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On the regional economic importance of SCC races

with special consideration of the real,- BERLIN-MARATHON

2003-08-27

Prof. Dr. Wolfgang Maennig

About 100,000 people each year now take part in the races organised by SCC, of which the real,- BERLIN-MARATHON (approx. 35,000 participants), the Bewag BERLIN HALF MARATHON (approx. 18,000 participants) and the SKATER MARATHON (approx. 9,000 participants) are the largest events. Approximately 32,000 of the runners come from Berlin (ca. 32%), approx. 23,000 runners from the state of Brandenburg (24%), approx. 33,000 from the rest of Germany (33%) and yet approx. 11,000 from other countries (11%). In a correct regional economic analysis only the economic activities of those from other areas can be considered; for the athletes and spectators from Berlin, one must assume that they would have developed other activities in the region even without the races. The economic effect of the activities of the out-of-town runners and those accompanying them has been calculated according to four different categories for accommodations with the corresponding spending behaviour. Their total expenditure is approximately 23 million Euros. This primary spending impulse goes mainly (approx. 70.5%) to the Berlin hotel and gastronomy industries.

The displacement effects that are caused by having “normal“ Berlin tourists avoid the city because of the MARATHON have been studied in depth for the mainly affected areas of hotel, gastronomy, and retail – and were found to be unbelievably minimal. Instead of the common general estimate of a 10% displacement from the primary impulse, it was found that at most the regular hotel tourism (and the activities brought with it) was displaced by about 2.2% in its relevant economic level due to the booked out capacities. Despite an increase in bus guests on Friday and Saturday, the city bus tour businesses that have to suspend their routes on MARATHON Sunday suffer noticeable loses, approx. 13% less than in a comparable September week without the MARATHON. While these losses are considerable for the affected sector, the sum lies in the lower 5-digit € area, and as makes up only 0.07% of the primary impulse generated by the MARATHON, it can be neglected as an economic factor.

The loses in sales of the downtown Berlin retailers, which differ according to the traffic patterns, also do not provide any significant counter-argument. Due to the polycentric structure of Berlin, the displaced Berlin consumers have good alternatives in other shopping areas. All in all, the results give an incentive to more closely calculate the displacement effect in similar regional economic studies and to keep away from (too high) general estimates.

The cost of the securing of the course by the police also is part of the further economic expenses. The Berlin chief of police calculates the involvement of 7,369 police forces for the real-, BERLIN-MARATHON and 5,200 for the SKATER MARATHON on Saturday. In addition, approx. 900 hours of work go into the pre- and post-marathon preparation. When the expenditures for the other races are also considered, total costs of about 470,000 € are calculated for the underlying costs for the typical Berlin police deployment.

The primary spending impulse of the out-of-town guests (minus the displacement effects) leads to a multiplying income effect, as these expenditures lead (in part) to income in Berlin, which then (in part) is again spent.

At the end of this multiplying income effect, a net income impulse of approximately 35.1 million € results from the SCC races (which is 0,05% of the gross product for the state of Berlin). In comparison with other studies and events, one must take into consideration the especially conservative multiplying factor, which was used. A multiplier specifically for Berlin of only about 1.35 was used—in comparison, for the calculation of the Football World Cup 2006 a multiplier of approx. 2.25 is used. The further estimates for the central economic effects that accompany an increase in income are also based upon commensurate business caution. The races create an additional combined amount of 670 years of personal work, which results in additional tax income for the Berlin state budget between 1.8 million € and max. 4.0 million €. In addition to these “real economic” effects, there is an increase in the image of the Berlin region, which is cultivated through the SCC races, especially through the real,- BERLIN-MARATHON. This is difficult to define through the economic instruments currently available; however, the expected value of approx. 14.2 million € which was calculated through a detailed media analysis seems to be a reasonable approximate value, when the outstanding scope of the international broadcasting (in 2002, 72 international stations in 41 countries, with 287 international programmes, reported for a total of over 57 hours, reaching ca. 147 million people) is considered.

The initiator profits, the business sector profits as a whole, the public profits, the image value is clearly positive – under such conditions, a formal cost-benefit analysis is unusual. For the sake of completeness, it should be mentioned that a comparison of the direct plus indirect benefits to the direct plus indirect costs gives a relation of approx. 12.0 of benefits to costs.

Even if one leaves out all effects on the image, the relation of benefits to costs is approx. 8.8. Both values signal a very high economic efficiency and highest societal priority.

Future regional growth potential from the SCC races must be sought after in the events, which demonstrate a current high growth trend, whose image contribution promotes the target image of Berlin as a modern and flexible city, and for which bottlenecks in capacities from the side of the organiser should play no role. Especially the (in part much questioned) SKATER MARATHON should belong to the list of such races, which already is achieving an economic surplus in profits.

The SCC races are clearly economically beneficial for the Berlin region and should be strongly supported.

You can download the entire document (German only) here

You can download an image analysis of the real,- BERLIN-MARATHON (German only) here

Address of the Author:
Prof. Dr. Wolfgang Maennig
Universität Hamburg
Department of Economics
Lehrstuhl für Wirtschaftspolitik
Von Melle Park 5
20146 Hamburg
Tel. +49 40 42838 4622
Fax +49 40 42838 6251
wmaennig@t-online.de