The Sage Gateshead. Economic Contribution: 10 Year Anniversary
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The Sage Gateshead.
Economic Contribution: 10 Year Anniversary
-Table of Contents Introduction and Methodology ..................................................................................... 2 Economic Contribution ................................................................................................. 4 Conclusions ................................................................................................................ 12 The Sage Gateshead – EIA Comparison Report 11
INTRODUCTION AND METHODOLOGY
In November 2009, ERS was commissioned by the Sage Gateshead (‘the Sage’) to
undertake research outlining the economic impacts generated by the Sage since its
opening in December 2004. The output of this work was a report capturing the first five
years of the Sage’s operations (‘the five year report’).
This report represents an update of this earlier analysis, highlighting the total economic
contribution of the Sage over its ten year existence.
In order to ensure comparable figures with the five year report, the methodology used in
this report aims to be as consistent as possible with the five year figures. However, it
should be noted that there are a number of differences between the two reports.
Therefore, to facilitate comparison of the figures, this report includes a reworking of the
five year figures as well as the ten year cumulative figure, allowing for comparisons of
how the economic contribution has developed over time.
Note that when figures from the first and second time year period, changes in the data
provided by the client (see below for more information) as well and the evolving nature
of official statistics methodologies, mean there are some differences in the approach
taken to calculating figures the different contributions. This means that some of the
figures presented in this report may not be perfectly comparable. Throughout this report
we detail areas of methodological difficulty and the approach taken when addressing
these challenges.
Data:
There are two broad sets of data that these figures are based on:
5 year dataset: This data was provided by the client at the time of the original report.
Updated data: The activities of the Sage following the 5 year report have been
captured by a series of data collected for a different (but similar) economic
contribution project.
While these two datasets capture broadly the same topics, they are not identical. In
addition, the methodologies used by the two impact assessments are also different.
The Sage Gateshead – 10 Year economic contribution 2Given these differences, the data was interpreted slightly differently, this is highlighted throughout the report. Time Series: The analysis presented in this report is largely based on financial year data (1 April – 31 March). This presents some difficulties given that the anniversary of the Sage’s opening falls in December. To address this issue, unless otherwise stated, figures referring to 2004/05 and 2014/15 are based on a pro-rata sum (i.e. 4 month period for 2004/05, a 8 month period for 2014/15), calculated using the average of surrounding years. This approach ensures a full 120 months of data is included in the analysis. The Sage Gateshead – 10 Year economic contribution 3
ECONOMIC CONTRIBUTION
Direct Employment
Table 1 below outlines the number of individuals employed at Sage Gateshead on a full
and part time basis, for each of the 10 years of the Sage’s operations.
Table 1: Employment Figures – The Sage Gateshead
Year Full Time Part Time Total FTE
2004/05 168 205 373 271
2005/06 171 235 406 289
2006/07 182 242 424 303
2007/08 182 282 464 323
2008/09 195 198 393 294
2009/10 195 289 484 340
2010/11 148 283 431 290
2011/12 172 287 459 316
2012/13 179 274 453 316
2013/14 165 298 463 314
Source: The Sage Gateshead
Table 2 below breaks down this employment by geographic area. As can be seen, the vast
majority of this employment is in the North East.
Table 2: Geographical Breakdown of Employment
Newcastle/Gateshead North East Region Elsewhere
Year
FTE % FTE % FTE %
2004/05 157 58 98 36 16 6
2005/06 168 58 106 37 15 5
2006/07 177 58 110 36 16 5
2007/08 165 56 111 38 18 6
2008/09 202 63 110 34 11 3
2009/10 208 61 118 35 14 4
2010/11 179 57 129 41 8 3
2011/12 197 62 113 36 6 2
2012/13 192 61 118 37 6 2
2013/14 186 59 120 38 9 3
Source: The Sage Gateshead
Expenditure on wages since opening the Sage equals £59.9m1, with £57.4m in the north
east region. In the last full financial year (2013/14) the spend was to £5.75m in total,
£5.6m in the region).
