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Spring Virtual Project Update for Downtown – TransEd Valley Line LRT

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RH van der Rohe said:
I agree with your point $450M sounds high. Not sure how many people can fit in the stadium but lets say we have 50,000 visitors for 9 days. Each person would have to spend $1000 per day. I was very close to going to Russia and we were budgeting $250 per day, 4 friends in a hotel room that was like $300 per day plus meals, beer etc. Press and VIP may spend a lot more but not that much. Of course there will be a lot of people from Alberta without tickets just attending the public areas and spending in restaurants and bars and maybe some hotels but not to make up for $450M.
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The income generated comes from a variety of sources. Not sure if you are familiar with the financial innards of major sports events, but having worked in 2 of these in the past (Brazil 2014 FIFA World Cup, still as an intern and Rio 2016 Summer Olympics as a Financial Consultant), I am 100% convinced that the total impact in the economy, over the course of the entire summer, can easily reach the 450M mark. The city will host matches in at least 2 weeks and the fans that come spend their money and the revenue from tickets, itself, is fairly irrelevant as a matter of fact, in the total impact.
The 450M number (which might be a little lower, but is just as probable to be higher) does include a lot of revenue not considered in your sum there: increases in local spending and, despite the crisis and the current state of the economy, Alberta is one of the places with the largest household available income ON EARTH, airport revenue, residual tourists (especially people who come from places further away will stay for longer, even after the event is over and considering summer is festival time, here, I bet a lot of people would feel encouraged to stay a week, or at least a few days longer, or come earlier) and the whole preparation which creates jobs and boosts the economy for, at least, a few months before and a few after. Not to mention all of the worldwide exposure that will start having an impact WAY BEFORE the event.

RH van der Rohe said:
Sorry to disagree with earlier posts about being chosen by a big team as training center. Not going to happen, the quality of facilities here is just not up to par to what is available in hundreds of pro and college facilities in the US, plus footballers and their wives love their shopping and know where the deals are. Also it would be a long flight anywhere for their games. I think Florida and Texas will get most of them with some south Atlantic and Midwest states taking the rest.
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Footballers frankly don't usually care about the money side of things in their shopping. Most of them will make in a month what any of us will make in a decade and even the "poor" ones will usually make more than a good paying job gives you in a year in a single month. That said, nowadays, with the performance side of things taking each day more the spotlight, it has become more and more common for major teams to be in more "isolated" places, where they can focus on training and whatnot. Not to mention the specific logistics that are considered. Being close to the cities where you'll be playing can be an asset and the combination of these two things might lead to a surprise. ALSO, on this side of things, the players have ZERO influence in that and the federations and confederations usually open bids for facilities to compete for them (openly or not). Brazil, Argentina and Uruguay, for example, stayed in pretty unexpected places several times in the past 3 or 4 World Cups. Not saying that it will happen, but we MIGHT get. And even if we don't, we might get matches involving them and it increases, yet again, exposure and makes the city more desirable for fans.

RH van der Rohe said:
Not sure how the LRT fits into the picture, there will be a lot of buses, there always are, people go to world cups in groups so UBERs will be popular and so will be rental cars.

