How much is the Open worth to Northern Ireland?

Description

RTE Brainstorm Blog on the scale of the economic impact of The Open 2019 in Northern Ireland

Subject

Economic numbers regarding the Open’s Impact

Dr Esmond Birnie, Senior Economist

For sure the Open at Portrush will have a sizeable and positive impact on the Northern Ireland economy. This will come in three ways: a boost to output, promotion (global advertising) of the region and benefits in the longer term. It is, however, important to put the size of all these gains into perspective.

The benefits

1. Northern Ireland’s economic output

215,000 visitors are indicated and it has been assumed that half of these (113,000) will be from outside of the region (the spending by Northern Ireland origin golf spectators should not be counted as much of this would have been spent on something else within Northern Ireland in any case). Assumeon average those external visitors each stay 4 nights. Assumeon average those external visitors spend £60 per night during their stay (based on Northern Ireland tourism data]. The spending and employment in the golf and hotels sectors will have spin-offs and sub-supply benefits in the rest of the regional economy, assumea “multiplier” effect to capture those benefits of 1.5 (i.e. for each £1 of additional output directly in the golf and hotels sectors add 50p for uplift in the rest of the economy).

Hence the output benefit from the Open=

113,000 X 4 X 60 X 1.5 = £40.7m.

 

In 2019 Northern Ireland output (gross value added, GVA) will be about £40m higher than it would otherwise have been.

1. Global promotion of the Northern Ireland location

It has been estimated that the “value” to Scotland from hosting the 2018 Open in terms of international TV marketing was £51m. That is, how much would have had to be spent to get an equivalent amount of coverage. Northern Ireland is likely to gain an equivalent value of international TV coverage etc. .

1. Long run gains

This is also important even though it cannot be readily quantified. There may be some lasting gains to tourism: repeat visitors or even people who watched the event on TV. Possibly also in terms of helping to promote Northern as a location for inward investment.

Conclusions

There are a number of these:

• A sizeable, positive immediate (or short run) gain to output is indicated: perhaps up to about £40m.

• The value of that gain does depend on the assumptions made.

• Undoubtedly, Northern Ireland is “buying” a lot of international promotion through hosting this event.

• There will be important gains in the long run.

• It is important to put all of these into some perspective. One context is, “how much will it all cost, especially in terms of public spending in Northern Ireland?” Unfortunately, not much data has been supplied about such costs. It has been reported that £17m have been spent on improving the amenity in Portrush including some infrastructure spend (e.g. railway improvements). Also, extra cost of policing. It does look as though the benefits will exceed the costs.

• Another piece of context is as follows. IF the gain to output in 2019 is £40m that is equivalent to 0.1%, a tenth of one percent of Northern Ireland’s total annual output (gross value added or GDP). That does not sound like very much. However, available forecasts, such as those by the Ulster University Economic Policy Centre, suggest economic growth this year of about 1%. So the Open could contribute about one-tenth of that annual economic growth.

• There is also an important question about sustainability and the long term. This event was planned whilst we had a functioning regional government and, indeed, was part of a strategy for international promotion through the Executive. What happens next if we do not have any Ministers taking key decisions?“