Today’s guest columnists are Brian Connolly (right), managing principal, and Zachary Ipson, senior analyst, of Victus Advisors.
Over the past 15 years, the youth and amateur “sports tourism” industry has matured into a significant driver of capital project spending by cities, counties and visitors’ bureaus seeking to capture a segment of this robust market. Annual sports tourism spending in the U.S. by travelers, event organizers and venues reached more than $45 billion in 2019, a nearly 20% increase since 2015, according to the Sports Events and Tourism Association. And as a result, at Victus Advisors, where we specialize in market, financial and economic consulting for sports facility development, youth and amateur projects have grown into one of our largest business lines.
When the COVID-19 pandemic first took hold in the spring of 2020, one of our biggest professional concerns was that public agencies, which operate the majority of sports complexes across the country, were often projecting massive budget shortfalls due to pandemic-related lockdowns. Our fear was that if governments were dealing with lower revenues (including sales taxes and hotel/motel occupancy taxes), large capital projects, such as sports venues, could be among the first on the chopping block. We were further concerned that it would take years to recover from public sector shortfalls.
However, as the pandemic ebbs, we see a clearer picture of the future for the sports tourism industry, and it’s surprisingly strong. We have launched numerous new youth/amateur sports complex planning projects for public sector clients who indicated they now have budget surpluses because their initial pandemic-driven adjustments were too conservative. Additionally, new stimulus and infrastructure spending bills offer the potential for localities to put federal funds toward new projects, and many of our clients are particularly intrigued by the potential for new sports tourism facilities to help their local hotels, shops and restaurants recover from the negative impacts of COVID.
Financial projections we’ve done for clients have not been significantly altered, for two primary reasons. First, the projects we help plan are typically at least two to three years away from opening, and the rapid vaccine development and rollout has given most youth/amateur sports organizers confidence that their leagues and events will return to normal operations by 2022. Second, in many regions of the country, youth sports did not slow significantly during the pandemic, especially for outdoor sports. Much as they did through the financial crisis of 2008, many families slashed household budgets and virtually eliminated vacation budgets, but they did not stop spending on their kids’ travel teams.
Once the initial lockdowns expired last spring, we saw a large majority of sports tournament organizers continue to host events wherever local laws allowed, with mask requirements in place, social distancing on the sidelines, and hand sanitizer dispensers at every field. This was particularly the case in regions with the fewest pandemic-related restrictions; states like Florida, Mississippi, Oklahoma and Texas continued to host youth and amateur sporting events and tournaments (often for both indoor and outdoor sports).
Now, as we look forward to a post-COVID world, we expect regional differences in this industry to continue to be important—just in a different way. Since the vast majority of sports tourism typically takes place within a five- to six-hour drive, national trends in youth sports data can be misleading. For example, frequently cited nationwide trends include the decline of tackle football participation due to concussions, and the aging of the fan base for sports such as baseball. However, if you live in the southeastern U.S., youth football and baseball/softball participation may not be declining, according to recent regional data from the Sports and Fitness Industry Association and the National Federation of State High School Associations. Projects we’ve recently worked on in Florida and Alabama showcased the fact that youth baseball and softball regional tournaments can be some of the largest economic-impact drivers of any sports tournaments in the country. These regional trends highlight the importance of cities and counties as hubs for the most popular sports within their drive-time ranges.
In another example, Victus Advisors has been a part of multiple facility planning studies in the last several years focused on indoor track and field, which uses a 200-meter banked running surface for high-level competition. These studies have occurred exclusively in the eastern and central time zones, where indoor track is a sanctioned sport in high school leagues and collegiate athletic conferences. When these venues are built in hotbeds such as Virginia, where the state-of-the-art Virginia Beach Sports Center opened in October 2020, indoor track creates significant economic impacts, thanks to high school, AAU and NCAA events that draw from a multi-state area.
There is one consistent national trend: the long-term growth of soccer. Depending on your data source, soccer is now the second most popular youth sport nationally for overall participation, behind only basketball, and in many regions it is the dominant outdoor youth sport. Our own recent projects in Southern California and North Carolina have illustrated this point; we’ve worked with large soccer clubs that have thousands of participants at all age levels and full-time staffs for both business administration and coaching.
Much as youth travel sports thrived through the economic collapse of 2008, they’ve repeated the feat through the pandemic, and as the country emerges from COVID, the industry now seems positioned to be as strong as ever.
Victus Advisors is a market, financial and economic consulting firm that specializes in objective research, independent analysis and data-driven recommendations for sports facility development projects.