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  • Economic Importance of Sport in Northern Ireland

    The lead public body for the development of sport in Northern Ireland

  • Contents

    Prepared for Sport Northern Ireland by the Sports Industry Research Centre of Sheffield Hallam University.

  • Executive Summary 2

    Chapter 1: Introduction 5

    1.1: Terms of Reference 5 1.2: Methodology 5

    Chapter 2: The Sport Economy in Northern Ireland 7

    2.1: Summary of Key Indicators 7 2.2: Consumer Expenditure 9 2.3: Sport-related Output 10 2.4: Sport-related Employment 11 2.5: Summary of Income and Expenditure Flows 12

    Chapter 3: Comparisons with the English Regions 13 Appendices 20 A1: Statistical Sources 21 A2: Model Output 22 A3: Definitions 36 A4: Sources and Methods 37

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    EXECUTIVE SUMMARY

    This report is part of Sport Northern Irelands effort to build the evidence of the economic value of sport. The research has been carried out by the Sport Industry Research Centre (SIRC) at Sheffield Hallam University.

    This report focuses on the economic importance of sport to Northern Ireland in 2008, providing additional comparisons with estimates from 1998 and 2004.

    The methodology employed is based on national income accounting and the income and expenditure flows between sub-sectors of the economy. By using the latter we can derive a monetary value for the sport production (value added) which is consistent with the national statistics framework and crucially avoids the problem of double counting.

    688m was spent by consumers on sport-related goods and services in 2008 in Northern Ireland. Consumer expenditure on sport as a percentage of total expenditure is estimated as follows:

    Northern Ireland: 2.8% England: 2.3% In consumer spending terms, despite the recession, the contribution of sport to the

    economy has remained unchanged.

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    There has been a 54% increase in sport-related consumer expenditure during the period 2004-2008. This corresponds to a 43% growth using constant prices.

    Sport related activity adds 638.6m to the Northern Ireland economy, corresponding to almost 2.3% of total value added in the region.

    17,900 people are employed in sport related employment, corresponding to 2.3% of total employment in the region (assuming total in employment 791,000).

    Sport Consumer Expenditurein Northern Ireland, 2008

    Clothing and Footwear

    Sports Equipment

    Subscriptions and Fees

    Admissions

    Sport Gambling

    TV

    Other

    12%

    25%

    8%

    21%3%

    19%

    12%

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    Commercial sector

    Voluntary sector

    Public sector

    Sport Employment in Northern Ireland, 2008

    During the period 2004-2008, expenditure on sport clothing and footwear, subscription and fees, and sport equipment increased, in real terms, by 46%, 95% and 81% respectively.

    The sport economy in Northern Ireland is driven by consumer expenditure and sport participation. The London Olympics in 2012 will become a significant force for sport development. Despite average earnings being below the average of the UK (85%), the popularity of sport has resulted in sport-related expenditure at 2.8% of total spending, higher than the English average. In 2008, Northern Ireland had not yet been significantly affected by the recession, showing, in actual fact, the overall greatest spending per household compared to the other home countries.

    70%

    18%

    12%

  • 1. INTRODUCTION

    1.1 Terms of ReferenceThis report has been prepared by the Sport Industry Research Centre (SIRC) at Sheffield Hallam University on behalf of Sport Northern Ireland. The purpose of the report is to provide an estimate of the economic importance of sport in Northern Ireland as well as to inform about its direct economic contribution.

    1.2 MethodologyThe SIRC model of economic impact assessment uses as its basic input where possible - economic variables from official statistics. Hence, with the sole exception of the voluntary sector, there is no need for collection of primary data. National income accounting provides the framework for this model, which is consistent with the UK National Accounts. It allows for a division of the sports economy into the seven sectors below:

    Consumers including the personal or household sector. Shows mainly sport-related expenditure, eg, spending on sports clothing and footwear.

    Commercial Sport including spectator sport clubs, sports good manufacturers and retailers. In this sector we would classify companies such as Nike, JJB and football clubs. We also include a section of the media where a sport product/service is produced, such as sport TV, sport publications etc.

