Abstract

The equestrians have played a critical role in the growth and development of the Aiken County economy. The equestrian activities in Aiken, South Carolina, consist of many different events such as polo, horse racing, horse showing, carriage driving, and fox hunting, to name a few. The input-output analysis of the Aiken equestrian industry reveals that its operations have a substantial impact on output, jobs, and income in Aiken County. Like any other industry, the equestrian industry makes a variety of input purchases that translate into flow of funds throughout the local economy. The indirect and induced effects of the equestrian industry work through numerous other sectors within the local economy and contribute to Aiken County’s economic growth and development.

Introduction

The equestrians have played a critical role in the growth and development of the Aiken County economy. Besides the local economy, the equestrian migration from the north effected Aiken’s culture and businesses. Just like any other equestrian group, the Aiken equestrians are fragmented with numerous groups, associations, and stakeholders. All of them have different interests and goals. The goal of this paper is to define the Aiken County equestrian industry and to define its economic impact on Aiken County’s economy. In order to determine the nature and scope of the local equestrian industry, an equestrian survey was designed and conducted. The survey was aimed at the equestrian enthusiasts who live and work in Aiken and Aiken County. The data obtained from this survey was utilized to provide descriptive and normative analysis of the equestrian industry and its economic profile and impact.

Equestrian Activities in Aiken County

The equestrian population, activities, and events are constantly growing in Aiken, South Carolina. The equestrian activities consist of many different events such as polo, horse racing, horse showing, carriage driving, and fox hunting, to name a few. In order to define and analyze a complex sector such as the equestrian one, an equestrian survey was conducted. The purpose of this survey was to highlight a set of equine-related activities that are present in Aiken. The survey was distributed to randomly selected individuals considered to be horse owners and/or enthusiasts. An electronic version of the survey was sent to several different equestrian associations with an appeal to share the survey with their members. Furthermore, hard copies of the survey were placed at different locations in Aiken and 20% of the participants returned their responses. The survey had eight sections with questions related to equine activities, inventory, labor and capital expenses, equine expenses, gross receipts, tourism related activities, and general information.

The first survey question asked participants to define their equestrian activities in the past 12 months while specifically determining the number of days spent in Aiken versus the number of days spent in other counties in South Carolina and elsewhere. Figure 1 illustrates participants’ responses to the first question. The obtained data suggests that a majority of the equestrian activities are pleasure related (48%), followed by competition (21%), breeding (18%), and racing (13%). Individuals whose equestrian activities consist of pleasure riding and breeding spend more than 50% of their time in Aiken, while racing and competition account for one-third of responders’ time spent in Aiken. Responses indicate that the states of Pennsylvania, Delaware, and Wyoming are “other locations” where “local” equestrian enthusiasts spend their time.

When asked to define more specific activities within major categories, 17% and 21% of participants report that they enjoy fox hunting and polo, respectively. According to the survey results, the polo activists spend more than 55% of their time in Aiken, versus 45% for fox hunting enthusiasts. Fourteen percent of the survey participants indicate that trial riding (both English and Western) is their preferred equestrian activity in Aiken. These particular equestrian individuals spend about 30% of their time in Aiken and the other 70% outside of South Carolina. Eight percent of the participants report dressage as their main equestrian activity with 44% of their time spent in Aiken. Five percent consider driving as their leading discipline with 35% of their time in Aiken and 65% outside of South Carolina. Nineteen percent of the respondents are jumper and/or hunter enthusiasts with 47% of their time spent in Aiken. Four percent of participants select lessons, training, and fundraising as their dominant equestrian activity with 43% of their time spent in Aiken. Figure 2 illustrates different types of equestrian activities conducted in Aiken.

Horse Population in Aiken County

To address the equine inventory in Aiken, the second survey question asked participants to identify the equine breed they own or board. According to the data, the estimated total equine inventory in Aiken County tops 6,785 horses. As indicated by Figure 3, the most dominant breed is still Thoroughbred (32%) followed by Quarter Horse (22%), Warm Blood (9%), Ponies (9%), Tennessee Walker (6%), Pinto/Paint (6%), Miniature (5%), Mules and Donkeys (4%), Draft Horses (2%), and several other breeds (5%).

The obtained data was used to estimate the total and average value of equine inventory in Aiken County. Table 1 provides the estimated average value per breed for Aiken County. According to this data, the most valuable breed in Aiken is Warm Blood ($17,907.00) followed by Thoroughbred ($16,982.00). The survey showed the average equine value for all breeds is $5,002.00. The total estimated equine value for all breeds included in survey is $59,086,223. This somewhat higher total value of all horses in Aiken County is due to a high percentage of Thoroughbred horses present in the county and their respective high market value.

