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THEEconomic impacT of THE SErralvES foundaTionEXECUTIVE SUMMARY

THEEconomic impacT of THE SErralvES foundaTionEXECUTIVE SUMMARY

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Using the year 2010 as reference, the activity of the artistic and cultural complex at Serralves generated an overall impact of about 40.56 million Euros on Gdp, helped create 1,296 full-time jobs, generated about 20.7 million Euros in salaries, and 10.8 million Euros in tax revenues.

Impa

ct o

n G

DP

Tax

Rev

enue

s

20.7 M€Multiplier 5

Sala

ries

40.6 M€Multiplier 9,9

10.8 M€ Multiplier 2,6

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EXEcuTivESummarY

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With the role that the Serralves Foundation plays in promoting arts and culture in the city, in the northern region, and in the

country as a whole being clear, there is the conviction that it also plays an important role as an economic agent with a major impact on the economy of the city of Porto, and northern region of the country. Thus, and similar to studies carried out for similar institutions in other coun-tries, the Serralves Foundation has decided to promote the elabora-tion of a study of its Economic Impact.

This study quantifies the economic dimension of the Serralves Foundation by estimating the direct, indirect and induced impacts

of their activities. Besides the quantified size of this impact, the study also characterizes in detail the links between Serralves and the differ-ent stakeholders: visitors (residents and non-residents), suppliers and entities of the cultural sector, the education sector entities, corporations and other institutions. This study aims to characterize the Serralves Foundation as a creative and cultural entity, as a tourist attraction, as an educational institution, as a dynamic facility of the creative industries, as a social boost, and an economic agent generating employment, con-sumption, income, tax revenues, etc.

Most of the information needed for the study was collected at the Serralves Foundation and the institutions that were considered

as belonging to the perimeter of the Serralves artistic and cultural com-plex. This information comes from the institutions’ accounts. In the case of the Serralves Foundation, the detail of the information requested im-plied recourse to management information already available, but it also required additional work by the services to format existing information. The completion of the study involved the carrying out of five surveys. The surveys carried out were: survey to Serralves users; survey to tour-ists in the streets of Porto and Gaia, online survey, survey to companies incubated at Serralves and other companies located at Serralves; survey at schools. The two surveys carried out to visitors had as its main objec-tive the estimation of the impact of Serralves on tourism demand and the contingent evaluation of free services at Serralves. It also allowed for the attainment of important information on levels of satisfaction and visibility of the institution, among other things. The online survey has broader objectives, including assessing the visibility of the institution, to assess the contingent evaluation of free services at Serralves, studying the perception of citizens on the impact of Serralves and estimate the willingness to contribute to the financing of Serralves. The survey at schools had the evaluation of Serralves as an educational institution as its main objective.

The main methodology used to quantify the economic impact of Serralves in this study is the input-output analysis. This is one of

the solutions used in the analysis of economic impacts an as instrument of analytical foresight.

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This study aims to characterize the Serralves foundation as a creative and cultural entity, as a tourist attraction, as an educational institution, as a dynamic facility of the creative industries, as a social boost, and an economic agent generating employment, consumption, income, tax revenues, etc.

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In 2010, subsidies from the central government represented only 43.1% of total revenues of the Serralves Foundation.

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Serralves recorded remarkable growth throughout the first de-cade of this century. Over the decade, we have found that the

total number of visitors has increased an average of 6.7% per year. The number of foreign visitors has increased an average annual rate of 42.3%, which is very significant, despite the starting number being very low. In 2010 and 2011, 450 277 and 473 903 people visited Serralves, the number of foreigners being 70,487 and 75,866, respectively.

Located in the heart of Oporto, the Serralves Foundation boasts a priceless heritage estate, comprised by a Museum (designed by the