1
Note that no figures were available between April and November 2014. To fill this gap a pro-rata amount
based on the average between 2010-11 and 2013-14 was applied. Also, note that the salary expenditure
The Sage Gateshead – 10 Year economic contribution 4Associated Audience Expenditure – Leisure Visitors
Visitors to the Sage bring additional impact to the local economy in recognition that their
visit to venue may well include a meal out, a night (or several nights) stay in the region
and spend on other activities within the area.
In assessing the associated impact of visitors to The Sage Gateshead it is considered that
those visitors residing locally and within the region are unlikely to have a significant
additional impact in the local area (for example, they may go for a meal as part of a night
out but are unlikely to stay over). Those that reside outside of the region are more likely
to stay over as part of their visit and in doing so, are likely to generate greater levels of
spend within the local economy and regional economy.
The impact of leisure visitors is calculated by multiplying the number of visitors from
outside the region with the spend they bring to the area.
In order to produce a combined 10 year impact, it is necessary to combine two different
data sets. Specifically:
Tickets sold to those residing out of the region: Data for 2005/6 - 2008/09 is based on
a postcode analysis of tickets sold. This data was produced for the five year economic
contribution report.
‘Visitors, participants and attendees’ from out of the region: Data for 2009/10-
2013/14 is based on the numbers and origins of ‘visitors, participants and attendees’.
This data was produced for a series of multi-organisational economic impact reports.
While both datasets have been provided by the Sage, they have been collected for slightly
different projects. Therefore, given that the data measures slightly different indicators it
is important their numbers are interpreted appropriately in produce to collect broadly
comparable analysis.
As can be seen in the table below, the difference in methodologies results produces
notably different visitor numbers. Specifically, when captured via an analysis of ticket
relating to 2004-05 appears to relate to the entire financial year (i.e. including a period before opening in
Dec 2004. As this was included in the 5 year report it is included here too.
The Sage Gateshead – 10 Year economic contribution 5sales, the number of visitors is relatively stable. When analysis changes to the second
data set the number of visitors varies dramatically.
However, it should be noted that, in the analysis for which “visitors, participants and
attendees” figures are specifically collected, only 25% of the numbers are considered in
economic impact calculations. This is based on the assumption that only 25% of those
from outside the region would purposefully dedicate their day visits to the Sage. The five
year report meanwhile, includes all those from outside the region who buy tickets.
Therefore, this analysis applies a 25% weighting to “visitors, participants and attendees”
but not to the analysis of tickets sold (which as this indicator collects different
information can be interpreted differently).
Multiplying the numbers of visitors from outside the region by the average overnight stay
produces the total spend in the regional economy generated by leisure visitors. Average
overnight stay is taken from statistics published by VisitEngland2.
The resulting spending figures are shown in the table below. As can be seen, in the ten
years the Sage has been in operation £18.4m has been generated through additional
visitor spend within the region.
2
Expenditure statistics published by VisitEngland have changed methodology over the period in question. Figures up to
and including 2009 are taken from the UK Tourism Survey. Figures from after this point use the Great Britain Tourism
Survey (2012) instead. Figures used in calculating the previous report multiplied UK and International visitors by a
visitor spend per night based exclusively on domestic visitors spending statistics. This spending statistic was calculated
using “all tourism” figures (i.e. as opposed to leisure or business tourism). In order to ensure methodological
consistency between the figures, the same approach has been adopted for this update. Given that annual figures are
not available for 2014, 2013 figures were applied using a 2.5% inflation rate.
