Economic Impact of the 2013 Academy Awards On Los Angeles County - by Roy Weinstein and Kristina Stanford Micronomics January 2014
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Economic Impact of the 2013 Academy Awards
On Los Angeles County
__________________________________________________________________________
by
Roy Weinstein and Kristina Stanford
Micronomics
A SourceHOV Company
January 2014
www.micronomics.com www.sourcehov.comEconomic Impact of the 2013 Academy Awards
On Los Angeles County
__________________________________________________________________________
by
Roy Weinstein and Kristina Stanford
Micronomics
A SourceHOV Company
January 2014
www.micronomics.com www.sourcehov.comExecutive Summary
Micronomics was asked to quantify the economic impact of the 2013 Academy Awards on Los
Angeles County. Based on our analysis, we have concluded that this event produced at least $67
million in immediate, identifiable benefits to Los Angeles County, including $1.5 million from
out-of-town visitors, $2 million from limousine rentals, $2 million associated with the wardrobe
of local female attendees, $26 million spent by the Academy of Motion Picture Arts and
Sciences, $6 million associated with the major Oscar parties, and $30 million in multiplier
effects, including $2 million in state tax revenue and $1.7 million in local tax revenue.
In addition, if only one quarter of one percent (0.25 percent) of the 40.3 million Academy
Awards telecast viewers visit Los Angeles for four days as a result of interest and enthusiasm
generated by the event, an additional $149 million in local revenue will result. Accordingly, the
total estimated economic impact of the 2013 Academy Awards on Los Angeles is as much as
$216 million or more. These estimates are conservative because we did not account for the local
value of corporate sponsorships or the economic benefit to local designers whose clothing is
showcased at the Academy Awards and ancillary events.
Background
In January 1927, 36 of the most influential men and women in film founded the Academy of
Motion Picture Arts and Sciences (“the Academy”), a non-profit organization dedicated to the
advancement and improvement of motion pictures. 1 By May 1927, the group had over 200
members. Today, the Academy consists of over six thousand members. 2
The Academy has hosted the Academy Awards ceremony, commonly known as the Oscars,
annually since 1929. 3 The event honors those who have significantly contributed to the film
industry in the previous calendar year. The Academy Awards is one of the most prestigious
award ceremonies in the world. Millions of viewers watch the globally televised event.
Oscars are given in 24 categories including “Best Picture”, “Actor in a Leading Role”, “Actress
in a Leading Role”, “Actor in a Supporting Role”, “Actress in a Supporting Role”, “Directing”,
and “Animated Feature Film”, among others. 4 Academy members vote first for the nominees
1
“History of the Academy,” The Academy of Motion Picture Arts and Sciences website
(http://www.oscars.org/academy/history-organization/history.html).
2
“History of the Academy,” The Academy of Motion Picture Arts and Sciences website
(http://www.oscars.org/academy/history-organization/history.html).
“History & Organization of the Academy,” The Academy of Motion Picture Arts and Sciences website
(http://www.oscars.org/academy/history-organization/index.html).
3
“History of the Academy Awards,” The Academy of Motion Picture Arts and Sciences website
(http://www.oscars.org/awards/academyawards/about/history.html).
4
“The Nominees,” The Academy of Motion Picture Arts and Sciences website (http://oscar.go.com/nominees).
1and again for the final winners. 5 The awards hold significant value as they are voted on by peers
in the film industry. Accordingly, award nominees receive international recognition for their
creativity and success and often reap significant professional and financial benefits.
The Academy Awards has taken place at many iconic locations throughout Los Angeles,
including the Hollywood Roosevelt Hotel, the Biltmore Hotel, the Ambassador Hotel,
Grauman’s Chinese Theatre, RKO Pantages Theatre, the Santa Monica Civic Auditorium, the
Shrine Auditorium & Expo Center, the Dorothy Chandler Pavilion, and the Dolby Theatre at the
Hollywood & Highland Center. 6
The 85th Academy Awards occurred on February 24, 2013 at the Dolby Theatre in Hollywood.
