Event Economic Impact vs. Economic Retention: Why the Difference Matters

When a big event comes to town, cities often celebrate the potential economic benefits. Economic impact is the total amount of money an event generates in a specific area, excluding money that’s already leaked away (spent outside the region). It represents the funds coming into the local economy from visitors and the event organizer. For example, a major sports event with a calculated €10 million economic impact already factors in leakage.

But here’s the catch: even this €10 million doesn’t necessarily stay in the area.

What is Economic Retention?

Economic retention focuses on how much of the event's money stays in the local economy after it’s spent. If visitors stay in national hotel chains, profits leave the region. If the event organizer and vendors are non-local, much of the money flows away. Economic retention asks: How much money really benefits the local community?

Comparing Economic Impact and Economic Retention

Let’s compare two scenarios for a sports event with a €10 million economic impact:

• Scenario 1: Low Retention

  • Organizer: 30% of their spending stays local = €0.75M

  • Visitor: 50% of their spending stays local = €3.75M
    Total Retained: €4.5M

• Scenario 2: High Retention

  • Organizer: 80% of spending stays local = €2M

  • Visitor: 90% of spending stays local = €6.75M
    Total Retained: €8.75M

Both scenarios start with the same €10 million economic impact, but the retained money is very different.

Why Economic Retention Matters

When money stays local, it creates a multiplier effect. Local businesses reinvest in the community, pay employees, and grow, which boosts the entire local economy. If most of the event’s money leaves the region, the local benefit is much smaller.

How Cities Can Boost Economic Retention

1. Prioritize local hiring for event staff.

2. Use local suppliers for event needs.

3. Encourage visitors to support local businesses instead of chains.

Conclusion: Focus on Economic Retention

While a big economic impact number sounds great, the real question is: How much of that money stays in the local area? Economic retention is the key to making sure events truly benefit the local economy.

This is important already in the event bidding process when evaluating potential bids in the Event Due Diligence process. Take a look at the winning recipe for event bidding here.