Economic Impact of Minnesota's State Fair

  by Amanda Rohrer
September 2013

Summertime in Minnesota is an endless string of festivals and events. Every county hosts at least one, and within the metro, often there are choices every weekend. Estimates put the number of festivals in the state each year somewhere between 600 and 1,500. Many of these festivals bring little or no money into the local economy. Others may bring in larger sums, from $4.2 million (Irish Fair of Minnesota) to $20 million (Renaissance Festival) or even more.[1] Many smaller festivals likely bring in little money and are held simply for the entertainment value. The biggest festival of them all, though, is the State Fair. State Fair attendance and budgets are well-documented for the legislature, but estimates of the economic impacts beyond fair management are less well-documented.

The Minnesota State Fair brings more than 1.7 million people a year into Saint Paul for food, fun, and fresh air. The traditions, the food, the newest and most exciting displays are touted in the rush to get people to the party. But there’s another side of the fair – for many people, it’s a livelihood more than an amusement. Although the fair operators charge admission and use those funds for facilities maintenance and security, the vendors are independent businesses. Rides, food, products, and music are all sold by independent operators. Consultants and services are consumed by exhibitors and competitors. Even long-established businesses get a seasonal August uptick as they adapt to provide parking, hotels, and food or beverages to fair attendees.

Because this is short-term (only 12 days of the year), and because it’s so consistent from year to year, the economic value of the State Fair to Saint Paul and nearby areas is often overlooked. In 2011 the State Fair itself brought in $41,351,000 in revenue from Ticket Sales (including Carnival, Grandstand, Gate and Parking), Activities (Campgrounds, Entertainment, Competitions, Sales, and other), and Other (Non-fair events, sponsorships, licenses, utilities, and other categories).[2] Businesses treat it as a marketing opportunity or may make a profit if they sell products at the event. Government agencies ramp up security, transportation, and parks maintenance to support the crowds in and near the fairgrounds, often paying workers overtime and keeping or hiring seasonal workers. However, vendor revenue is not public information, and the benefits to nearby establishments are even harder to quantify. Although the fair is short-term, the amount of money that changes hands in fair-related transactions is definitely a boon to the area and the people and to businesses involved.

Background

The Minnesota State Agricultural Society (MSAS) manages the fairgrounds and the fair. They also coordinate other events and the rental and maintenance of the facilities. Although accountable to the State as a quasi-state entity, MSAS receives no public subsidy — essentially, income generated by the fair and fairgrounds pays the cost of running the event. Donations to the separate and private State Fair Foundation are often used for improvements as well.

In 2011, the most recent year for which the full financial report was available at time of writing, the fair brought in 1,769,872 visitors and revenue of $41.4 million. Expenses totaled $39.6 million.[3] The scale of the event is massive. Over the course of a few months or weeks, money changes hands at a rapid pace. All that money is spent on goods and services, largely from local entities. Many service providers have ongoing or repeat contracts that give them a measure of financial stability. Some of that money is spent toward payroll — permanent jobs for people who work for MSAS itself or whose jobs are substantially dedicated to fair activities by outside entities. Those people live and work locally, spending toward the local economy and acting as economic anchors of a sort.

A 2003 report commissioned by MSAS from a private consulting firm[4] attempted to quantify the economic impacts of the fair using RIMS II multipliers produced by the U.S. Bureau of Economic Analysis and the U.S. Department of Commerce. The idea behind this method is to see how dollars spent or jobs created in one industry ripple through the economy. While now somewhat dated, the report indicated that annual fair activities had $44.2 million in expenditure impacts, largely on concession and rides, $14.1 million in earnings impacts, and created 1,980 jobs. Including operations of MSAS and the non-fair events, 5,550 jobs were created.

Estimated Impacts of MSAS Activities - 2003

Initial
Impacts

Induced
Impacts

Total
Impacts

Expenditures

Minnesota State Agricultural Society Operations

$28,000,000

$45,000,000

$73,000,000

Annual Fair Impacts

Local concessionaire and ride/game operators

$15,200,000

$16,800,000

$32,000,000

Non-local concessionaires, ride and game operators and commercial exhibitors

$4,100,000

$3,700,000

$7,800,000

Non-local competitive livestock exhibitors

$2,100,000

$2,300,000

$4,400,000

Total Fair Impacts, excluding non-fair events

$49,400,000

$67,800,000

$117,200,000

Employment

Operations

2,460

450

2,910

Annual Fair Activities

1,210

770

1,980

Annual Non-Fair Activities

80

580

660

Total employment impacts

3,750

1,800

5,550

That report, though, limits itself to the effects of MSAS. Much of the State Fair’s impact never goes through them. Private vendors pay fees to be there, but may not report total revenues. Hotels, taxis, and bus tours have no affiliation. Marketing campaigns by large companies and politicians may be costly and expenditure-heavy, but little of it goes to the fair itself. Groups and associations like 4H and schools make the fair a major part of their focus, with participants putting energy and expense in beforehand and often far away to showcase at the event. Even fairgoers who dish out for sunscreen and new walking shoes are inspired to spend where they otherwise wouldn’t and are contributing to economic activity without being quantified as a fair activity. The attractions of the fair and its broad attendance inspire much more economic activity than can be easily quantified by a single entity.

