XX Commonwealth Games Visitor Study: Economic Impact Report

4. Net Economic Impacts

Introduction

4.1 In this section results are set out in which the gross impacts detailed above are adjusted for the effects of displacement and deadweight. The results net of displacement and deadweight represent a more meaningful measure of the impact on the economies of Glasgow, the Clyde Valley and Scotland by all visitor groups to Glasgow 2014 and Festival 2014.

4.2 The adjustments to gross impact are made in sequence beginning with displacement which is considered at three levels, Scotland, Glasgow and Glasgow and Clyde Valley.

4.3 At each geographical level the adjustment for displacement has been done by excluding "locally originating" spend from the calculations. Thus we take the position that (for example) the money spent by Scotland/Glasgow residents on event related activity is money that those people would have spent in the Scotland/Glasgow in any case: that is, it is displaced spending.

Adjustments for Displacement

Table 4.1. Total Games Non-Displaced Economic Impact Scotland - Event Visitors

Area	Output Impact £ Million in 2014	GVA Impact £ million in 2014	Employment Impact (FTE in 2014)
Scotland
Direct	95.2	47.2	1,702
Indirect	37.6	17.6	364
Induced	27.6	14.7	257
Total	160.4	79.5	2,323

Source: Expenditure data from Games Visitor Survey. Scottish Government Input-Output Model 2011 v4.06.

Note: Due to rounding some figures may not sum to totals.

4.4 Table 4.1 shows the impact of event visitor spending at the Games at the Scottish level net of spending by Scottish residents. These effects were produced by non-displaced spending of £118.39 million.

4.5 The non-displaced impact is about 65% of the gross which is what would be expected given the data on spend origin. To this should be added the expenditure of "non-Scottish" media and volunteers.

4.6 The non-local media spend is estimated at £3.5 million and spend by volunteers from outside Scotland was £4.1 million (including pre Games spend). These additional elements of spending (£7.6 million) are equivalent to 6.4% of spend in Scotland by non-resident event visitors.

4.7 This has been factored in to give the total spending impacts as shown in Table 4.2.

Table 4.2. Total Games Non-Displaced Economic Impact Scotland - All Visitor Groups

Area	Output Impact £ Million in 2014	GVA Impact £ million in 2014	Employment Impact (FTE in 2014)
Scotland
Direct	101.3	50.1	1,811
Indirect	40.0	18.7	387
Induced	29.4	15.6	273
Total	170.7	84.4	2,471

Source: Calculations by Optimal Economics.

Note: Due to rounding some figures may not sum to totals.

4.8 About half of the non-displaced economic impact on Scotland reported in Table 4.2 was experienced in Glasgow itself, around 9% in the rest of the Clyde Valley and 41% elsewhere in Scotland.

4.9 Table 4.3 shows the impact of event visitor spending at the Games at the Glasgow and Clyde Valley level net of spending by Glasgow and Clyde Valley residents. This spending amounted to £107.49 million.

4.10 In these displacement calculations the Glasgow and Clyde Valley area has been treated as one market. Glasgow is the centre of a Travel to Work Area which extends far into the Clyde Valley and beyond while some of the key retail facilities serving the city lie outside its boundaries. Moreover, the Clyde Valley Community Planning Partnership's vision for Metropolitan Glasgow states that the city is "the main employment and service centre, the main retail centre, the main centre of further and higher education, and the main centre of cultural, leisure and entertainment activities for western central Scotland"^[18].

4.11 The adoption of a "one market" displacement approach to the Glasgow and Clyde Valley area is also considered to be appropriate given the particular nature of the Games as an event. The Games were a very large scale event spread over a relatively long period (11 days) with a diverse mix of activities spread over locations inside and outside Glasgow. It is not being argued here that the "one market" approach is always appropriate and it may not be, for example, appropriate in relation to smaller or shorter duration events focussed on the city of Glasgow.

4.12 Sensitivity testing shows that the adoption of an alternative assumption (that the two markets were separate) would only affect Glasgow. It would have a negligible effect on the impact estimates for Clyde Valley but would increase Glasgow level impacts by 15%. The alternative assumptions have no effect on the impact assessment at the Glasgow and Clyde Valley or Scottish levels. It follows that the assumption that Glasgow and Clyde Valley are one market results in a conservative estimate of non-displaced impacts at the Glasgow level.

