An examination of the determinants of Irish household sports expenditures and the effects of the economic recession

ABSTRACT

Research question: This study examines the determinants of four household sport expenditure items. The primary objective is to examine the effects of the recent economic recession in Ireland on these expenditures. This study is the first to analyse Irish household sport expenditure data and the first to study the effects of the economic recession on these items.

Research methods: Data from the 2004/2005 and 2009/2010 Irish Household Budget Surveys, a period which covers the economic recession in Ireland, are employed. A Tobit model is estimated as each of the four sports expenditures has a large amount of zero expenditures.

Results and findings: The social and economic characteristics of Irish households affect each sports item in differing ways. The presence of children of a particular age appears to be a strong determinant of spending on categories of sports which involve more physical activity (sport participation and leisure fees). Other categories of sports are influenced more by income (attendance at sporting events) and age and social status (club subscriptions). For some categories of sport spending there is a strong link with how the economy is performing, whereas for others household characteristics play just as important a role.

Implications: This research has shown that sport is a multi-faceted product. Its determinants and how it is affected by economic downturns depends on the type of expenditure examined. For spending on certain categories the recession has had a clear negative effect, whereas for others it has been neutral. These are important considerations for sports managers and policy-makers when devising their strategies.

KEYWORDS:

• household sports expenditures
• economic recession
• Tobit model
• expenditure elasticities

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1. European Commission (2013). Sport satellite accounts, A European project: New results. Directorate-General for Education and Culture.

2. The Deloitte (2010) report, in particular, has a section devoted to an analysis of the effects of the global recession.

3. A two-stage sample design is employed by the CSO. In the first stage a number of block or survey areas were randomly selected at the county level to proportionately represent eight strata relating to population density. The second sampling stage involves a random selection of two independent samples of three original households and three substitute households for each survey area. If the quota of three cooperating households was not reached the interviewer would systematically approach as many substitute households as was necessary. This meant that variations in response by region and town size were controlled for.

4. Slight differences exist in how the CSO labels sports expenditure categories in the 2004/2005 and 2009/2010 surveys. For example, in the 2004/2005 survey, expenditures on sporting events is labelled as ‘Sports/games – spectator costs', whereas in the 2009/2010 survey it is labelled as ‘Spectator sports – admission charges’. Expenditures on sports participation are labelled as ‘Sports/games – participation costs' in the 2004/2005 survey and in the 2009/2010 survey as ‘Participant sports – excluding subscriptions'. Expenditures on sports club subscriptions are labelled as ‘Subscriptions to sports clubs, other clubs and societies’ in the 2004/2005 survey and in the 2009/2010 survey as ‘Subscriptions to sports & social clubs’. For expenditure relating to leisure classes fees, two categories, ‘Health/Fitness clubs' and ‘Sports/Swimming lessons', were taken from the 2004/2005 survey as a match for the corresponding 2009/2010 category, labelled as ‘Fees to leisure classes'.

5. Data from a 2005 publication on the ‘Social and Economic Value of Sport in Ireland’ (Delaney & Fahey, 2005) found median subscription fees for golf clubs and aerobic/fitness clubs in the range of €400–€500 per annum while tennis club and swimming club memberships were also relatively expensive at €200 and €300 per year, respectively.

6. GAA stands for Gaelic Athletic Association which is an organisation which promotes traditional Irish sports such as hurling and Gaelic football.

7. Another possible approach is to employ a multivariate procedure such as seemingly unrelated regression (SUR) estimation. According to Pawlowski and Breuer (2011, 2012), however, the development of such approaches which incorporate the censored nature of the dependent variable have not been satisfying to date. One could employ SUR estimation on just the positive expenditures but when each equation contains exactly the same set of independent variables the estimates are numerically identical to OLS estimates.