Table 1
Estimated Horse Value Per Breed

Equestrian Industry Capital Expenditures and Gross Receipts

The equestrian industry is very important to the local economy as it affects numerous and diverse activities such as agriculture, business, sport, entertainment, and recreation. The equestrian industry has introduced thousands of new people to the area in terms of owners, riders, trainers, etc. In order to determine the scope of the equestrian sector, the survey respondents were asked several questions about their capital expenditures and gross receipts. The participants were asked to list their annual capital related costs for the following categories: new equine purchases, new building and equipment investment, building and equipment depreciation, fencing investment, and interest on investment. The largest capital expenditure were new building and equipment investments (56%) followed by the new equine purchases (36%). Figure 4 illustrates capital related spending for the year 2007.

In addition to this, the respondents were asked to list the value of their personal property, business property, land, and any other category they relate to their equestrian activities. The responses indicate that business property (e.g. farm, barn) are the most valuable properties in this category (49%) followed by personal property (39%), and land (11%). Figure 5 illustrates these responses.

When asked about the taxes they pay to state and local government, the respondents indicate that the taxes paid to state government account for 46% of their total tax burden, followed by Aiken County taxes (32%), and Aiken City taxes (19%). The government permits, licenses, and/or contracts account for 3% of total tax spending of the Aiken equestrian industry.

Employment and Labor Earnings

The equestrian industry has its effect on the local labor market as well. Survey question # 3 asked respondents to report the number of full-time, part-time, and seasonal workers they employed for the past 12 months. Besides these three labor categories, two other categories – family members and others – were also choices for respondents. According to the results obtained from the survey, far more full-time workers are employed by the Aiken equestrian industry than any other worker. Seasonal workers are the second largest labor category, followed by family members, part-time, and other workers. Not every survey participant provided employment and labor earning responses. The total number of all workers across survey respondents who answered these two questions was 751. Such a high number of workers clearly support the constant care and management which horses require. Figure 6 summarizes the responses regarding equine related labor. The respondents report 243 full-time, 106 part-time, and 200 seasonal workers employed by the Aiken equestrian industry. In addition, there are 163 family members who contribute to the local equestrian sector. Under the “other” category, respondents indicate 39 contract-workers were hired during the past 12 months. Question # 3 also asked respondents to indicate the total equine-related payroll expenses for the past 12 months. The total reported payroll in 2007 was $3,122,300.00. This indicates a relatively high level of compensation given the fact that almost 22% of equine related labor are family members and 41% are part-time and seasonal workers combined.

Tourism Related Activities and Benefits

Tourism activity generates a wide variety of benefits to the local economy such as tax revenues from travel-related expenditures and new employment opportunities. When tourists arrive in an area, they spend money on products and services acquired from the local business community. Businesses that benefit directly from tourism include lodging establishments, restaurants and bars, recreational facilities, amusement parks, gas/convenience stores, department stores, and sporting goods retailers. Over the past several decades, tourism in Aiken County has been steadily increasing and this growth can be related to the boom in the equestrian industry. The equestrian industry is bringing more and more people in for riding lessons, to watch the shows, to shop in the equine stores, to buy horses, and to attend polo and other equestrian events.

The survey of tourists was conducted during the spring time and that is when the Aiken equestrian community draws the most attention due to the Triple Crown events. A total of 96 surveys were filled-out and the data was analyzed to reveal some important characteristics of tourists visiting Aiken. Fifty percent of respondents had previously been to Aiken on more than one occasion. This indicates a high rate of return visitors with a majority of them stating that they repeat this visit at least 2-4 times. Generally, the people that responded with a higher number of return visits to Aiken also indicated a family and/or friend connection with Aiken or a horse association referral.

Figure 7 illustrates the results from the question that asked participants about the events that brought them to Aiken. The majority of respondents were either visiting family/friends (37%) or they were visiting a horse event (34%). For some of the respondents, these two categories were interchangeable. The other three “referral” categories for tourists to choose from were golf (11%), historical attractions (9%), and other (9%). The visitors who had family/friends and horse association connections also indicated that they did not need tour guide services while in Aiken. These respondents also characterized Aiken as “exciting for tourists” (67%). The remaining 33% stated that Aiken was not particularly exciting either because there is “no nightlife for single tourists” or there is very “limited activity for families.”

