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How Music Festivals Boost the Local Economy

Since 2011, Madison House Presents and Insomniac Events, have hosted Electric Forest Music Festival at the Double JJ Resort in Rothbury, Michigan. The festival is a huge money maker not only for event organizers but for the local area as well.

Over the course of two weekends the small town of Rothbury, Michigan grew from its average yearly population of 400 residents to an estimated 60,000. This is because Electric Forest Music Festival calls this town home for two weeks every June. Since 2011, Madison House Presents and Insomniac Events, have hosted the event at the Double JJ Resort. The festival is a huge money maker not only for event organizers but for the local area as well. The village of Rothbury gets a huge economic boost from music lovers from all over the country making their way in. From gas stations to grocery stores to locals setting up shop on their front door step, businesses see a boost whenever the festival is happening.

“What I’ve seen is that all the businesses around I believe they can’t wait for these people to come into town,” says Kelly Ramthun who lives in nearby Montague.  “I can see where the businesses are thriving where any other time around here it’s kind of quiet. Where now it’s very busy; every time you walk up and down the street you’re seeing somebody that’s celebrating and just enjoying life.”

Tim Shield, a hometown vendor, stated that he earned a six figure profit even after having to pay $3,000 to the festival organizers and share 45% of his profits from his snack shop on site. The festival not only brings in a large amount of consumers to one place but it also requires a lot of infrastructure. A nearby company, Beckman Brothers Inc., reportedly brought in over 300 pounds of dirt to help build a mile long road in the campgrounds. While the surge in people can cause some headaches like increased traffic, for many locals it is worth the hassle since they make the majority of their profits during this time.  

“Some businesses, they rely on the festival just to make it through the winter,” says Federico Flores, a former professional boxer who now owns Rico’s Tamales in Rothbury. “This week a lot of people will get a lot of money. It’s a good thing, you know. It’s a good thing.”

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In addition to local businesses thriving, the village itself earns a good amount of money from the event. Rothbury Village President Scott Beishuizen stated that in 2017 they received $6 a wristband for weekend one and $5 for weekend two. That is an estimated $450,000 that can be used for public projects like repaving roads. Even local schools benefitted, received $51,000 in grants for their music programs.

This is true for festivals outside of Electric Forest. Manchester, Tennessee residents see a similar economic boost during the weekend of Bonnaroo Music and Arts Festival. A study conducted in 2013 found that the average festival goer spends $35 per day outside the festival in the local county. That totals to $36 million in direct and $15 million in indirect sales, jobs, and income. A local business owner, Sharon Holmes, stated that her cafe, Health Nutt, earns 30% of their yearly profit during Bonnaroo season. The effect of an event spans outside just the days that the actual festival occurs. Crews are required to be on site for many weeks before and after in order to produce the large events. These groups also largely impact the economics of the region.

“A lot of the people who set up the festival come a couple weeks ahead,” Holmes said. “And then the people who clean up and stay later, they’ll stay a couple of weeks with us. The people who do the ticketing—they might have 30 people and they need breakfast, they need lunch, they need dinner.”

Insomniac Events, the hosts of Electric Forest and other festivals, also has a large impact on the US economy overall. A report conducted by Beacon Economics came out in 2015 stating that over the course of five years, from 2010-2014 the group had generated $3.17 Billion for the US economy. That translates to over 25,000 jobs, $1 billion in labor income for workers, and $18.1 million in local and state taxes. In addition, $866.3 million directly impacted local hotels and other accommodations services, transportation, food and beverage, and entertainment. The money went primarily to Las Vegas, where their largest event Electric Daisy Carnival (EDC) has taken place for over 20 years. Large portions also boosted San Bernardino, California, New York and New Jersey areas, and Orlando, Florida. EDC Las Vegas alone has reportedly had a $1.3 billion impact on the local economy. Just in 2015 it generated $21.9 million in state and local tax revenue, which is the equivalent of 292 full time fire and rescue employees at an annual salary of $75,000. The tax revenue from this five year study totaled $81.4 million which could have covered the tuition of 1,055 undergraduates at University of Nevada, Las Vegas.

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“This study beautifully illustrates the powerful financial and cultural impact of dance music here in the United States,” says Insomniac Founder and CEO Pasquale Rotella. “As support from our Headliners continues to grow, our contributions can continue to make a difference here at home and around the world.”

There is no denying the incredible impact music festivals have on a local economy. For a few weeks in June a small town in Michigan grows more than 100 times its size and local business see a major boost in revenues. Some even earn what they need for the whole year in just a few short weeks. While hosting a large event can have an impact in other ways like increased traffic and a higher noise volume, it is undeniable the benefit that being host to a large festival can have economically. Both the local governments and businesses can bring in huge profits simply by being home to a music festival. From having billions of dollars worth of economic impact to simply helping local business owners stay a float, music festivals have meaningful economic impacts on their local areas.

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