1992 Pritzker prize winning architect, Álvaro Siza Vieira), a Villa (a unique example of Art Deco architecture) and a Park (designed by Jacques Gre-ber and winner of the “Henry Ford Prize for the Preservation of the Envi-ronment” in 1997). In view of its important architectural and historic inter-est, Serralves was classified as a “National Monument” in 2012. Serralves develops a wide range of activities: constitution of a leading international contemporary art collection; an ambitious program of exhibitions, fea-turing works of leading Portuguese and foreign artists and initiatives involving young artists; music, theatre and performing arts series that complement and enhance the exhibition program; innovative educational programs, suitable for all people, of all ages; high visibility initiatives such as “Serralves em Festa”, “Autumn Party” and the “Environment Day”; ac-tivities regarding the environment valuing the Park as a space for public fruition and as a basis for approaching the main environmental problems facing the world today, in the broader context of relations between art and the landscape; study and debate, in courses, conferences and semi-nars, of the main questions of our time, involving the participation of great national and foreign thinkers, in the fields of the arts and social, political and experimental sciences; touring exhibitions throughout the country in order to support the revelation of new talent, disseminate the Serralves Collection and enhance the programming of existing facilities and thus help build new audiences; lending of artworks; trading activities; library/documentation center, etc. Serralves also develops an activity to support business incubation in the Creative Industries. In 2011, nine companies of the following areas were installed in Serralves: design (2), multimedia (2), online marketing (1); conservation and restoration (1); computer (1), graffiti (1) and reception services and public hosting (1).

The collection of works at Serralves is a good measure of the value of the legacy this institution generates for all the Portu-

guese people. Considering the value of the works in regards to their historical cost, the cumulative value of the works purchased and do-nated to Serralves between 2000 - 2010 increased from about 5,979 to 17,791 million Euros.

The growth of activity at the Serralves Foundation over the last decade was reflected in the creation of jobs. Serralves created

28 jobs between 2001 and 2011, which represents an increase of 41.2%. The staff is very young. Of the 96 employees, 52% of the people are under the age of 40 and only 9% are fifty-five or more. The Serralves Foundation has been able to create opportunities for Portuguese youths in specialized areas, and this is worth noting, given the tra-ditional difficulty of creating skilled employment in our country. The level of qualified staff at the Serralves Foundation is very high. Of its employees, 60% have a bachelor’s degree or higher.

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of the 96 employees, 52% of the people are under the age of 40 and only 9% are fifty-five or more (...) of its employees, 60% have a bachelor’s degree or higher.

Total number of visitors has increased an average of 6.7% per year (...) foreign visitors has increased an average annual rate of 42.3%

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In 2010, the Serralves Foundation generated revenues of 9538.5 million Euros. Valued at current prices, the Serralves Founda-

tion’s income in 2008 reached a maximum value of 10,241 thousand Euros. In the year 2009, and to a lesser extent in 2010, the growth difficulties of the Portuguese economy were also felt in the ability to generate income by the Serralves Foundation. In 2010, own revenues - excluding income arising from patronage and sponsorship - accounted for 18.49% of total income. Among similar institutions nationwide, the Serralves Foundation stands out for its proven ability to generate revenue from patronage, sponsorships, and other private donations, as well as in obtaining public funding on a competitive basis. In 2010, subsidies from the central government represented only 43.1% of total revenues of the Serralves Foundation.

The Serralves Foundation plays an important role in the city of Porto, in the northern region and in the country as a whole

in the search for specialized goods and services associated with their core business, contributing in a very significant way to the develop-ment of the Creative Industries sector. In 2010, an amount of 1949.4 thousand Euros could be potentially associated to the cultural and creative sector. Included are 411.9 thousand Euros in creative / art-ists fees, 181.8 thousand Euros in monitor fees, 221.5 thousand Euros related to advertising in the press and 868 thousand Euros in other specialized work. The creative / artists fees represented about 7.5% of the ESF in 2010 (please note that the plastic artists with exhibitions do not receive fees).

Taking into account the results of the street survey carried out in this study, the Serralves Foundation is among the four

major points of interest for tourists visiting Porto. Most visited or in-tend to visit Serralves for the first time. Tourists visiting the Serralves Foundation spend an average of 2.4 nights in Porto, against 1.6 days of those not visiting the Serralves Foundation. Foreign tourists spend an average of 2.3 nights against 1.3 days by the national tourists. Most tourists interviewed are independent travelers. A very significant pro-portion traveled by plane in low-cost airlines (34%). 19.7% respondents traveled in normal air carriers. About 30% of the tourists traveled by car. The Portuguese tourists traveled in groups of 3.5 people, on aver-age, while foreign tourists traveled in groups of 2.75 people, on aver-age. The vast majority of tourists traveled without children (86.3%).

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The Serralves Foundation plays an important role in the city of Porto, in the northern region and in the country (...) contributing in a very significant way to the development of the Creative Industries sector.

