By the Blouin News Business staff

Carnival around the world: big return on investment

by in Global Economy.

Revellers of Imperatriz Samba School, 6th in the 2015 Rio's Carnival, perform during the Champions' Parade at the Sambadrome in Rio, Brazil, on February 21, 2015. YASUYOSHI CHIBA/AFP/Getty Images

Imperatriz Samba School revellers perform in Rio’s Carnival, Brazil, February 21, 2015. YASUYOSHI CHIBA/AFP/Getty Images

Perry Christie, the prime minister of the Bahamas, said on Wednesday that the country’s first-ever “Junkanoo Carnival” in May will generate $30 million for the economy. The government has budgeted $9 million for the event, which it believes “can become the biggest game in town outside of Trinidad” within three to four years.

Bold words. But are the massive extravaganzas that are Carnival and Mardi Gras (both in February), and now Junkanoo, worth it? Do local communities benefit? The answer seems to be almost always yes, regardless of global location. The return on investment (ROI) of public spending is often several times over for local government revenue, and the wider economic impact on the communities in terms of revenues and jobs is vastly higher.

Christie added that the $1.7 million that has been spent so far on the Junkanoo Carnival through 214 small and medium-sized businesses throughout the Bahamas have already generated an estimated economic impact of $7.6 million. No timeline has been set for when the event would be weaned off government subsidies and become self-sustaining, but over time it is expected to get bigger, better, and more successful. As a reference point and model, the Bahamas Festival Commission’s chairman pointed out that “the Trinidadian government spent $70 million to promote its carnival and, while receiving no direct cash infusion in return, benefited from the increased economic activity and tax spin-offs that the event generated.”

Trinidad & Tobago’s Carnival, a 5-day mega-celebration of dancing, music, and costumes, is its top tourism earner, drawing in 40,000- 45,000 visitors, or nearly 10% of the country’s total annual tourism (which comprised 8.2% of GDP in 2013). That said, the government is concerned that the event’s potential has not been maximized, as it might face competition from the many carnivals elsewhere in the world. It is considering ways to extend the economic boost, and has floated the idea of a 6-week Carnival “season” lasting from January through mid-February. But the real move came in late December when the government distributed $9.7 million to regional Carnival committees, with the goal of transforming Carnival from a “festival to an industry,” with at least one event per month.

Mardi Gras, New Orleans’ world-famous Cajun equivalent of Carnival, brought in $164 million directly to the city in 2014. When the year-round value of Mardi Gras’ brand (such as merchandise sales, and sustaining lodging, bars, and restaurants) is included, the figure grows to $465 million. This was 2.22% of New Orleans’ GDP and provided $17.6 million in tax revenue to the city and other government entities. In 2011, the net fiscal benefit to the city was more than $13 million, or a return of $8.45 for every city dollar spent.

Toronto’s Caribbean Carnival (the largest of its kind in North America) is also phenomenally successful, drawing in 1.2 million visitors. A 2010 study found that it generated $438 million for the local economy and resulted in the creation of some 6,800 jobs, of which over 80% were in the Toronto area. The return on investment is staggering, since the combined cost to Toronto and the provincial government of Ontario was only slightly over $1 million.

The biggest of all remains Brazil’s nationwide Carnival celebrations, which brought in a whopping $3.2 billion in tourism revenues in 2012. Previous Carnivals have created temporary jobs or income for 250,000 people. However, the country’s ailing and indebted economy, combined with a severe drought, led many cities and towns to scale back or cancel their Carnival celebrations this year. Despite that, nearly one million visitors attended Rio’s Carnival, generating $782 million in revenue for the city.

Partial government funding for Brazil’s Carnival extends to even the most unexpected channels: despite being mired in a massive corruption scandal and having much more pressing priorities, Petrobras assured the top twelve samba schools that they will receive the same $350,000 funding as last year. They spend roughly $3-4 million each to put together their shows, which is more than made up for in income from the Rio parade itself, which in 2012 generated $42.7 million from sales of tickets, CDs, television rights, sponsorships, advertising and costumes.

With typical economic benefits on this scale, and the chance for locals to celebrate their culture, expect more Carnivals to spring up around the world.