Impact of festivals on downtown

I was on Winnipeg Internet Pundits today talking about the impact of festivals like Fringe on Winnipeg's downtown. You can (and should!) listen to the show's pod cast, but I thought I would type out the gist of what I talked about.

This came about because I opened my twitter yap last week suggesting it as a topic for the regular insightful WIPs gang to discuss, so of course I end up having to talk about it instead. That's okay though. Good excuse to get back down to the 101.5 studio, meet the gang (and Paul Hesse) and torture the air waves with my broken muffler-esq voice.

From an economics perspective, you can put a dollar value on things like festivals. You can google it and find lots of examples. I have some experience valuing things, having worked as an RA in University on a government-funded project to value Manitoba's wilderness, and I also at one time surveyed studies on the value of a human life for reasons that I don't recall (varies widely depending on methodology, but median was around $6-8 million at the time. Less if you're left handed. Just kidding.)

Right, so let's get down to it: looking at Fringe , in 2010 there were 86,717 tickets sold plus additional attendance at free events for about 150,00 total. Ignoring the freeloaders (though they spend money too) let's just ball park $15 per person -- $9 for a ticket plus a couple drinks each. This may be high, but the freeloaders will make up for that. That works out to $1.3 million in direct spending downtown.

The Ontario Trillium Foundation estimates that with large-ish festivals like Fringe, about 10% of the attendees come from other provinces. Let's say 10% x 86,717 = 8,671 tickets @ one show per night = 8,671 tourist nights in Winnipeg; at $150 per night = $1.3 million in tourism spending downtown.

Plus, the budget for the Fringe festival itself was about $650,000, for a sub-total of $3.2 million.

Why just a sub-total? Because you forgot the multiplier! The multiplier says that each dollar spent reverberates around in the economy like a wave, creating additional impact until it fades away. Economists like multipliers because it lets them make numbers bigger without doing any additional work. Again, there are varying estimates but they seem to gravitate between 1.2 and 1.5. This detailed Scottish study puts the local multiplier at 1.25, which works out well for me because it gives me a nice even number: $3.2 million x 1.25 = $4.0 million economic impact.

The Jazz Winnipeg Festival does not seem to like publishing ticket sales, but I phoned them and the lady I spoke to estimated that there were about 40,000 sold. That's about half the Fringe total, but average cost is much higher. Without better information, let's be lazy and say another $4 million there.

Those two downtown fests alone bring something close to $8 million in annual economic impact to the area. That's what we in the biz call a "gee whiz" number. Nice and big. Looks great in a tourism brochure.

Economic impact is great and all -- it means some pay cheques are bigger and some businesses are more profitable -- but that's only part of the story. Maybe more important is the long term impact on the vitality and image of downtown Winnipeg.

The Fringe and Jazz fests both started around 1988. Back then the exchange district was known mostly for it's hookers and Chinese food. The hookers are now gone and the area has cleaned up substantially, and I submit that the festivals were one of the keys to giving the area that nudge in the right direction.

When I was 18 I recall going to Old Market Square and watching the Jazz Fest and thinking "this is really cool." It changed my impression of the area. It is not just a place where weirdos and johns go. It's a place where you and other normal people can go and enjoy yourselves. And when you go there, you see unique businesses like Hoopers or The King's Head or Hillary Druxman, and you go back and check them out sometime and discover other places and become a fan of the area. All because you went to a Fringe play.

This happens bit by bit. It is a slow transformation but a sure one that has helped drive the growth momentum in Downtown Winnipeg and especially in the Exchange. I think that, moreso than the actual festival spending during those few weeks in the summer, is the most important impact, because it's cumulative and lasting.