    Commercial Non-Sport including suppliers for the production of sport-related goods and services. This sector includes all companies of the commercial sector that do not provide a sport product, but which assist through supply of inputs or revenue in its production. The size of these inputs is determined by the National Accounts and the Annual Business Inquiry (ABI) survey. Examples include a beer company sponsoring a football club, energy required for the operation of a Leisure Club etc. The advertising revenue received by the club represents a flow from the commercial non-sport to the commercial sport sector. Within Commercial Non-sport two large sub-sectors are gambling and satellite TV; however, the largest part is the general unidentified component derived from the demand of inputs in the sports economy.

    Voluntary including non-profit making sport organisations such as amateur clubs run by their participants.

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    Professional football clubs are not included in this category even if they are managed on a non-profit basis.

    Local Government including income from local government sport facilities, sport-related grants from Central Government and rates from the commercial and voluntary sector. The sector has expenses such as wages for labour (a flow towards consumers) and grants to the voluntary sector.

    Central Government, including taxes, grants and wages on sport-related activities. For example, a person buying a ticket for a football match records two flows: one towards the Government sector as VAT and another towards the commercial sport sector for the remainder of the price.

    Outside the Area sector. This includes all transactions with economies outside the region.

    Income and expenditure flows are recorded between the seven sectors above. As a result a set of income and expenditure accounts can be drawn up for each sector. The double entry accounting principle is applied, so every expenditure flow from sector A to sector B is also an income flow in the sector B accounts. The income and expenditure accounts are then used to derive estimates for the following economic impact indicators of the sport economy.

    Sport-related consumers expenditure Sport-related employment Sport-related value added

    Sport-related value added is the most comprehensive statistic of economic value as it corresponds to the gross value added (GVA) in the economy as a whole. It shows the contribution of the sport industry to the regional economy. It is measured as the sum of wages and profit surplus in the sector, adjusted for the inclusion of value contributed from National Lottery projects.

    The method used is consistent with the Office for National Statistics (ONS) estimate, as reported in the publication Consumer Trends1. The sport-generated product (GVA), as a percentage of the total regional product, is usually the most important statistic to consider.

    1 Consumer Trends Quarter 1 2010 (ONS)

  • 2. THE SPORT ECONOMY IN NORTHERN IRELAND

    2.1 Summary of Key IndicatorsTable 2.1 summarises the most important sport-related indicators for Northern Ireland, namely Consumer Expenditure, Gross Value Added and Employment. The table also draws comparisons for the region, focusing on the years 1998, 2004 and 2008 and on the situation in England as a whole. The estimate for total consumption expenditure is consistent with the European System of Accounts 1995. In the case of Gross Value Added and Sport Related Employment, the 2004 statistics have been re-estimated to reflect the official sources used in 2008 (ASHE instead of New Earnings Survey, Annual Business Inquiry instead of Business monitors).

    According to Table 2.1, over 688 million was spent on sport-related goods and services in Northern Ireland in 2008, accounting for 2.8% of total consumer expenditure in the region. This compares favourably to the national average for England (2.3%). Compared with 2004, there was an increase of 54% in sport-related consumption.

    TABLE 2.1: MAIN SPORT-RELATED INDICATORS FOR NORTHERN IRELAND

    1998 2004 2008

    Consumer Expenditure on sport (million) 254.7 446.2 688.1 percentage of Northern Ireland total 2.2% 2.8% 2.8% national average (England) 2.2% 2.4% 2.3%

    Gross Value Added by sport (million) 274.0 521.9 638.6 percentage of Northern Ireland total 1.6% 2.3% 2.3% national average (England) 1.5% 1.7% 1.5%

    Sport-related Employment (thousands) 11.6 16.0 17.9 percentage of Northern Ireland total 1.7% 2.2% 2.3% national average (England) 1.5% 1.8% 1.8% The proportion of total consumer expenditure on sport has also increased from 2.2% in 1998 to 2.8% in 2008. It has not been affected by the early signs of recession in 2008 for the UK as a whole. Sport-related economic activity in Northern Ireland adds close to 639 million, which represents an increase of 22% over the year 2004. The contribution to GVA by sport in the region has also grown - from 1.6% in 1998 to 2.0% in 2004, to 2.3% in 2008.

    Sport-related employment in Nor