products. Likewise, Government sometimes fails to understand the cost benefit that sport and recreation is able to provide when looking at its health, education and justice budgets and programs.

In order to create maximum efficiency from the $1 we spend in sport and recreation, we need to collaborate not only within sport, but also across industries.

References 

© 2018 Paul Mead

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