Snowmobiling’s Rate on Investment (ROI) to Tourism in Michigan

NOVEMBER 2016

Since my October legislative column I received many calls and emails regarding a trail permit fee increase. Most of those contacting me and other MSA officials say they would support an increase to $60, but that’s where they draw the line. Riders are telling us they understand the need for an increase, but they are also telling us that larger increases would be pricing them out of the sport of snowmobiling. We also know that with every trail permit increase the number of permits sold decreases.

Long discussions are being held regarding the now complete 10-year snowmobile program budget. We know revenue for that $6 million program has to increase.  We know we need to increase the state trail permit fee to $60 to maintain the snowmobile program and smooth snowmobile trails. Increasing the trail permit to $60 will allow the snowmobile program to break even.

Any trail permit increase will take a state legislator to introduce it and passage in both the State and House. The trail permit will be $48 this season. That means that the program will see a shortfall at the end of this season. The program will not fund everything that needs to be done in the next fiscal year, which begins Oct. 1, 2017 and runs through Sept. 30, 2017.

At the end of the upcoming season there will be zero money left to purchase grooming equipment for the following year. That’s right, ZERO left to purchase grooming equipment.

At the end of every season, we typically have funds available.  In the past there has been around $1.5 to $2 million left in the snowmobile program. That money is used to purchase equipment. That money will not be there at the end of this season.

The fact that we can’t purchase new equipment for even one year will increase the following season’s  repair and refurbishing costs.

Snowmobiling’s Return on Investment (ROI)

While the 10-year budget discussions and a trail permit increase continue to take place,  MSA Past Present Jim Dickie and I have also been working on the tourism aspect of snowmobiling and the ROI it provides to Michigan.

Our state legislature has put $32 million of our tax dollars to the Pure Michigan tourism campaign. These tax dollars are being used to promote tourism in our state. State officials say that they are doing this because of the campaign’s ROI of those tax dollars. Statistics from Pure Michigan show that for every $1 spent promoting Michigan through Pure Michigan, $7 comes back to the state in terms of goods and services purchased.

Pure Michigan is bringing people into Michigan to enjoy our resources and this helps our economy. People spend their money here and their ROI is that they enjoy themselves and the activity they are participating in. Pure Michigan encompasses all tourism including snowmobiling, biking, camping, taking a color tour, enjoying our Great Lakes and many other activities.

Time for a Partnership With Tourism

Now to the point — the state doesn’t put any money into the snowmobile program. No general fund dollars are put into the program and Pure Michigan doesn’t put any of that $32 million into the snowmobile program.

They are not paying their ROI to the snowmobile program.  In a 2009 Michigan State University study on the economic impact of snowmobiling in Michigan it stated that our sport has over $500 million economic impact on this state. Keep in mind that in 2008 we were in the midst of a recession, so that half a billion dollar number is probably low.

Snowmobilers put into the program $ 6 Million from Trail Permits and $ 2 Million from a small return of our Gasoline Tax paid, equaling $ 8 Million. So take that amount and divide it into the economic reality of $500 Million and you get an ROI of $ 62.50 return to the state for every dollar we put in.

What does that mean? It means that for every dollar spent by you on Pure Michigan snowmobiling’s the ROI is $60. The state funds Pure Michigan because it sees an average $7 ROI of every dollar spent, and snowmobiling provides a $60 ROI on that $1.

Using this analogy of ROI, isn’t it about time that the state puts some tourism dollars into the snowmobile program?

We keep hearing about tourism dollars obtained from hiking, biking, and cross country skiing in Michigan. None of those sports put any money into the cost of their particular recreation to the user. The only two recreations that are paying their own way in Michigan are snowmobiling and ORV’s. We are not saying that snowmobilers should be free loaders. We do agree that we need to pay for our chance to play and we do through purchase of trail permits. We just don’t believe that we should have to pay 100 percent of our way. Especially since other user groups are not paying anything.

It is true that some area hotels, motels, gas stations, and restaurants do contribute to local snowmobiling grooming programs, but this doesn’t happen on a on a statewide bases. Those businesses’ contributions are valuable, appreciated, and are coming out of their own pockets.

The snowmobile program in this state does not receive any funding from Pure Michigan or the Michigan Economic Development Corporation (MEDC).

Partnerships and tourism grants are currently being done with communities around the state. A partnership with snowmobiling and tourism in this state is long overdue.

This concept is new, and has caused some raised eyebrows with those I have already discussed it with. By the time you read this article I will have met with representatives from the tourism industry. I will be presenting snowmobiling’s ROI to tourism in this state to Dave Lorenz, vice president of Travel Michigan. Look to future issue of the Michigan Snowmobile News for how that meeting went.

Back to a Trail Permit Increase

Even though we have been talking about a trail permit increase for the past year, we have received zero positive input from our state legislators. Not one state representative or senator is willing to introduce a snowmobile trail permit increase.

We have been told that MSA should  not even consider bringing a tax increase to them. That means that as things stand today, a trail permit fee is not going to happen for the 2016-17season, and unless we can convince Legislators by June of 2017, we will not see one in the 2017/18 season either!

By the time you read this, our November election will be history. Our state legislature will consist of many new people who must be educated about the snowmobile program. Now is also one of the scariest times in state politics. During the two weeks in November and the two weeks in December that our legislators are in session many of those who lost or were termed out will be trying to get legislation approved that will create their political legacies. This legislation isn’t always friendly to snowmobiling.

Again let me assure you there is enough money in the snowmobile program to run it this 2016-17 season.  The program will remain intact this season. Next season and beyond is what we are concerned about. If nothing changes by next June, discussions will turn to where do we cut in the snowmobile program.

Remember your legislators hold the key to our snowmobile future. We are looking for a legislative champion of snowmobiling. We need someone to step up and sponsor a bill proposing the increase.

MSA Continues to Fight the Good Fight

Rest assured that once committee assignments are made in our new state legislature MSA will be presenting the snowmobile program’s 10-year budget to those committees involved in snowmobiling.

We will be discussing this budget and three options with new and old legislators. We will  be asking them — and trying to convince them to:

  • Put general fund money into the snowmobile program.
  • Consider snowmobiling’s ROI in Pure Michigan and the tourism industry, and:
  • Introduce and approve an increase in the snowmobile trail permit to $60 for the 2017-18 season.