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The Serralves foundation is among the four major points of interest for tourists visiting porto. (...) Tourists visiting the Serralves Foundation spend an average of 2.4 nights in Porto

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The results from the survey of visitors to the Serralves Foun-dation are consistent with the street survey. Most Portuguese

tourists do not stay overnight in accommodation establishments. For-eign visitors stay overnight in a significant percentage of 2, 3 or 4 nights in hotels. A high percentage of visitors come to the Serralves Founda-tion accompanied by one or two adults and do not come with children. A large percentage of the respondents spend 2 hours at Serralves (38.04% of respondents) and 3 hours (30.98% of respondents). Ap-proximately 17.5% of the respondents spend half a day at Serralves. On average, national visitors spend an average of 2.67 hours at Serralves. Foreign visitors are at Serralves an average of 2.78 hours. According to the street survey, national tourists are willing to pay, on average, 3.48 Euros for a visit to Serralves and foreign tourists are willing to pay, on average, 6.80 Euros. The average tourist is willing to pay 5.77 Euros.

Foreign visitors surveyed at Serralves on days on which the entry is not paid are willing to pay slightly higher than national visitors, i.e., they are willing to pay an average of 4.95 Euros compared to 3.66 Euros by national visitors. According to the online survey carried out in this study, the willingness to pay for an entrance to the Museum and Park on a Sunday morning would be, on average, 3.33 Euros, while the willingness to pay for an entry in the Serralves Park on a Sunday morning would be 1.42 Euros. Online respondents are willing to pay an average of 3.30 Euros for an entrance fee to Serralves em Festa.

From the results obtained during the street survey, we can conclude that there is a high level of satisfaction in the visi-

tors to Serralves. The vast majority say that they are satisfied or very satisfied. Only 3.5% of the respondents say they are dissatisfied. The level of satisfaction is slightly higher for foreign tourists. Most tourists who visited Serralves consider that the value paid fits the level of sat-isfaction obtained by visiting Serralves (fair value). About 19% of the respondents who visited Serralves expected to pay more, while 11.9% expected a lower value. There appears to be consistency between the fair value evaluation, willingness to pay, the level of satisfaction, the likelihood of recommending to a friend, and the probability of return-ing to Serralves. In general, the assessment made by foreign tourists is slightly more favorable than the assessment made by national tour-ists. However, both are very favorable.

According to the results of the survey conducted at Serralves, the level of satisfaction with the visit to Serralves is high. Only

1.5% of national tourists negatively classify their experience at Ser-ralves. This percentage is higher for foreign visitors, but nevertheless remains very low (7.46% of respondents). The desire to visit Serralves again is higher for national visitors, which is understandable given the cost of the trip. Regardless, 77.8% of foreign respondents expressed willingness to return. Both national visitors and foreign visitors say they will probably recommend the visit to Serralves to friends / family. The probability is higher for national visitors.

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From the results obtained during the street survey, we can conclude that there is a high level of satisfaction in the visitors to Serralves. The vast majority say that they are satisfied or very satisfied.

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As mentioned above, the main purpose of this study is to quan-tify the impact of the artistic and cultural complex of Serralves

on the economy. This review is conducted in order to ascertain the over-all primary and secondary effects which are generated on a set of eco-nomic giants such as production and added value, household income, employment and tax revenues. The distinction between primary (direct) and secondary (indirect and induced) effects is crucial, given the im-plications in terms of methodological options and background informa-tion. The primary effects relate directly to the impact generated by the set of activities undertaken in the context of the artistic and cultural complex at Serralves. Firstly, we evaluate the immediate impact of the activities undertaken directly by the Serralves Foundation in providing artistic and cultural services which involve the allocation of its own hu-man resources and procurement of goods and services. Additionally, the direct impact of the Foundation’s activities of a commercial nature is evaluated, as well as the activities carried out by the concessionaire companies and the companies incubated under the Serralves policy for the promotion and development of the creative industry sector. Finally, the direct impact associated with the expenditure incurred by visitors when participating in multiple activities at Serralves is evaluated.

Secondary effects relate to indirect and induced effects due to the expenditure charged to the different artistic, cultural

and commercial activities at Serralves, as well as the expenses sus-tained by visitors. Indirect effects relate to the economic activity in-crementally generated by the goods and services that are consumed directly in the context of the cultural-artistic complex at Serralves. In-duced effects relate to the economic activity incrementally generated as a result of consumption expenditure of workers directly involved in the artistic and cultural complex at Serralves and employees of enti-ties providing goods and services (economic activity generated either by direct effect or by indirect effect).