The ceremony honored movies released in 2012, including Lincoln, Silver Linings Playbook,
Argo, Skyfall, Zero Dark Thirty, Les Misérables, Life of Pi, Amour, and Django Unchained. 7
The event had approximately 3,280 attendees, including 15 percent who came from outside the
Los Angeles area. Additionally, the three and a half hour telecast had approximately 40.3
million viewers, which was twice the size of the 2013 Golden Globes audience. 8 The show was
viewed in over 200 countries and produced its best ratings in years. 9
The Oscars was hosted by Seth MacFarlane, the creator of “Family Guy,” and telecasted on
ABC. 10 The show featured many celebrity appearances and performances. Michelle Obama
made a video appearance to announce Argo as the Oscar winner for “Best Picture” and Adele
performed “Skyfall”, the winner for “Best Original Song.” 11 Other celebrity attendees included
George Clooney, Ben Affleck, Jennifer Lawrence, Anne Hathaway, Sandra Bullock, Bradley
Cooper, and Charlize Theron. The Red Carpet highlighted the latest fashion trends as celebrities
wore gowns by Prada, Alexander McQueen, Valentino, Dior, and Oscar de la Renta, among
others. 12
In addition to the main show, the Academy hosted many ancillary events including the
Governors Ball, the Governors Awards, the Scientific and Technical Awards (“Sci-Tech
5
“Voting for the Academy Awards,” The Academy of Motion Picture Arts and Sciences website
(http://www.oscars.org/awards/academyawards/about/voting.html).
6
“Oscar Legacy,” The Academy of Motion Picture Arts and Sciences website
(http://www.oscars.org/awards/academyawards/legacy/index.html).
7
“Oscar Legacy,” The Academy of Motion Picture Arts and Sciences website
(http://www.oscars.org/awards/academyawards/legacy/index.html).
8
“Golden Globes TV audience best for six years,” January 14, 2013, Reuters website
(http://www.reuters.com/article/2013/01/14/goldenglobes-ratings-idUSL2N0AJA6P20130114).
“Oscars show reels in viewers in Seth MacFarlane’s debut as host,” Los Angeles Times, February 26, 2013.
9
“Oscars 2013: TV ratings rise with Seth MacFarlane as host,” Los Angeles Times, February 25, 2013.
“Academy Award Show Raises Ratings and Hackles,” The New York Times, February 25, 2013.
10
“Oscars show reels in viewers in Seth MacFarlane’s debut as host,” Los Angeles Times, February 26, 2013.
11
“Adele to Perform SKYFALL at Oscars,” Oscars website, January 23, 2013 (http://oscar.go.com/blogs/oscar-
news/breaking-news-adele-performance-announcement).
“Michelle Obama Oscars Appearance: First Lady Presents Best Picture to ‘Argo’,” The Huffington Post,
February 25, 2013.
12
“Oscars 2013: The Red Carpet Arrivals,” The Hollywood Reporter, February 24, 2013.
2Awards”), and the Foreign Language Film Award Reception. The Governors Ball was the
official after-party for Oscar attendees. The event was held at the Ray Dolby Ballroom and
included gourmet food by Wolfgang Puck and music by Michael Feinstein. 13
The Academy held the fourth annual Governors Awards on December 1, 2012 at the Ray Dolby
Ballroom. The ceremony celebrated achievements outside the categories awarded at the Oscars.
2013 honorees were rewarded for their work in film stunts, documentaries, film preservation, and
philanthropy. 14
The Academy held the Sci-Tech Awards on February 9, 2013 at the Beverly Hills Hotel. 15 The
ceremony was hosted by Chris Pine and Zoe Saldana who co-starred in the 2009 film, Star Trek,
and its 2013 sequel, Star Trek Into Darkness. Awards included the Technical Achievement
Award, the Scientific and Engineering Award, and Academy Award of Merit. 16 Approximately
400 people attended the event. 17
The Foreign Language Film Award Reception was held at the Academy Headquarters in Beverly
Hills on February 22, 2013. 18 Approximately 275 people attended the event, which honored
Oscar nominees of the “Best Foreign Language Film” category. 19
Collectively, the telecasted Oscars ceremony and ancillary events had approximately 7,000
attendees. 20 Spending by these attendees, the Academy, and third parties produced significant
economic benefit to Los Angeles County.