Economic Impact of the Equestrian Industry on Aiken County’s Economy

The equine related businesses bring over a billion dollars into the South Carolina economy and support suppliers throughout the state. These contributions are very important as industries such as tourism, marketing, and many others are impacted by the equestrian industry. This is important from the economic perspective as it is much easier to grow and maintain an existing, productive industry than to build a new one. Therefore, in this section the equestrian expenditures are reported as they serve as a main determinant of the size of this industry.

Table 2
Total Equestrian Related Expenditures in 2007

There are several main sources of equestrians’ expenditures in Aiken County. The equestrian survey asked participants to report their equestrian related expenditures for 2007. All together there were 32 expenditure categories which were combined into eight groups: boarding fees, equine purchases, stable lease payments, animal health, feed, grooming, fees, and maintenance. The total equestrian industry expenditures (without labor and capital costs) for 2007 were $14.17 million and are reported in Table 2.

As Table 2 and Figure 8 indicate, the equestrian expenditures were spread widely among the eight selected categories. The main expenditure categories reported by the participants were horse-related fees (21%), which include training, track, breeding, and show/tournament related fees. The second largest category was new equine purchases (18%). Grooming came in the third place (16%) and includes expenses such as farrier, clothing and other supplies (for both individuals and horses), grooming supplies, saddle & tack, advertisement, utilities, insurance, etc. The fourth largest category was animal health (15%), which included veterinarian fees, medicine, hospital-surgery/lab work, and other health related services. Boarding fees accounted for 10% of total equestrian expenditure while feed (feed, feed supplements, seeds, etc) and maintenance expenditures (fertilizers, building and equipment repair, fencing, etc) accounted for 9% and 7% respectively.

This study estimates an annual cost of $7,393.00 per horse, which amounts to $50.163 million in total spending produced by the equestrian sector. This immediate impact of the equestrian industry on Aiken County’s economy is a solid base for the County’s economic growth and development. However, in addition to the direct economic impact of the Aiken equestrian industry, there are additional indirect effects or so called “ripple” effects that get created by the initial equestrian spending. Numerous workers in Aiken County are employed by the local equestrian industry and those jobs provide workers with income which enables them to purchase goods and services from our local economy. These purchases are translated into additional economic impacts of the Aiken equestrian industry. These multiplied effects are explained and discussed in the following section.

Input-Output Analysis, Multiplier Effects & Economic Impact

It is important to measure the interrelationship of the equestrian industry with other industries in Aiken County. This study uses an economic input-output analysis in order to understand the inter-industry relationships between the Aiken equestrian industry and the local economy as well as the long-term impacts that result from equestrian businesses and activities. There are numerous economic models that can generate economic multipliers and estimate the long term benefits of an industry. However, this study uses the economic impact software program IMPLAN (IMpact Analysis for PLANning) to estimate the total economic contribution of the equestrian industry to the Aiken County economy. With this input-output model the purchases and sales of commodities between industries, businesses, and final consumers can be easily traced and analyzed. The input-output model uses the multiplier analysis to estimate the direct and indirect contribution of an industry. For example, total spending by the equestrian industry for labor, feed, veterinarian services, insurance, etc. create employment and income for businesses in those sectors. The output multiplier will measure the effect of a $1 change in an industry’s sales on the output of all other local industries.

The intention is to use the input-output model to estimate the “multiplier” portion of the equestrian industry’s impact on the Aiken County economy. However, the “equestrian industry” is not a well defined industry by the existing standard defined by the North American Industry Classification System (NAICS). In other words, while there are numerous other industries well defined by the United States Census Bureau and NAICS (e.g. farming, mining, manufacturing, trade, etc.), the equestrian activities are considered to be a part of the agricultural sector. Therefore, any spending regarding the equestrian sector (according to this definition) contribute to supporting the suppliers of the agricultural sector. However, the equestrian industry goes beyond the agricultural sector. Many race tracks and stables in Aiken County are not part of farm operations and not all horses are kept on farms. This makes it difficult to use a standard input-output model to estimate the economic impact of our local equestrian industry. Given the responses obtained from the equestrian and the tourist surveys, this study defines an equestrian industry as the one that reaches and affects numerous other industries and activities such as the agricultural sector, farm construction and maintenance, hunting, sporting goods, real estate, veterinary services, accounting and advertising services, hotels and other accommodations, and spectator sports. Based on the findings from the two surveys conducted, these 11 different industrial activities are closely related and affected by the Aiken equestrian industry. Therefore, when the economic impacts of the equestrian industry were estimated, a unique model that reflects diverse and multiple-industry related activities of the Aiken equestrian industry was created. All 11 above mentioned industries were combined and averaged out to obtain an economic impact that the equestrian industry has on our local economy.

