Testing the accuracy of event economic impact forecasts

Abstract

PurposeThe purpose of this paper is to examine the findings from ex ante and ex post economic impact appraisals of six major sports events. The ultimate aim of the paper is to identify the factors that cause differences between forecasts of direct expenditure and figures based on primary research.Design/methodology/approachA direct expenditure forecast for each event was derived based on analysis of event documentation and informed assumptions applied from previous studies. Subsequently, a comprehensive study was undertaken involving primary data collection and associated desk research.FindingsOf the forecasts, three were inflated and three were conservative relative to the ex post figures. In total, two potential sources of variance are examined – visitor spending and organisational expenditure. The former was found to be more unpredictable when compiling a pre‐event forecast. The group for which direct expenditure is most difficult to predict is spectators, with the most exaggerated forecasts associated with free‐to‐view events.Research limitations/implicationsNeither input‐output nor computable general equilibrium models were used to analyse secondary, indirect or induced impacts. Nonetheless, direct expenditure is the basis for modelling wider impacts and is therefore worthy of consideration in its own right.Practical implicationsThe paper's findings should enable public sector agencies to better understand the reliability of projected figures presented to them by organisers in exchange for securing financial support for their events.Originality/valueEconomic impact forecasts are rarely subjected to post‐event scrutiny. This research bridges the gap between ex ante and ex post figures and identifies areas where forecast accuracy can be improved.