Economic impact vs economic retention: why the difference matters
Economic impact is the money an event brings into an area, after leakage. Economic retention is how much of that money stays local after it is spent.
Two events with the same €10 million impact can retain very different amounts — €4.5 million or €8.75 million — depending on how local the organiser, workforce and suppliers are. Retention is what actually grows the local economy.
When a big event comes to town, cities celebrate the potential economic benefit. Impact is the headline. But the headline and the benefit are not the same number, and the gap between them is where most of the money goes.
What economic impact measures
Economic impact is the total amount of money an event generates in a specific area, excluding money that has already leaked away — spending that goes straight outside the region. It captures the funds coming into the local economy from visitors and from the event organiser. A major sports event with a calculated €10 million economic impact already has that first leakage stripped out.
But here is the catch. Even that €10 million does not necessarily stay in the area.
What economic retention adds
Economic retention focuses on how much of the event's money stays in the local economy after it is spent. If visitors stay in national hotel chains, the profit leaves the region. If the organiser and the vendors are non-local, much of the money flows away. Retention asks a sharper question: how much of this actually benefits the local community?
The same impact, two very different outcomes
Take two scenarios for the same event, both starting from a €10 million economic impact.
| Source | Low retention | High retention |
|---|---|---|
| Organiser spending kept local | 30% = €0.75M | 80% = €2.0M |
| Visitor spending kept local | 50% = €3.75M | 90% = €6.75M |
| Total retained | €4.5M | €8.75M |
Same €10 million impact. Nearly double the money staying in the community. The headline number told you nothing about which event the city actually got.
Why retention matters: the multiplier
When money stays local, it creates a multiplier effect. Local businesses reinvest, pay employees and grow, which lifts the whole local economy. When most of the money leaves the region, the local benefit is far smaller. This is also why applying a multiplier to a raw impact figure overstates the result: a multiplier belongs on the retained base, not the headline one. That reasoning is the core of the problem with standard economic impact numbers.
How cities boost retention
- Prioritise local hiring for event staff, so wages are spent in the region.
- Use local suppliers for event needs, so purchases and taxes stay.
- Steer visitors to local businesses rather than chains and platforms.
This matters most before anything is signed. Retention is one of the questions a host city should answer during due diligence, not after the event — it belongs alongside the other factors to estimate in event bidding.
A big impact number sounds great. The real question is how much of it stays.
To see the split for a specific event, the Real Economic Impact calculator estimates local retention and the value it supports, not just the turnover moving through.
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