The study estimates four different kinds of equestrian industry effects on our local economy:

1. Direct Effects are associated with the Aiken equestrian industry’s direct gross receipts.
2. Indirect Effects represent the relationship between different firms working through input purchases of goods and services.
3. Induced Effects are economic impacts that arise from spending of household income earned by workers employed by the Aiken equestrian industry.
4. Total Economic Impact of the Aiken equestrian industry is calculated as the sum of the direct, indirect, and induced effects of the Aiken equestrian industry.

The economic benefits gathered by the Aiken community are best measured in terms of the number of jobs created and the amount of personal income accruing to local residents. In the case of the equestrian industry, there are certain direct effects associated with the $50.163 million in total spending and estimated 1,329 full-time workers. The impacts of the equestrian industry on employment are given in Figure 9. As mentioned earlier, the Aiken equestrian industry itself accounts for 1,329 jobs. There are an additional 283 jobs due to indirect effects and 202 jobs due to induced effects. In total, 1,814 jobs in Aiken County can be attributed to the operations of the equestrian industry. The estimated 1,329 jobs translate into 1.7% of total jobs in Aiken County and this makes the equestrian sector an important local employer.

Furthermore, this study estimates the impact of the equestrian industry on the local household income. These estimates are given in Figure 10. There are $16.93 million in income effects that result directly from the local equestrian industry. In addition to this, there are indirect linkages that account for an additional $2.09 million, and the induced effects are another $217,513.00. In total, the impact of the Aiken equestrian industry on household income is estimated to be $19.25 million annually in 2007.

Finally, the economic impact of the Aiken equestrian industry can also be gauged by analyzing the effect of an average dollar in output on our local economy. In terms of the output multiplier of the equestrian industry, one dollar of spending by this industry leads to $1.65 of spending in the local economy. In other words, for every dollar of spending made by local equestrians, an additional 65 cents is generated for the Aiken County economy. Relative to other industries that dominate the Aiken economy, this multiplier is smaller than the ones produced by the manufacturing sector (2.05) or the construction sector (2.10). However, the equestrian multiplier is still larger than the FIRE multiplier of 1.51 (FIRE – Finance, Insurance, and Real Estate). Figure 5.4 illustrates direct, indirect, induced, and total output effects that the Aiken equestrian industry has on our local economy. The $50.16 million in direct gross receipts leads to an additional $11.76 million in indirect effects and an additional $9.89 million in induced effects for a total of $71.82 million.

Therefore, the key indicators of equestrian activities include total industry output, total income, and employment. Table 3 and Figure 12 summarize all the above mentioned effects of the equestrian industry on our local economy. The total estimated impacts of the Aiken equestrian industry are $71.81 million in gross output, 1,814 workers, and $19.25 million in labor earnings. The indirect effects are $11.76 in gross output, 283 workers, and $2.09 million in labor earnings, while the induced effects are $9.89 in gross output, 202 workers, and $217,513 in labor earnings.

Table 3

This input-output analysis of the Aiken equestrian industry reveals that its operations have a substantial impact on output, jobs, and income in Aiken County. Like any other industry, the equestrian industry makes a variety of input purchases that translate into flow of funds throughout the local economy. The indirect and induced effects of the equestrian industry work through numerous other sectors within the local economy and contribute to Aiken County’s economic growth and development.

Summary

The equestrian industry of Aiken provides many economic and cultural benefits to the people who live here. Aiken’s equine industry presents itself in many different ways starting from local business development to veterinarians, furriers, dentists, boarders, and other businesses closely related to horses. The current study estimates substantial benefits to the Aiken County economy through the creation of jobs, labor income, and output. Besides the economic benefits and contributions, the equine industry is very influential as it effects Aiken’s social, cultural, and financial environments. Given Aiken County’s strong reliance on industries susceptible to external factors – industries such as administrative and waste services, manufacturing, and construction – it is a recommendation of the current study to nurture the equestrian industry as an important economic cluster. The equestrian industry is an existing economic cluster of firms and institutions whose activities interconnect with the rest of the Aiken County economy. Nurturing the equestrian industry of Aiken should be the long-term goal. Industries such as tourism, accounting, marketing, and many others are impacted by continued growth of the Aiken equestrian industry.

References

South Carolina Department of Agriculture. (2008). South Carolina Market Bulletin. (Volume 83). Columbia, South Carolina: Author.

U.S. Bureau of Census. (2007), North American Industry Classification System. Washington, DC: Author.

Dr. Sanela Porca and Dr. J. Ralph Byington
School of Business Administration
University of South Carolina Aiken
Aiken, South Carolina 29801
803.641.3340