If I was setting priorities I would invest in improving public spaces around the stadium, change our silly liqueur laws and leverage our proximity to the mountains and other attractions to try to make people plan longer stays or maybe make another trip soon.
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The LRT is happening, one way or the other, and there are SEVERAL reasons why we should think about having it completed before the World Cup:
1 - The city will be exposed and scrutinized by the media, around the globe. Wouldn't it be nice if all of the people out there, from potential students/immigrants to potential investors (big and small) could see the city with a brand new LRT line, all of the landscaping done and the city looking aesthetically pleasing, modern and clean, instead of a big construction site, with obstructions everywhere, orange cones and machines crossing the Downtown core (which will be the most exposed area and ALREADY is a concern)?
2 - Wouldn't it be really good for the city if one of its major attractions (like it or not) was connected to the LRT network and it was safe, easy and quick for tourists to get there? Instead of the tourists taking old buses, passing through, again, A LOT of construction and taking more than half an hour, uncomfortably, to get there, they can hop on a brand new train, enjoying the new landscaping and all of the developments around and hop off in a pretty transit centre right where they wanna go? And guess what: these people have social media presence, they will influence others and can do harm or improve perception about the city.
3 - We don't need to think just about people coming and going to the Stadium. Edmonton has quite a few areas that would benefit from the LRT network being more complete, either because it would make it easier for people to get to them with the new stops (West Edmonton Mall, specifically) of because it would allow for people with less money to spend to stay longer by staying in cheaper hotels further from the Downtown core (again, the west end comes to mind).
4 - The extra spending to speed it up also brings economic benefits, such as more jobs in the short term, which boosts any economy; puts the system in full operation earlier, meaning revenue comes sooner, rather than later; unlocks some future developments that are, certainly, waiting for it to be done (or close to it).

There are others, or the ones mentioned above could be split and discussed in more detail, if you'd prefer, but it is unquestionable that there are advantages to plan on speeding up the construction. It is not like we'd be putting another 2.3 billion dollars on it, for crying out loud. We're far from spending a lot of money to host it, in any case, and we are not doing what cities in South Africa, Brazil and Russia did, building megalomaniacal projects JUST for the sake of hosting a few games, never to be used again (or to be underused, at the very best scenario). The Valley Line West was already planned and approved way before we even thought about hosting this event, the funding for this isn't (and shouldn't) be budgeted in the hosting costs and, therefore, if speeding it up can be done without hurting the city financially, there's no good reason why it shouldn't.

That said, if the costs of doing so are prohibitive then yeas, we should not consider it. Fortunately, I don't believe they are and, even more, I believe that the timeframe that was given, of 5 to 6 years, with the current budget, is entirely possible in the lower margin of this interval. I actually believe this timeframe to be conservative, even, considering that the Valley Line Southeast, with a much more complex and time consuming infrastructure (tunnel, bridge, uphill section and elevated section) is going to take roughly 5 1/2 years, with all of the delays (it broke ground in April 22, 2016 and will most likely be operational by the end of summer/early fall 2021). The west section has a longer elevated section and a small bridge (Groat), but the overall construction challenges are a lot smaller.
 
Lot of anecdotal evidence/statements in here and/or qualitative evidence instead of quantitative. Show me some math to arrive at 450M based on the estimated number of people that would attend 3 or max 4 games.
 
westcoastjos said:
Lot of anecdotal evidence/statements in here and/or qualitative evidence instead of quantitative. Show me some math to arrive at 450M based on the estimated number of people that would attend 3 or max 4 games.
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If you are expecting revenue figures or any easy math for this, sad to disappoint you, not possible, at least not without access to information that I would forfeit a limb to put my hands on. It is not hard to get some rough estimates close to the 350M mark.

Let's get the average 50000 people, at any given point, during the two weeks of group phase, as someone mentioned (Commonwealth sits more than 60000, but let's have the locals fill the rest).
Now let's have these be broken down in a few budget groups: Elite/VIP, Above average, average and budget.

It is not hard to have roughly 10% in the first group: this includes rich fans, parts of media outlets from around the globe, some VIP guests, FIFA staff, etc... Let these people spend on average $1000/day between food, leisure, accomodation, transportation, etc. (These figures match roughly the expenses for this kind of people during Brazil 2014 and South Africa 2010 and are below the figures from Germany 2006).

The same amount of people could be placed in the second group. These would be fans from upper classes, people who usually won't care about expenses and will stay in fancier hotels and eat in upscale restaurants for most meals, but won't be willing (or needing) to spend as much as group one. Let these people spend on average $500/day.

Group 3 is the average person who will come. They will spend roughly $250, between accomodation, food, leisure, transportation, etc... It does match with what has been mentioned before. It is what I spent, myself, in 2012 when I went to London for the Summer Olympics. They will account for roughly 60% of the total.