Economic Impact of Hosting the 2013 Academy Awards
Our analysis addresses four components of the immediate economic impact associated with the
ability of Los Angeles to host the 2013 Academy Awards. The first is direct spending by visitors
to Los Angeles attracted by the Academy Awards and related events. This direct spending
includes expenditures on local transportation, accommodations, food and beverage,
entertainment, and shopping.
13
“Oscars 2013: A joyful night at the Governors Ball,” Los Angeles Times, February 25, 2013.
“Oscar After Parties: Stars Shine At Governors Ball & Vanity Fair Party After 2013 Academy Awards,” The
Huffington Post, February 25, 2013.
14
“2012 Governors Awards,” The Academy of Motion Picture Arts and Sciences website
(http://www.oscars.org/awards/governors/2012/index.html).
15
“Scientific and Technical Awards,” The Academy of Motion Picture Arts and Sciences website
(http://www.oscars.org/awards/scitech/index.html).
16
“2012 Scientific and Technical Awards,” The Academy of Motion Picture Arts and Sciences website
(http://www.oscars.org/awards/scitech/2012awards.html).
17
Information from Academy staff.
18
“Foreign Language Film Award Reception,” The Academy of Motion Picture Arts and Sciences website
(http://www.oscars.org/photogalleries/photo.php?s=72157632848927335&p=8505591367).
19
Information from Academy staff.
20
Information from Academy staff.
3The second is direct spending by Academy Awards attendees on transportation and wardrobe.
We estimated the cost of renting limousines for the ceremony and related events. Wardrobe
costs include gowns, accessories, makeup, and stylists.
The third is direct spending by the Academy of Motion Picture Arts and Sciences. Expenditures
associated with the setup and production of the Academy Awards include venue rental,
equipment, set construction, performances, and staffing.
The fourth is the multiplier effect understood by economists to reflect the circulation of
incremental spending within the local economy. The Academy Awards provide increased
income for taxi and airport shuttle operators, restaurant and club owners, hotel employees, and
others. Recipients of this income use at least a portion to make purchases that they otherwise
would not have made, thereby producing another round of beneficiaries. These multiplier effects
are directly attributable to the Academy Awards since they would not benefit Los Angeles if the
event was held elsewhere.
Methodology for Calculating Visitor Direct Spending
We used reported attendance figures provided by Academy staff as the starting point for
calculating direct spending by visitors for the Academy Awards. We then estimated the average
number of visitor days spent in Los Angeles and used tourism statistics (average spending per
night for affluent travelers) compiled by the Los Angeles Tourism and Convention Board to
determine the total amount of direct visitor spending associated with attending the Academy
Awards. 21
According to the Academy, approximately fifteen percent of the attendees were from outside the
Los Angeles area, representing 492 out-of-town attendees. 22 We estimated visiting attendees
spent an average of four nights in Los Angeles for the Academy Awards. 23 Using Los Angeles
tourism statistics, we determined that each out-of-town spectator spent approximately $744 per
night in Los Angeles. 24 This includes accommodations, food, entertainment, and shopping.
Accordingly, total direct spending by visitors attracted to Los Angeles by the Academy Awards
was approximately $1.5 million (see Figure 1).
21
Information from Academy staff.
Information from Los Angeles Tourism and Convention Board.
22
Information from Academy staff.
23
Information from Academy staff.
24
Information from Los Angeles Tourism and Convention Board.
4Figure 1: Local Spending by Academy Award Attendees Visiting from Outside of Los
Angeles
Attendees from Spending by
Outside of Local Average Nights Attendee
Area in Los Angeles per Night Total Spending
(Dollars)
(1) (2) (3) (4)
(1) x (2) x (3)
492 4 $744 $1,464,192
Direct Spending by Attendees on Transportation and Wardrobe
Using data from the Academy, we estimated 2,000 limousines were rented for the Oscars. We
assumed the average cost of a limousine is $110 per hour and each limousine was rented for a
minimum of eight hours. Accordingly, direct spending associated with limousine rental for the
Academy Awards and related events was approximately $1.8 million (see Figure 2).