In general, the characterization and quantification of the eco-nomic importance of the direct effects was done by taking

into account the specificities of each impact component using the ac-counting information and data obtained by the investigations, as well as the estimation procedures, combining administrative data with aux-iliary information extrapolation of a micro and macroeconomic nature.

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Generally, the evaluation methodology of indirect and in-duced impacts adopts an approach of input-output analysis

based on the application of Leontief multipliers. The direct impact of artistic and cultural activity is quantified from the information of oper-ating expenses related to services provided within the Museum, Park and exhibitions, the library, the performing arts, education services, at exhibitions and completion of Serralves em Festa and other special events, as well as the expenses incurred by the national organizers of exhibitions. The expenses relating to artistic and cultural services on the premises of the Serralves Foundation were calculated from the ac-counting information, proceeding to group activities compatible with the national accounts system, as shown in the table of costs presented below, and involve activities of publications and dissemination, educa-tional services activities, museum activities and exhibitions, perform-ing arts, and library services. In regards to exhibitions, expenditures are recorded from the income transfer paid to the Serralves Founda-tion, plus an estimate of the expenses incurred by the organizers. The expenses of the organizers of exhibitions abroad are considered to have no impact on the national economy, and therefore only the costs incurred by the organizers of exhibitions in Portugal are taken into account. It is assumed that the exhibitions held in Portugal take place in the organizers’ facilities, with electricity, water and the use of the exhibition rooms being considered as negligible costs. Similarly, ship-ping costs sustained by the organizers are not considered, as this type of service was provided for own benefit, or it was incorporated in the rights of transfer and are thus reflected in the Serralves accounts.

Using the year 2010 as reference, the activity of the artistic and cultural complex at Serralves generated an overall impact

of about 40.56 million Euros on GDP, helped create 1,296 full-time jobs, generated about 20. 7 million Euros in salaries, and 10.8 million Euros in tax revenues.

When comparing the economic impact of Serralves with the economic impact of the Guggenheim Museum in Bilbao, we

found that, per visitor, the impact on GDP is slightly less than half, and the impact on employment in relative terms is greater than the impact on GDP the same happening with the effect on tax revenues. The ef-fect on employment and the effect on tax revenues in Serralves per visitor is 66% and 82%, respectively, of the effect generated by the Guggenheim Museum Bilbao.

We also compared with other studies on the economic im-pact of major museums in France, UK and the USA. These

studies were done for different periods and are therefore not directly comparable... Given this limitation, we observed that the values of the economic impact of Serralves per visitor are in the range of the esti-mated values both in terms of the impact on GDP, and in terms of the impact on employment. The estimated impact on tax revenue is higher than the values of the museums studied, but is lower than the value estimated for the Guggenheim Museum.

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The role of Serralves in

education and audience

development is widely recognized.

This recognition was confirmed in

the online survey: 92.4% and 92.1%

of respondents are in a position of agreement in

regards to the role of Serralves as an educational entity in the arts and the

environment, as well as audience

development.

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We observed that the values of the economic impact of Serralves per visitor are in the range of the estimated values both in terms of the impact on GDP, and in terms of the impact on employment. The estimated impact on tax revenue is higher than the values of the museums studied.

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The study also included an assessment of the value given by the visitors for free admission to the Museum and Park.

For the quantification of willingness to pay in the Museum and Park, we used the most conservative estimate available (the result from the online survey for nationals and the result from the survey done at Ser-ralves for foreigners). For the Serralves em Festa, we only know the willingness of the national visitors to pay, and we considered this value also for foreign visitors.

The role of Serralves in education and audience develop-ment is widely recognized. This recognition was confirmed

in the online survey: 92.4% and 92.1% of respondents are in a position of agreement in regards to the role of Serralves as an educational en-tity in the arts and the environment, as well as audience development. During 2010, the number of visitors / users of the Serralves educa-tional service was 111,620. To this number we must add the visitors to the Environment Festival (3282), the Autumn Festival (18,098), the Christmas Party (5222). In 2010, the Serralves educational activities provided services to 138,222 users. From the information available, it is possible to estimate that about 35% of the educational services users (guided tours, workshops) are from outside the Northern region, which gives us a good picture of the geographical influence of Serralves.