The Sage Gateshead – 10 Year economic contribution 6Table 3: Visitor Spending Impact
Total Tickets Sold /Visitors With
(elsewhere UK and Int.) Weighting Calculated Spend
2004/05 77,003 9,704 9,704 £653,057
2005/06 227,948 29,669 29,669 £1,692,937
2006/07 233,654 29,773 29,773 £1,698,555
2007/08 231,383 28,703 28,703 £1,512,946
2008/09 231,046 28,300 28,300 £1,616,779
2009/10 724,618 425,658 106,415 £5,468,641
2010/11 695,139 123,909 30,977 £1,764,774
2011/12 232,010 125,587 31,397 £1,768,265
2012/13 221,986 11,760 2,940 £190,688
2013/14 273,851 33,545 8,386 £573,116
2014/15 1,431,736 96,061 24,015 £1,682,238
Total 4,580,374 942,669 204,130 £18,621,997
Associated Audience Expenditure – Business / Conference Visitors:
The Sage also provides a significant economic impact through hosting conferences which
attract business visitors to the region. Again, differences in available data means slightly
different approaches were taken when capturing these impacts. Essentially, both data
sources capture the number of visitors from outside the region. These number of visitors
from outside the region (i.e. rest of UK and international) are then multiplied with
VisitEngland statistics showing the average nightly spend per domestic tourist making a
trip to attend a conference3. It was assumed that the length of overnight stay was
commensurate with the length in number of days for each conference.
3
As with leisure tourism, these figures were taken from the GBTS and UKTS
The Sage Gateshead – 10 Year economic contribution 7Table 4: Business Conference Impact
Year Attendance Spend
2004-05 £1,235,752
2005-06 £1,218,224
2006-07 £1,862,782
2007-08 £1,387,162
2008-09 £1,154,363
2009-10 £1,080,552
2010-11 £1,543,648
2011-12 £4,682,611
2012-13 £1,191,362
2013-14 £3,321,080
2014/15 £1,489,098
Total £20,166,634
Indirect and Induced Impacts
Direct expenditure drawn from The Sage Gateshead supports further jobs and additional
expenditure through indirect and induced effects (essentially the local spend from the
income received by those employees within the organisations).
The report upon which this analysis is based, used multipliers of 1.9 for local effects and
1.38 for regional effects. These multipliers were based on a review of existing research
and government guidance.
When calculating these impacts the analysis also accounted for additionality factors such
as:
Displacement (public sector investment that detracts from existing private sector
operations) – very low due to the lack of competitors within the region;
Leakage (benefits from the investment that accrue to non-Newcastle/Gateshead
residents and businesses and therefore leak out of the local economy) – accounted for
through the geographical mapping of spend and the residential location of
employment;
In order to maximise methodological compatibility, it is assumed that the multipliers and
additionality factors are the same as that used when calculating figures from the 5 year
report.
The Sage Gateshead – 10 Year economic contribution 8Table 5 below details patterns of direct, indirect and induced impact for employment
(FTE) both locally and in the region.
Table 5: Patterns of Employment – Direct, Indirect and Induced
Gross FTE Direct Direct, Indirect
Gross FTE Direct Direct, Indirect &
Year regional & Induced (FTE)
Local Induced (FTE) local
(including local) regional
2005/06 168 274 215 468
2006/07 177 287 227 490
2007/08 165 276 212 472
2008/09 202 312 259 533
2009/10 208 325 266 557
2010/11 179 308 230 527
2011/12 197 310 253 530
2012/13 192 310 246 530
2013/14 186 306 239 523
The employment figures can be calculated as Gross Value Added (GVA) to aid the financial
assessment of economic impact. The activities of the Sage (as with the creative industries
sector as a whole) is difficult to define using government standard industrial classification
(SIC) systems. The five year update notes that employment predominantly sits within the
Hotels and Restaurants sector and the Other Community, Personal and Social Activities
sector. A GVA per employee figure from the combination of the two sectors was
therefore used as a best estimate of GVA per employee, factoring inflation and
employment change to account for variances in GVA over the years analysed. 4
Since the five year economic contributions were calculated, there has been a change in
SIC classification, meaning it is difficult to use more up to date government statistics to
provide a directly comparable GVA per head figure. Therefore, in order to promote
consistency between years, the same GVA per employee figure as the five year report is
used (again with a 2.5% inflation rate applied).
The local and regional GVA impact is shown in the table below.
4
Headline GVA per employee for the Hotels sector equates to £15,687 per employee in 2006 and for the
community service sector equates to £29,912 for the same year. The combined figure for that year equates
to £21,711 GVA per employee. Subsequent years have been calculated on the basis of 2.5% annual
inflation. Indirect and induced employment has been assessed against cross-sector GVA per employee in
recognition that this investment is unlikely to be sector specific.