Figure 2: Spending on Limousine Rentals for the Academy Awards and Related Events
Limousines Rented Average Cost Total Spending
(Dollars)
(1) (2) (3)
(1) x (2)
2,000 $880 $1,760,000
Wardrobe costs for local females (as opposed to women from out-of-town) attending the Oscars
were estimated using average costs for each wardrobe component. According to the Academy,
3,280 people attended the ceremony, including 200 celebrities, and approximately 85 percent
were from LA County. Assuming half of these local attendees were female, we estimated 1,394
Los Angeles-based females attended the Oscars including 85 celebrities and 1,309 non-
celebrities.
Wardrobe and related expenditures were broken down into the following categories: a) stylists;
b) gowns; c) handbags; d) shoes; e) hair styling; and f) makeup. Local, female attendees were
assumed to have spent money on all of these components, except for stylist expenditures which
were included only in the spending estimates for celebrities and 25 percent of the non-celebrities
at the Oscars. Based on estimates from a Los Angeles-based stylist, average prices were
allocated to each component and total wardrobe expenditures were calculated. 25 This resulted in
approximately $2.3 million on incremental wardrobe expenditures (see Figure 3).
25
Information provided by local stylist. Mallen, C., “The cost of attending an awards show,” Bankrate.com,
February 23, 2012.
5This estimate is conservative given that only local women were included. A portion of visiting
female attendees undoubtedly had their hair and makeup done in Los Angeles and some may
have purchased their gowns locally as well. Men also wore expensive tuxedoes; however, it is
difficult to estimate the numbers that were purchased solely for the event. Local designers
whose clothing is featured at the event also benefit. As a result, our wardrobe estimates
understate the actual economic benefit of the Oscars to the local economy.
Figure 3: Spending on Wardrobe and Accessories by Local Female Attendees
Expenditures
Local
Female Stylists Hair
Event Attendees Hired Stylists Gowns Handbags Shoes Styling Makeup Total
(Dollars)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
(3) x $1,500 (2) x $500 (2) x $250 (2) x $250 (2) x $150 (2) x $50 SUM (4)…(9)
1. Academy Awards 85 85 $127,500 $42,500 $21,250 $21,250 $12,750 $4,250 $229,500
(Celebrities)
2. Academy Awards 1,309 327 490,500 654,500 327,250 327,250 196,350 65,450 2,061,300
(Non-Celebrities)
3. TOTAL 412 $618,000 $697,000 $348,500 $348,500 $209,100 $69,700 $2,290,800
In total, direct spending associated with wardrobe and transportation is estimated at $4.1 million.
Direct Spending by the Academy
The Oscars and ancillary events require extensive setup and on-site staff to accommodate
attendees. The Academy hired more than 2,700 people to work the events. A portion of the
Academy staff was from outside of Los Angeles County and stayed in local hotels. According to
the Academy, out-of-town staff spent an average of four nights in Los Angeles County for a total
of 2,435 room nights.
In addition to staffing expenditures, production costs included venue and equipment rental,
security, parking, set construction, and performances. The Red Carpet was also funded by the
Academy.
In total, the Academy spent approximately $26.4 million on the Oscars and ancillary events (see
Figure 4).
6Figure 4: Spending on Production of the Academy Awards and Ancillary Events by the
Academy of Motion Picture Arts and Sciences
Event Budget
(Dollars)
(1) (2)
1. Show/Pre-Show $17,064,500
2. Academy Theater 5,400,000
3. Governors Ball 1,838,100
4. Governors Awards 915,000
5. Nominations Luncheon 300,000
6. Nominees Dinner 150,000
7. Sci-Tech Awards 531,000
8. Foreign Language Reception 100,000
9. Awards Week Programs 60,000
10. TOTAL $26,358,600
Direct Spending by Third Parties
Many third parties hosted Oscar celebrations before and after the ceremony, including the
legendary parties hosted by Vanity Fair and the Elton John AIDS Foundation. We estimated the
major commercial-sponsored parties were million dollar affairs and other private parties cost
approximately $200,000. 26 Sponsors included Chopard, Ford, L’Oreal, and SmartWater. 27 In
total, spending associated with these parties was approximately $5.6 million (see Figure 5).
