Experts predicted this past summer's World Games in Birmingham to have an economic impact of $256.5 million. However, according to a new study, the actual impact was much lower than expected.
The study was released in December by Quantum Consultancy, an event consulting firm that worked with the City of Birmingham to conduct an assessment of the event. The report claims to have used data sources provided by multiple stakeholders to provide a detailed view of "economic, social and environmental impacts" associated with games.
It found that the indirect economic impact of the World Games was $165 million. But the direct economic impact was much lower, at $11.7 million.
'Those 11 days changed us forever'
The World Games began on July 7 and concluded on July 17 with a celebration at Protective Stadium. It hosted 3,459 athletes from 99 different countries who competed in 34 sports.
According to World Games 2022 CEO Nick Sellers, the event cost was $65 million. Though corporate sponsorships paid for most of it, Birmingham already contributed $3 million in 2022, combined with $2.7 million for police overtime.
On the first day of the games, the Birmingham City Council gave emergency spending authority to Birmingham Mayor Randall Woodfin. The city asked Gov. Kay Ivey to declare a state of emergency to authorize emergency expenditures, but Ivey's office declined.
Nevertheless, public figures touted the games in the months preceding and following the event. One columnist ridiculed those skeptical about the World Games, calling them "CAVE people" or "Citizens Against Virtually Everything." Birmingham City Councilor Hunter Williams even said that the games "changed us forever," according to AL.com.
Jefferson County officials had high hopes in the months after the games. Jefferson County Economic and Industrial Development Authority Executive Director Ted vonCannon told 1819 News that he was "not sure you can really put a dollar figure" on the value of Birmingham being showcased to the rest of the world.
Several other businesses shared their experiences with 1819 News during the World Games but reported mediocre, sometimes even disappointing, results.
Debt and bailouts
The World Games finished with a $14 million deficit and asked multiple local institutions to help bail them out so they could repay vendors.
Both the Jefferson County Commission (JCC) and Birmingham City Council (BCC) complied. The JCC gave $4 million in September, and the BCC elected to give $5 million in August in exchange for professional services and consulting to the City of Birmingham.
According to reports, the Greater Birmingham Convention & Visitors Bureau even contributed $1 million to address the deficit.
The World Games still owes money to debtors, and Sellers said the deficit grew because a few sponsors dropped weeks before the games. Airline flight costs, gas prices and inflation also drove up accommodation costs.
According to Sellers, the World Games 2022 Organizing Committee is still conducting fundraising efforts to pay off the remainder of the debt. He said sponsors also stepped up to provide additional support, and the organization should have its debts paid off by the end of the first quarter of this year.
Ticket sales down $2.2 million from projections
Though a press release immediately following the games stated that 375,000 spectators watched the event, the report found only 140,217 ticketed spectators in attendance, equating to only 37% of all tickets sold.
Sellers told 1819 News that this discrepancy was due to challenges in credentialing volunteers and sponsors. Certain volunteers and sponsors got tickets that were not scanned upon entering events. There were also people who bought tickets but did not show up.
Ticket sales for the World Games 2022 opened in July 2021. The average ticket price was $24 for all events other than the opening and closing ceremonies, which were as high as $99.
Only 31% of the tickets were sold to the general public. Well over half of the tickets, approximately 60%, were sold to sponsors as part of corporate packages, and 9% were given away for free.
Although the target was $6 million, the World Games only made $3.8 million from ticket sales. The vast majority of the tickets were sold in the months leading up to the event. A little over half of the tickets were sold in July alone.
Lowest attendance since 2001
World Games 2022 had the lowest World Games attendance since 2001, finishing 11% below the average attendance at World Games events, which have been held 11 times since 1981 around the world.
According to the report, only 13,521 people actually traveled to Birmingham. Over 85% of the attendees were from Alabama. Only around 2% were from outside of the United States.
Consequently, only 4,437 spectators booked paid accommodations in the Birmingham-Jefferson area, resulting in a total accommodation expenditure of $1.8 million.
According to the report, the conflict in Ukraine was also a factor, as well as high temperatures. The World Games even banned the participation of Russian or Belarussian athletes.
"Anecdotal evidence suggests that attendance at TWG 2022 was hampered by the pandemic effect whereby large numbers of fans, predominantly international fans, remained uncomfortable in traveling to attend a busy sporting event in the summer of 2022," the report read. "Additionally, unprecedented temperatures during a summer heatwave, accompanied by two days of storms, also impacted attendances with ticketing data showing higher rates of no-shows on these bad weather days with several sessions also having to be rescheduled, creating uncertainty for spectators, and putting pressure on ticketing management processes."
"The delay and kind of the COVID pandemic overhang dampened a little bit of the expectations of the economic impact," Sellers said. "Candidly, we really were expecting greater international travel … in particular from European nations, Germany. They ended up winning the world games."
Sellers insisted that there were challenges with international flights and that another wave of COVID was hitting Europe.
"Another challenge was that a lot of these sports were emerging sort of novelty sports," Sellers added. "Most of them don't have large organic fanbases in the Southeast U.S… We really didn't see the pickup that we were hoping we'd see in the probably six to eight weeks leading up to the opening ceremony."
How do you determine indirect economic impact?
It's unclear how the organization determined indirect economic impact and, therefore, why it is almost 14 times higher than the direct economic impact.
Sellers said he didn't know how Quantum calculated the economic impact because it was an independent investigation and the consultant group worked with the City of Birmingham.
In the report, Quantum didn't provide any strict criterion for calculating the direct economic impact but said that it is calculated "in accordance with the methodology utilized by the City of Birmingham."
Breaking down direct economic impact
The direct impact figure, on the other hand, "consists of out-of-town visitor spending and organizational surplus expenditure made specifically for the event within the host economy, defined as the City of Birmingham and Jefferson County."
The direct economic impact can be broken down as follows:
Total out-of-town visitor expenditure: $4.1 million
Event participant expenditure: $6.1 million
Event organizational surplus expenditure: $1.7 million
These numbers do not include expenditures made by local residents.
"What we tried to achieve with the World Games was to put Birmingham on an international stage in a different light," Sellers said. "And to show Birmingham as a progressive new city that was welcoming to people from all over the world. And I think, by all accounts, we achieved that. We had hundreds of millions of impressions … It's really hard to put a value in terms of what that's going to mean in terms of long-term opportunities."
1819 News reached out to Woodfin's office for his perspective on the results but received no response. Woodfin was a primary player in the Birmingham City Council's bailout of the World Games last fall.
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