Group 4 will be those people on a budget. These people will be very frugal and we can set a $150/day for them and they will account for some 20% of the total tourists. These are generally younger fans or people who will spread their money to stay a longer period.

This, alone, gets us to the 250M mark.

Now, onto the revenue from the tickets (the share that stays with the venue owner). It hovers from 35 to 50%. Tickets ranged in 2018, for group phase, from $105 to $250 (USD) for regular seats and about $1000 for VIP stands. The Commonwealth seats 55800 including the VIPs. Spreading this seats at the same rate (with just about 500 VIPs paying $1000) and 35% of revenue staying with the venue owner, gives us another easy 15M

Total, so far, 260~270M

And that is just for tourists staying in town only during the 2 weeks of the games. There will be increased local spending (FIFA Fan Fests on every game, potential increase attendance to the festivals happening before and after the games...). There is also a small, but relevant, number of people who will stay longer or come earlier, both tourists and staff (not no mention local staff being paid to work in the event, from security to infrastructure).

The investments made in infrastructure and the economic multiplier of said investment, the extra jobs generated in retail and hospitality, it all goes into account to get to the 450M. Direct spending and the indirect effects they generate in the economy work in much more complexity than this simple math here. Get me access to the data I need, however, and I can model and forecast it for you, both lower and higher scenarios.

Now, a (very) educated guesstimate would put the lower end close to 320M and the top end closer to 500M, as the total economic impact, over the course of 2025 and 2026.

On another note: there is a huge difference between anecdotal evidence and experience. I don't claim to have all of the answers or to be absolutely correct in the forecast, but to work in the events that I did, I had to study previous ones, from different eras and backgrounds. I am much more estimating rather than guessing.
 
One has to consider the costs and not just the revenue.

Stadium upgrades in Edmonton will likely be between $35M - $55M and may go higher with labour/material costs emerging from other construction sectors.

In addition, the current cost estimates do not include security costs, which will be high, especially if security is required for a month long setup.

From this article: "The Vancouver Olympics, for example, originally budgeted $175 million for security and ended up spending $900 million. And Ottawa just spent $396 million on cops, cars, fences and all the other necessaries to protect the G7 leaders at their 28-hour summit in La Malbaie."

Going with a low estimate of $100M - $150M for security here. FIFA has high requirements for security of all venues, hotels, infrastructure, etc, which is why this number is likely to be higher. FIFA also requires local jurisdictions to absorb liability costs.

If you speed up the LRT construction, you are likely looking at $150M - $200M as well as a conservative estimate.

All of a sudden you are at $350-450M in costs on the low end.

We also lose out on tax revenue as part of FIFA's requirements captured in this article, thus reducing the municipal and provincial governments economic benefit leaving taxpayers footing the bill. While it may be difficult to find Edmonton's calculations on revenue, it is not hard to find the FIFA bid requirements. You can toss out most of the stadium upgrade figures that other host nations have taken on as stated previously in this thread (thankfully we won't have to spend much there); however, there are still considerable costs in other areas that must be considered.

The cost benefit analysis is a two way street and the city needs to provide the analysis in writing. If the community benefits are great, there should not be an issue in sharing the details publicly.
 
I've dealt with this issue when I took a course on Economics of Professional Sport at the UofA with Brad Humphries. We investigated the impact of sports teams, and singular sports events on the economy. It turns out that in a lot of these economic impact assessments that reliability and accuracy is often not that great (especially since those commissioning the reports have a vested interest, and there is no such thing as an auditing of the projections). While single events (I believe we reviewed the impact of the Super Bowl, and an American F1 race) tend to have positive impact, most of the economic activity is generated from out of town attendees. Locals tend to have fixed entertainment budgets, so single events actually have slight negative impact on average.

In general, you could take most of the economic impact assessments, and cut them in half....and you are likely still likely overshooting.
 
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