Figure 5: Spending on Major Parties Associated with the Academy Awards
Category # of Parties Average Cost Total Spending
(Dollars)
(1) (2) (3) (4)
(2) x (3)
1. Sponsored Parties 5 $1,000,000 $5,000,000
2. Other Major Parties 3 200,000 600,000
3. TOTAL $5,600,000
Altogether, direct spending associated with the Academy Awards was approximately $37 million
(see Figure 6).
26
Information from Academy staff.
27
Information from Academy staff.
7Figure 6: Direct Impact of Academy Awards and Related Events on Los Angeles County
Category Amount
(Dollars)
(1) (2)
1. Production $26,358,600
2. Major Parties 5,600,000
3. Wardrobe and Accessories 2,290,800
4. Limousine Rentals 1,760,000
5. Visiting Attendees 1,464,192
6. TOTAL $37,473,592
Multiplier Effect
Economic multiplier models are used to estimate the additional impact from circulation of direct
spending through the local economy. These models reflect the relationship between inputs and
resulting economic outputs, and recognize the impact that an increase or decrease in economic
activity in one sector of the economy can have on economic activity in other sectors.
The Minnesota IMPLAN Group, Inc. compiles data that provide the framework for an economic
multiplier model used to measure output gains resulting from increased spending in sectors such
as transportation, accommodations, food and beverage, entertainment and shopping. Based on
the estimated incremental spending noted above, total direct spending associated with the
Academy Awards would result in a secondary economic impact of $30 million. Included in this
estimate is approximately $2 million in state tax revenue and $1.7 million in local tax revenue.
Altogether, the economic effect is estimated to be $67 million (see Figure 7).
8Figure 7: Total Immediate Impact of the Academy Awards and Related Events on Los
Angeles County 28
Category
of Impact Amount
(Dollars)
(1) (2)
1. Direct $37,473,592
2. Indirect 13,396,840
3. Induced 16,559,250
4. TOTAL $67,429,682
Other Considerations
Aside from the direct and immediate economic impact, other factors contributed to the economic
consequences of hosting the Academy Awards. Since these benefits have not been fully
quantified in this report, the true economic impact on Los Angeles County has been understated.
Visibility
The Academy Awards is “typically the highest-rated entertainment program on television.” 29
Accordingly, the ceremony has an increasingly global reach. This provides valuable publicity
for Los Angeles, which can translate into significant local economic benefits. If only one quarter
of one percent (0.25 percent) of the 40.3 million viewers of the Oscars broadcast decide to visit
Los Angeles for four days as a result of watching the awards show, the estimated economic
impact using tourism statistics from the Los Angeles Convention and Visitors Bureau is an
additional $81 million.
Figure 8: Direct Benefit to Los Angeles if One Quarter Percent of Viewers of Oscars
Broadcast Visit Los Angeles for Four Days
One Quarter Spending by
Number of Percent of Nights in Los Visitor
Viewers Viewers Angeles per Night Total Spending
(Dollars)
(1) (2) (3) (4) (5)
(2) x (3) x (4)
40.3 Million 100,750 4 $201 $81,003,000
Based on this estimated incremental benefit, a secondary economic impact of $68 million will
result. This multiplier effect includes approximately $10 million in incremental state and local
28
IMPLAN Economic Impact Modeling System.
29
“Oscar Broadcast Rivals Super Bowl as Showcase for Ads,” The New York Times, February 20, 2013.
9tax revenue. In total, the estimated economic impact of one quarter of one percent of Oscar
viewers (0.25 percent) visiting Los Angeles for four days is $149 million.
Figure 9: Total Impact if One Quarter Percent of Viewers of Oscars Broadcast Visit Los
Angeles for Four Days
Category
of Impact Amount
(Dollars)
(1) (2)
1. Direct $81,003,000
2. Indirect 24,321,720
3. Induced 44,002,420
4. TOTAL $149,327,140
The Oscars telecast also generates positive publicity for the nominated films. Consequently,
these films often receive increased box office sales. Furthermore, some theaters will add a
movie back to its listings if it received an Oscar. Nominated films can also reap significant long-
term financial returns through increased DVD rentals and additional showings.
