The Southeast Minnesota Sports and Recreation Industry

By Jennifer Ridgeway 
May 2010

For those who live in southeast Minnesota, it comes as no surprise that the people here enjoy sports and recreation. There are more than 100 miles of bike trails in the region, as well as all the amenities related to our many lakes and rivers. Thinking about hitting the links this weekend? You have 43 golf courses and country clubs to choose from in the 11-county region. And if you’re not too averse to risk, you can spend the wintry months on our ski slopes.

What might surprise even local residents, though, is the number of companies in the region that make a business out of sports and recreation. There were more than 4,600 jobs in sports- and recreation-related industries in southeast Minnesota in 2008. A total of 343 business establishments contributed $90.5 million in payroll wages to the regional economy. That is more payroll jobs than any other economic development region in Greater Minnesota for these industries, not including lodging (see Figure 1). These numbers undercount employment, as self-employed people are not included in the data. Nationwide almost one in 10 fitness trainers is self-employed, as are 13 percent of motorboat and motorcycle mechanics.[1] Just in the categories of sporting goods wholesalers, sporting goods retailers, and recreational vehicle dealers alone, there were more than 1,400 firms without paid employees in Minnesota in 2007.[2]

The largest number of jobs in the southeast region of Minnesota in 2008 (2,588 jobs) was in instruction, spectator sports, and industries related to our regional amenities (see Figure 2). That includes staff at golf courses, marinas, ski facilities, health clubs, and bowling alleys among others.

The second largest category is rental and retail jobs. For all of those bicyclists and other outdoor enthusiasts, the region has spawned 47 sporting goods stores ranging from big-box national chains to small mom-and-pop establishments. Together these places employed a total of 854 people on average in 2008. Motorcycle and boat dealers were the next largest employers in that category.

The smallest industry, as measured by number of jobs, was manufacturing and wholesale activity. There were barely a dozen establishments in this category in 2008 employing just over 800 people. But this number belies the relative importance of this industry in the region. Compared to the U.S., the southeast region has twice the normal share of jobs in this category.

Within the sporting and athletic goods manufacturing industry specifically, the region has six times the expected employment based on the national average for the industry.

A handful of firms in the region account for a full 30 percent of sporting and athletic goods manufacturing payroll jobs statewide. However, there are also many more small companies in the region that are not reflected in the payroll data, which are based on companies with paid employees.

Recession - a speed bump for otherwise gold-medal growth

Employment in most of these sports- and recreation-related industries — both in manufacturing and service areas — ebbs and flows with the business cycle. It dipped around the time of the 2001 recession, and it fell again during the latest recession (see Figure 3). The fallout in 2001 was fairly short-lived, with employment rebounding quicker than total employment in the region, which did not add back net jobs until 2004.

Since that rebound, growth in sports- and recreation-related employment has also outpaced overall job growth in the region by a considerable margin. The biggest gains in those growth years were in sporting and athletic goods manufacturing, sporting goods stores, and golf courses and country clubs. However, most sports- and recreation-related industries were growing during those years.

Unlike total employment in the region, though, sports- and recreation-related employment fell harder and fell earlier with the start of the latest recession in 2007. Industries related to rental and retail — as well as those in the instruction, spectator sports, and amenities — have shed employment since the start of the recession as consumers tightened their belts. Regional employment in sporting goods stores and fitness and recreation centers saw double-digit job loss between 2006 and 2009.

The exception has been sporting and athletic goods manufacturing, which bucked the national job loss trend until recently. The southeast regional industry bounced back a few years after the 2001 recession and enjoyed strong industry employment growth for five years before slipping 10 percent during the first three quarters of 2009.

Technology, productivity improvements and competition from imports all impact employment in sporting goods manufacturing as well as the ship- and boat-building industry, and together these factors can lower employment levels. The U.S. Bureau of Labor Statistics, however, projects continuing growth in output. Indeed, even as U.S. industry employment fell 22 percent between 2002 and 2007, industry shipments were up 6 percent and shipments per employee were up 36 percent during that same period.[3]

Sports and recreation also means dollars

While employment numbers tell us something about the impact these industries have on the region, there are also bigger benefits. According to a 2008 survey of state-trail use, recreational use like this has a clear financial impact on the region. The survey, conducted by the Minnesota Department of Employment and Economic Development, revealed more than 41 million person-days of trail use and $370 million in trip spending in southern Minnesota in 2008 (see Table 1). [4] The highest number of trip days was among people using trails for walking, hiking, biking, or running.

All of these activities are good for local residents, but these activities also bring in people from other areas of Minnesota, Wisconsin, Iowa, and beyond. Total trip spending on trails in southern Minnesota, such as lodging, food, fuel, and equipment rental, hit $370 million in 2008. The share of spending by non-local users in the region was similar to the state as a whole in most categories except bicycling, where 33 percent of trip spending came from non-local users.