Table 4.3. Total Games Non-Displaced Economic Impact Glasgow and Clyde Valley - Event Visitors (Excluding Ticket Spend)

Area	Output Impact £ Million in 2014	GVA Impact £ million in 2014	Employment Impact (FTE in 2014)
Glasgow
Direct	78.9	38.7	1,350
Indirect	7.4	3.8	76
Induced	5.5	3.0	51
Total	91.8	45.5	1,477
Clyde Valley
Direct	6.6	3.3	124
Indirect	8.5	4.1	80
Induced	5.9	3.2	55
Total	21.1	10.6	259
Glasgow and Clyde Valley
Direct	85.5	42.0	1,474
Indirect	15.9	7.9	156
Induced	11.4	6.2	107
Total	112.9	56.1	1,736

Source: Expenditure data from Games Visitor Survey. Scottish Government Input-Output Model 2011 v4.06.

Note: Due to rounding some figures may not sum to totals.

4.13 The impact net of displacement is about 80% of the gross which is what would be expected given the data on spend origin.

4.14 As with the gross impact calculation, we need to add the impact of the expenditure of "non-Glasgow and Clyde Valley" media and volunteers.

4.15 The non-local media spend (excluding Glasgow based media) is estimated at £3.5 million and spend by volunteers from outside Glasgow and the Clyde Valley was £4.8 million (including pre Games spend). These additional elements of spending (£8.3 million) represent a sum equivalent to 8.4% of non-displaced event visitor spend in Glasgow and 7.7% of event visitor spend in Glasgow and the Clyde Valley by non-residents.

4.16 This has been factored in to give the total spending impacts as shown in Table 4.4.

Table 4.4. Total Games Non-Displaced Economic Impact Glasgow and Clyde Valley - All Visitor Groups

Area	Output Impact £ Million in 2014	GVA Impact £ million in 2014	Employment Impact (FTE in 2014)
Glasgow
Direct	85.5	42.0	1,463
Indirect	8.0	4.1	82
Induced	6.0	3.3	55
Total	99.5	49.3	1,600
Clyde Valley
Direct	6.6	3.3	124
Indirect	9.1	4.4	86
Induced	6.3	3.4	60
Total	22.0	11.1	270
Glasgow and Clyde Valley
Direct	92.1	45.2	1,587
Indirect	17.1	8.5	168
Induced	12.3	6.7	115
Total	121.5	60.4	1,870

Source: Calculations by Optimal Economics.

Note: Due to rounding some figures may not sum to totals.

Adjustments for Deadweight

4.17 The final step in this analysis is to adjust for deadweight by which we mean the presence (and spending) of people who would have been in Glasgow even had there been no Glasgow 2014/Festival 2014 events. Assessing deadweight it always challenging since it is difficult to construct a "counter-factual" - i.e. a description of what people would otherwise have done.

4.18 The approach taken here is based on responses to questions which asked people how important each event was in their decision to visit Glasgow. The answers to this question were strikingly clear. Figure 4.1 shows the percentage of respondents who indicated that each event was their 'sole reason' or a 'very important reason' for visiting Glasgow. The answers are shown for all of the sample, persons who attended each type of event and persons who only attended sport or festival events as appropriate.

Figure 4.1. Percentage of Respondents Stating Specific Event was Sole or Very Important Reason for Visiting Glasgow

Source: Games Visitor Survey

4.19 Of the three events, Glasgow 2014 events were the most potent influence on decisions to visit Glasgow. Thus 83% of visitors from the rest of the UK stated that Glasgow 2014 events were the sole reason for visiting Glasgow (as compared to 62% of Scottish visitors). Festival 2014 and the Merchant City Festival, while having a lesser influence on the decisions to visit Glasgow and Scotland, were still cited by 18% and 20% respectively of all event visitors (and 11% of non-Scottish UK visitors) as the sole reason for visiting Glasgow. (Further analysis is presented in Figure C.1 in Annex C)

4.20 Even with this evidence it is difficult to say how many of the 690,000 visitors to Glasgow 2014/Festival 2014 would have visited Glasgow had there been no events or even a different combination of events.

4.21 Given the logical difficulties in establishing the joint impact of the events net of deadweight, the procedure adopted has been to assess each event separately using a score for deadweight calculated as follows:

• Persons who stated that the event was the sole reason for the visit are scored with a weight of 1
• Persons who stated that the event was a very important reason are scored 0.5
• Persons who stated that the event was a fairly important reason are scored 0.25
• Others are scored 0

4.22 These weights are used to calculate the proportion of spend which is additional (not deadweight) for each event. As the responses were different for Scottish and non-Scottish visitors, two proportions are then calculated and a weighted average produced reflecting the proportions of each type of visitor. These calculations produced a "deadweight factor" which was the proportion of spending for each event and at each geographical level deemed to be "not displaced".