Corporate Sponsorship and Advertising
The Oscars is the second most expensive advertising opportunity behind the Super Bowl.
Moreover, some advertisers refer to the Oscars as “the Super Bowl of the entertainment
industry.” 30 Many sponsors choose to advertise during the Oscars because of its affluent, female
audience and rarefied venue. 31 Additionally, the ceremony has fewer advertising slots than
games such as the Super Bowl, giving each advertisement more impact. 32 Each 30-second spot
cost approximately $1.7 million. Major sponsors included Hyundai, J.C. Penny, Coca-Cola, and
Chobani. 33 While the bulk of the advertising funds are paid to ABC, a portion of this economic
activity impacts the local economy.
Conclusion
The 2013 Academy Awards produced significant economic benefit to Los Angeles County. We
have estimated an impact of at least $67 million in identifiable benefits. These include:
• Approximately $1.5 million in expenditures associated with visiting attendees.
Incremental expenditures on accommodations, transportation, food and beverage,
entertainment and shopping are included.
30
“Oscar Broadcast Rivals Super Bowl as Showcase for Ads,” The New York Times, February 20, 2013.
31
“Oscar Broadcast Rivals Super Bowl as Showcase for Ads,” The New York Times, February 20, 2013.
“Oscars Have Become Hyundai’s Biggest Marketing Performance,” Forbes, February 23, 2013.
32
“Oscars Have Become Hyundai’s Biggest Marketing Performance,” Forbes, February 23, 2013.
33
“Oscar Broadcast Rivals Super Bowl as Showcase for Ads,” The New York Times, February 20, 2013.
10• Approximately $4 million spent on limousines and wardrobe.
• Approximately $26 million spent on production and staff for the Oscar events.
• Approximately $6 million spent on Oscar receptions and parties hosted by other entities.
• Approximately $30 million from multiplier effects flowing from direct spending
associated with the Academy Awards, including an additional $4 million in state and
local tax revenue.
These estimates are conservative since they do not include local benefits associated with
corporate sponsorships and positive publicity.
11Contributors
Roy Weinstein is an economist and Managing Director at Micronomics. Mr. Weinstein
has been engaged in economic research and consulting since 1969. Areas of expertise include
industrial organization, antitrust economics, the valuation of intellectual property, wage and hour
litigation, statistics, econometrics, and the calculation of economic damages. He has testified as
an economic expert in numerous jurisdictions and has delivered presentations at Peking University,
City College New York, the American Bar Association, the National Association of Attorneys
General, the National Association of Business Economists, and the Los Angeles County Bar
Association. Mr. Weinstein’s articles have been published in the Federal Circuit Bar Journal, the
Journal of the Patent and Trademark Office Society, The Journal of Law and Technology, and the
Antitrust Bulletin. Mr. Weinstein received his Bachelor of Business Administration degree cum
laude with honors in Economics from City College New York and his Master of Arts degree in
Economics from the University of Chicago. He is a recent recipient of the Career Achievement
Award from the Business and Economics Alumni Society of the Baruch School at City College.
Kristina Stanford is an econometrician and Research Associate at Micronomics. Ms.
Stanford received her Bachelor of Arts degree cum laude with honors in Mathematical Economics
from Scripps College.Acknowledgements
Micronomics is an economic research and consulting firm located in Los Angeles,
California. Founded in l988, it specializes in the collection, tabulation, and analysis of various
types of economic, financial and statistical data. Areas of expertise include industrial organization,
antitrust, intellectual property, the calculation of economic damages, and employment issues.
Industries studied include banking and financial services, computer hardware and software,
entertainment, healthcare, insurance, medical products and devices, motion pictures, oil and gas,
pharmaceuticals, semiconductors, sports, supermarkets, telecommunications and tobacco. Clients
include law firms, publicly and privately held businesses and government agencies.
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