Pacific Life Open proves jackpot for local economy

Public Record, The, Mar 15, 2005 by Davis, Rick

One tipoff is that hotel rooms and dinner reservations suddenly are tougher to nail down.

Increased traffic on an already-congested Washington Street also suggests something special is going on in the desert.

But don't blame it strictly on peak season for snowbirds. Another big reason is that annual tennis marathon known as the Pacific Life Open is back in town this week. And inconveniences aside, it truly is a jackpot for the local economy.

Jackpot? How does $100 million sound?

That's the financial impact - $100,067,881 to be exact - that this venerable sporting event has on the economy of the Coachella Valley during its yearly twoweek visit. The real good news is that figure actually is too low because data that was used in an analysis developed by George Washington University four years ago.

For sure, the impact has to be greater these days, in light of the fact, for instance, that a record 267,834 specators attended the 2004 edition of the tournament. And this year's total could exceed that.

"The tournament is an economic engine for the whole valley," says Indian Wells City Councilman Rob Bernheimer. "The city of Indian Wells pays $600,000 to be a presenting sponsor for a variety of reasons. The biggest one may be there's no other event that gives the valley as much exposure internationally because tennis is such an international sport and players from all over the world come here to compete."

Bernheimer said he's reminded frequently of the exposure value received by a city when it hosts an event such at the PLO.

"You can be in places all over the world and you say you're from Indian Wells, California," said Bernheimer. "Their response is, 'Oh, that's where the big tennis tournament is.' The sport is enormously popular internationally."

Bernheimer said he was in Australia in 2002 after Lleyton Hewitt had won the first of his back-to-back men's singles championships at Indian Wells.

"It seemed like everybody I talked to there knew of Indian Wells," added Bernheimer. "The city really gets recognition from this."

Beyond the visibility though, the event brings enormous revenue to the area - benefiting hotels, restaurants, bars, gas stations, grocery stores, the tennis garden, etc.

The George Washington analysis, conducted by the university's School of Business and Public Administration, revealed that the average PLO spectator spent $1,766 during a five-night stay. The $100 million-plus figure was reached by multiplying $1,766 by that year's out-of-town spectator count (31,354), then adding nearly $8 million (estimated expenditures of tournament officials and media) for an total of $63,334,102. The analysis also included an indirect impact of $36,733,779 that was based on the premise that of every dollar injected into the local economy because of the tournament, 58 cents was respent by the recipient. Thus the overall impact was $100,067,881.

PLO assistant tournament director Dee Dee Felich said a new analysis probably will be conducted later this year, incorporating data from the 2005 event. "The event really has grown since 2001," she said. "The men's draw and women's draw each has 96 players now. That's more players, more matches, more room nights (at hotels), more meals."

To varying degrees, the valley's nine cities (La Quinta, Indian Wells, Palm Springs, Palm Desert, Indio, Coachella, Desert Hot Springs, Rancho Mirage and Cathedral City) receive PLOgenerated revenue from their portion of sales tax and transient occupancy tax on lodging. Overall TOT was estimated to be $3 million in the 2001 analysis. Felich said a number of local hotels, including the Hyatt Grand Champions, Renaissance Esmeralda, Miramonte and Hotel Indian Wells, arrange deals in which blocks of rooms are set aside for tournament spectators. Packages that include lodging and tickets also are marketed successfully. Steve Furgal International Tennis Tours 2004 includes the PLO in its series.

"We sell out our block of 17 rooms most nights," said Joel Cutler, a sales associate Embassy Suites Palm Desert. "Some nights during the tournament, we sell out the whole hotel. It means more revenue for our restaurant, too. Business is very good during this."

Bernheimer said Indian Wells - the valley's smallest city with a population of about 4,400 - has been able to use the tournament as a marketing tool possessing considerable wallop. It factored heavily in a City Council decision to return to being a presenting sponsor of the event, which it was as recently as 2002, before downgrading to hostsponsor status in 2003 and '04. A presenting sponsorship costs $600,000 twice as much as a host sponsorship.

Is the city getting sufficient bang for its $600,000? Probably, but it's tougher to quantify than those tennis fans' dollars and credit-card vouchers that wind up in local coffers. "There's an old saying," says Bernheimer. "By somebody who decided half of what he spent on marketing was wasted. The problem is you don't know which half."

Bernheimer said the city stepped in as an emergency replacement title sponsor in 2002 after a company called ISL that controlled sponsorships for the Tennis Masters Series (including Indian Wells) went bankrupt. Combined with the after-effects of 9/11, it left tournament organizers here hurting for sponsors