While mostly the fair brings forth images of food and rides and entertainment, the industries that it draws upon are much more varied than that. Transit adapts to the increased traffic – buses run more frequently, and parking for pay and shuttle services become industries overnight. Security and police ramp up. Waste hauling and garbage services are expanded. Landscaping and contractors are hired to ensure the fairgrounds are maintained and to build temporary exhibits. Marketing and advertising are expanded, both because of the expense of advertising the fair itself, and because outside entities take the opportunity to market to so many people all in one place at one time. Many people also travel for the fair – their accommodations and expense on gas and food away from home help the local economy.

Employment Numbers

While we can track seasonal trends in the industries that are likely to be impacted by State Fair activities, we face two major problems when isolating fair-related growth. First, our data products focus on employment. While we have wage data, it is reported quarterly, so brief spikes are very difficult to identify. Since in many of these industries existing staff may work many more hours before the company is compelled to hire, employment alone is often a weak indicator of how busy or lucrative a business is in the short term. The second problem is that employment is reported for the pay period containing the 12th of the month. While we have monthly data, any hiring that occurs exclusively for the last two weeks of August, the general time frame of the fair, would likely not be reported as a part of our existing data products. We can only capture increases that start before the fair or continue after, which likely decreases the accuracy.

Additionally, tracking those benefits to the local economy can be tricky. This agency has no way of delving into expenditures or sales taxes charged because our focus is on employment. However, the term of the fair makes that challenging. Payroll employment is unlikely to reflect the full impact of temporary hires because the fair doesn’t fall during our reference week, the week including the 12th of the month. Even without the actual dates of the fair included in our sample, hiring in some industries shows a clear increase. Because food vendors and other related industries often have summer activities, this is a seasonal increase spurred by many events, but is likely inflated by the reliability/scale of the State Fair, which allows vendors to bring on more workers and schedule hours more flexibly for events before the fair.

Additionally, few businesses are permanently at the fairgrounds, making it hard to isolate where their employment is reported. For the purposes of this investigation, Ramsey County was the area of focus, but that likely misses at least some employment that is related to the fair.

There is nonetheless a notable increase in employment in some industries, particularly mobile food vendors. Most others see some increase around that time, but it may simply be their typical seasonal pattern. Services to Buildings and Dwellings, for example, the category that includes landscaping services, definitely increases hiring in August and September, but autumn maintenance and the full realization of accrued summer gains could also be responsible for this employment growth.

sept_review_fair_employment.png

A Broader View

Other summer events have significant attendance numbers — in 2010 Tall Ships brought 250,000 people into Duluth. Grandma’s Marathon brings in about 10,000 runners every year, and more spectators and vendors. In the metro the Renaissance Festival, which runs for much longer, had 303,000 attending in 2012. In 2011 the Minneapolis Aquatennial counted 400,000 in attendance, although that may pull in more local people. WE Fest had 47,000 attendees over only three days.[5] In Saint Paul the Hmong Freedom Fest brings people from all over the country, and the Irish Fair attracts 80,000 to 100,000 people. Data for these events are even harder to quantify: They’re less consistent and often shorter, they coincide with or make up the summer tourist season, and their lack of government ties leaves even more of their financial operations a mystery. While some release estimates of the amount of money spent, there is no consistency in how those data are collected or compiled, and thus are not comparable. Likely many of the same vendors and contractors work for several of these events and experience with one has been leveraged to gain work at another.

Major events, besides being an attraction for residents, likely provide a revenue stream that expands certain industries in the state. While there may not be much short-term hiring, the money spent by the State Fair and its consistency — returning every year, reliable dates, habitually large expenditures — makes the presence of higher-quality service providers viable and in turn benefits other consumers of those services.


[ 1]Greder, Andy and Ann Harrington. Twin Cities Business, “What do 10,000 Festivals Add to the MN Economy?” May 23, 2013.

[2]Report to the Minnesota State Legislature. “Minnesota State Fair, 2011 Annual Report”. September 2012. http://archive.leg.state.mn.us/docs/2012/mandated/120688.pdf

[3]Report to the Minnesota State Legislature. “Minnesota State Fair, 2011 Annual Report”. September 2012. http://archive.leg.state.mn.us/docs/2012/mandated/120688.pdf

[4]Markin Consulting. “Report on the Economic Impacts of The Minnesota State Agricultural Society.” December, 2003. www.markinconsulting.com/MSF%20Economic%20Impact%20Final%20Report.pdf

[ 5 ]Greder, Andy and Ann Harrington. Twin Cities Business, “What do 10,000 Festivals Add to the MN Economy?” May 23, 2013.