The Sage Gateshead – 10 Year economic contribution 9Table 6: GVA Impacts - Net Direct, Indirect and Induced
Local Regional
2004-05 2,918,993 6,961,236
2005-06 7,233,648 10,668,126
2006-07 8,230,116 12,066,719
2007-08 7,547,883 11,381,384
2008-09 10,152,073 14,163,500
2009-10 10,621,169 15,036,072
2010-11 9,721,261 14,847,311
2011-12 10,742,950 15,354,678
2012-13 10,673,068 15,529,163
2013-14 10,981,308 16,167,778
2014-15 7,019,765 17,015,558
Total 95,842,235 230,488,680
Indirect Visitor Spend
Visitor spend (both leisure and business) attracted to the region by The Sage Gateshead
equated to £38.8m (leisure = £18.6m and business = £20.2m).
As with the employment listed above, there is a supply-side multiplier associated with
this expenditure in recognition of the fact that one person’s expenditure is another
person’s income resulting in further reinvestment in the region. Figures for the five year
report use a multiplier of 1.37. This was based on research undertaken regionally5. Again,
in order to ensure compatibility between figures, the same multiplier was selected for
this update.
Applying this multiplier to the expenditure figure results in a direct and indirect
expenditure relating to tourism (both business and leisure) of £53.1m in the regional
economy over a ten year period.
The five year report used Annual Business Inquiry (2007) information (namely, turnover
per head in the Hotels and Restaurants sector) to convert direct and indirect spend into
jobs supported in the region. This report does the same albeit with a slightly different
5
Modelling the North East Economy: The impact of tourism on economic activity in the North East of
England, Durham University (2007)
The Sage Gateshead – 10 Year economic contribution 10mtethodology6. The results of this analysis find that in 2008/09 (the last full financial year of the five year report), a spend of £3.8million equated to an estimated 78.0 FTE jobs, in 2013/14 (the last full financial year of the ten year report), a spend of £5.3million equated to an estimated 107.9 FTE jobs. 6 Given the difficulties in accessing this archive information, a new turnover per head for the ‘Accommodation and Food Services’ sector is used. This was obtained using ONS BRES and ABS data for 2008 and 2012. The Sage Gateshead – 10 Year economic contribution 11
CONCLUSIONS
The analysis presented within the earlier sections provides details on direct, indirect and
induced impacts associated with organisational employment and direct and indirect
visitor spend within the region.
These impacts are summarised below at a North East Regional level.
Total Economic Contribution:
The total (direct, indirect and induced) economic contribution of The Sage Gateshead to
the North East Region equates to around £283.6m7since opening with 632 FTE jobs
supported in the region during the most recent complete financial year.
The table below presents these figures in more depth as well as comparing how impacts
have changed between the first five years of operation and the second five years of
operation.
Table 7. Summary of Economic Contribution8
Comparing economic contributions
Indicator Cumulative %
2004-09 2009-14
increase
Total Economic Contribution £283.6m £128.3m £155.3m 21.0%
Jobs supported (FTE) N/A 635 632 -0.5%
Employment
Direct, Indirect, Induced FTE
equivalent employment (Local) N/A 267 239 -10.4%
Direct, Indirect, Induced FTE
employment (Regional) N/A 557 523 -6.1%
Direct, Indirect and Induced GVA
(Local) £95.9m £43.2m £52.7m 22%
Direct, Indirect and Induced GVA
(Regional) £230.5m £103.1m £127.4m 23.6%
Visitor Spend (all figures regional)
Leisure Spend £18.6m £10.8m £7.8m -27.9%
Business Spend £20.2m £7.6m £12.6m 66.1%
Total Leisure and Business spend £38.8m £18.4m £20.4m 10.8%
Direct and Indirect spending £53.1m £25.2m £27.9m 10.8%
Jobs Supported by spending (FTE) N/A 78 108 38.4%
7
Made up of direct, indirect and induced GVA associated with employment and direct and indirect visitor
spend
8
Note all employee data shown is for financial years 2008/09 and 2013/14
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