Total regional employment related to trip spending (attributable to direct, indirect, and induced effects on employment) was estimated at 5,034 jobs, a third of which was driven by non-local use. [5] In addition to trip spending by local and non-local trail users, the study also estimated the impact of equipment purchases which were assumed to take place in the user’s home region. This spending — the largest categories were for horseback riders and snowmobilers — created an additional 2,025 jobs in the region.

This is generally thought of as the impact of tourism, albeit in the case of this study only that recreation related to trails and not activities like downhill skiing or boating, for example. Total traveler expenditures in the southern region for all types of travel in the region amounted to $2.1 billion from June 2007 to May 2008. Thirteen percent of spending was for lodging ($274 million) and 25 percent was on recreation ($528 million). [6]

Even though some manufactured goods are sold to local residents, manufacturing does not generally bring tourists to the region. However, it has a sizable ripple effect on employment in the region because manufactured goods are sold outside the region and therefore bring money from elsewhere into the local economy. Total regional employment related to sporting and athletic goods manufacturing and boat building (attributable to direct, indirect, and induced effects on employment) is estimated at 1,732 jobs in 2008. [7]

Some of those products reach a global market. Statewide exports of sports-and-recreation-related manufactured goods totaled $135.8 million in 2009 or about 1 percent of statewide exports. Sports equipment and personal boats accounted for almost all of these exports in 2009 with smaller categories including things like skis, snowboards, and horse and fishing gear.

While the global recession has hurt exports, there were some categories of related state exports that saw growth between 2007 and 2009. That includes sport shoes, saddlery/harnesses, sports equipment including ice skates and roller skates, which has experienced sizable gains, and fishing-related items. State growth in all of these categories significantly outpaced the U.S., too, where most industries saw a loss in exports over the period.

Do what you love…at least part time

Given the types of recreation-related industries in Minnesota and our four seasons, it’s no surprise that many of these jobs are considered seasonal or temporary. According to the results of the 2009 Minnesota Job Vacancy Survey, the majority of job openings for occupations common in sports, instruction, amenities, and retail/rental industries were seasonal (see Table 2). Jobs with high shares of seasonal or temporary openings included lifeguards, groundskeeping workers, and coaches, while openings for security guards, customer service representatives, and fitness trainers were among the jobs least often posted as temporary or seasonal. Job openings in instruction, spectator sports, amenities, and retail/rental were also likely to be part time.

Manufacturing and wholesale-related openings were different, though. Although they depend on seasonal industries, manufacturing can happen for a longer stretch of the year, and it can keep workers busy for full-time shifts. Openings for warehouse workers. listed as laborers and freight, stock, and material movers, hand in Table 2, were the only ones that had higher levels of part-time or temporary work. Engineers, managers, and sales people work year-round to create new products and reach their markets. Median wages are also somewhat higher in manufacturing and wholesale industries, although there is a wide range of wages across the various sports and recreation industries.

Some of these part-time jobs may be second jobs for workers in other careers. For people who enjoy sports and recreation, there is a benefit to working in the industry that goes beyond the wage. Of course there is another option for sports junkies: be your own boss and do what you love. About one in every five or six athletes, coaches, and umpires is self-employed. Interested in repairing motorcycles or motorboats? Consider self-employment, which is the avenue 13 percent of workers take.

Conclusion

The region is home to many different kinds of sports- and recreation-related industries. Some are more seasonal and provide locals and visitors with outdoor activities, amenities, and places to shop. Those industries bring dollars and jobs to the region. There are also about 800 regional jobs in manufacturing and wholesale-related industries. These jobs are more likely to be full time, year-round, and well paid. They also create products, from exercise equipment and canoes to fishing lures and ice skates, which serve national and global markets. By doing so, those industries have a significant economic impact.

[1]U.S. Bureau of Labor Statistics, Employment Projections
[2]U.S. Census Bureau, EPCD,  Nonemployer Statistics
[3]U.S. Census Bureau, Economic Census 2002 and 2007
[4]Venegas, Ernesto.  “Economic Impact of Recreational Trail Use.” November 2009.
NOTE: The Southern Minnesota region in the study included the entire southern tier of Minnesota.
[5]The direct effect is the increase in spending in the state by the new or expanded business. The indirect effect is the increased economic activity of their suppliers, and the induced effect is the increased activity of the respective employees.
[6]Davidson-Peterson Associates. “The Economic Impact of Expenditures By Travelers On Minnesota.” June 2007 – May 2008
[7]Employment impact was estimated using the Minnesota IMPLAN Group, Inc (MIG, Inc) ver. 3.0 computer software and economic databases.

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