4.23 Table 4.5 shows the deadweight adjustment factor for each event at each level. The Glasgow and Clyde Valley figures are the same as respondents were asked about trips to "Glasgow and the Clyde Valley".

Table 4.5. Deadweight Adjustment Factors

Area	Deadweight Adjustment Factor
Glasgow
Glasgow 2014	0.77
Festival 2014	0.3
Merchant City Festival	0.32
Clyde Valley
Glasgow 2014	0.77
Festival 2014	0.3
Merchant City Festival	0.32
Scotland
Glasgow 2014	0.89
Festival 2014	0.14
Merchant City Festival	0.18

Source: Games Visitor Survey. Calculations by Optimal Economics.

4.24 Because the deadweight factors varied between events and because many visitors attended both Glasgow 2014 and Festival 2014 events, there is no simple way to calculate the total joint impact of the events.

4.25 The approach taken recognises that for event visitors to Glasgow 2014 that event was the primary influence on the decision to visit Glasgow/Scotland. However, some visitors who attended Festival 2014 events did not attend Glasgow 2014. Our approach, therefore, has been to calculate the additional impact of all persons who were visitors to Glasgow 2014 events based on the Glasgow 2014 deadweight adjustment factors set out above and combine that with the estimated additional impact of visitors who attended Festival 2014 but did not attend any Glasgow 2014 events. The survey data indicates that 160,000 visitors to Festival 2014 (including Merchant City Festival) did not attend Glasgow 2014 events. The calculation undertaken for individual events indicate that the net additional impact per Festival 2014 and Merchant City Festival visitor was similar.

4.26 The economic impact of Festival 2014 visitors is based on 520,000 visitors thus the impact of 160,000 such visitors would be 30.7% (rounded to 31%) of that impact. By combining the impact of Glasgow 2014 with 31% of the impact of Festival 2014 we have an estimate of the combined impact of Glasgow 2014 and Festival 2014.

Net Economic Impacts

Table 4.6. Estimated Combined Net Impact of Glasgow 2014 and Festival 2014

Area	Glasgow 2014 Visitors	Media and Volunteers	Festival 2014 (31%)	Total
Glasgow
Output in 2014 (£ millions)	62.1	7.7	6.2	76.0
Employment FTE in 2014	1,001	124	102	1,227
GVA (£ millions) in 2014	30.8	3.8	3.1	37.3
Clyde Valley
Output in 2014 (£ millions)	14.6	0.9	1.4	16.9
Employment FTE in 2014	180	11	17	206
GVA (£ millions) in 2014	7.3	0.5	0.7	8.8
Glasgow and Clyde Valley
Output in 2014 (£ millions)	76.7	8.6	7.6	93.4
Employment FTE in 2014	1,181	135	118	1,432
GVA (£ millions) in 2014	38.1	4.3	3.8	46.2
Rest of Scotland
Output in 2014 (£ millions)	60.4	1.2	2.2	63.8
Employment FTE in 2014	800	7	29	836
GVA (£ millions) in 2014	29.6	0.5	1.1	31.5
All Scotland
Output in 2014 (£ millions)	132.9	9.8	4.9	147.6
Employment FTE in 2014	1,925	142	71	2,138
GVA (£ millions) in 2014	65.9	4.8	2.4	73.1

Source: Calculations by Optimal Economics.

Note: Due to rounding some figures may not sum to totals.

4.27 The results are shown in Table 4.6. Allowance is also made for media and Clyde-sider volunteer impacts. The media and Games volunteer impacts net of displacement have been added without any discount for deadweight as it is reasonable to assume that neither non-local Clyde-siders nor non-local media would have been present without the Games. Table 4.6 includes an estimate of impact on the "Rest of Scotland"^[19].

4.28 The combined net impact of the Games thus ranges from

• 2,138 jobs in 2014 and £73 million of GVA in 2014 at the Scottish level
• 1,227 FTE jobs in 2014 and £37 million of GVA in 2014 at the Glasgow level
• 1432 FTE jobs in 2014 and £46 million of GVA in 2014 at the Glasgow and Clyde Valley level

4.29 Results corresponding to Table 4.6 for Glasgow 2014 alone (all visitor groups) and Festival 2014 and the Merchant City Festival (event visitors only) are provided in Annex C.