Using a survey of schools, we sought to assess the impact of Serralves as an educational entity and audience develop-

ment. The assessment of the contribution of Serralves in this aspect is very favorable. Considering the percentages of full compliance and agreement, we conclude that the highest level of satisfaction for Ser-ralves is in regards to the awareness for the preservation of the envi-ronment (89%), visits to the Park (87%), the contribution of Serralves for the complete instruction of the students (85%) and the increase of the contact of students with the environment. Despite the very posi-tive reviews, the percentages of agreement are slightly lower for the arts: students’ awareness of contemporary art (71%); Serralves pro-vides students with unique experiences in the field of contemporary art (67%); students appreciate the visit to the Museum of Contem-porary Art (57%). By separating schools with arts education from schools without arts education when doing the analysis, we concluded that schools with more arts education value the contribution of Ser-ralves in regards to arts while schools without arts education valued Serralves’ contribution in making students aware of the preservation of the environment.

Another way of assessing the contribution of Serralves as an entity that provides educational services is by comparing

the data published by the NSI for the statistics related to Culture for the year 2010 with the information relating to Serralves in regards to visitors counted in school groups. In 2010, Serralves represented about 23% of all national students who visited art museums.

in 2010, Serralves represented about 23% of all national students who visited art museums.

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Serralves’ international prestige is already reflected in the number of foreign institutions in the education sector that

visit their facilities. Most institutions are from Europe, although there are some institutions from outside Europe (USA, Brazil and Peru). Spanish institutions represent 73.5% of the number of visitors from foreign schools. A significant part of these institutions belong to high-er education establishments, particularly in the areas of fine arts and architecture.

Statistical evidence on the relevance of Serralves in the ar-tistic and cultural dynamics of the region is also expressed in

the perception of users (online survey) when asked about the role of Serralves in boosting economic activities related to arts. One should note, however, that this is the dimension that registers the lowest per-centage of full concordance when compared with the percentages of full concordances on the role of Serralves in other areas (symbol of the city, internationalization of the city, public education and instruction).

The symbolic value of Serralves for Porto and the local region is evident in the responses from the online survey. Serralves

is a symbol of the city, a symbol which makes its inhabitants proud, and it is an almost unanimous perception that it greatly contributes to the internationalization of Porto.

The Park and the Serralves Museum are today a privileged part of the city of Porto, visited by users of the metropolitan

region with great regularity. The online survey shows that this space is particularly appealing to the young and skilled public with a strong preference for cultural activities. When asked about the reason for the last visit to Serralves, a high percentage of respondents refer firstly to the museum exhibition, but in second and third place is the visit to the Serralves Park and the participation in Serralves em Festa. These last two reasons for visiting Serralves have the environmental component crossed with the cultural one as an important role. The complement between environment / arts / creative industries is a distinctive trait of Serralves in a national and international context, so it is not surpris-ing that the visits to Serralves are an important element of quality of life in Porto.

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Serralves is a symbol of the city, a symbol which makes its inhabitants proud, and it is an almost unanimous perception that it greatly contributes to the internationalization of porto.

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In terms of green areas, the city of Porto today has about 156 hectares of green areas, the aim of the Municipality of

Porto being the increase of the green area to about 388 acres. Within the green areas of the city of Porto, the Serralves Park has a remark-able dimension (18 ha). The Serralves Park has a wide range of areas, from formal gardens in the direct surroundings of Casa de Serralves, a mid-zone with a half-slope covered by thick forests and a lower plane in its finitude south, an old recreation farm today largely dedicated to environmental education. It is a privileged space for being with nature in the heart of the city. According to the characterization made by the Director of the Serralves Park, this property has an arboreal heritage and shrub of great relevance in the metropolitan landscape, consisting of roughly 200 species of native woody plants and exotic ornamental.

In the online survey, we asked questions about Serralves fi-nancing. The majority of respondents believes that the best

method to improve the cultural program and the state of conserva-tion of the Serralves is through contributions from patrons and spon-sors (51.97% of respondents) and through the provision of spaces for events and other commercial activities (30.91% of respondents). Only 1.67% of respondents believe that ending free entrance on Sunday morning would be a good solution, while 6.1% of respondents refer to the entrance to events usually being free. The percentage of respon-dents who expressed willingness to contribute to Serralves is high. However, there is a problem of possible self-selection bias, as the most motivated respondents are the ones to respond to the survey online.

Despite showing willingness to contribute, according to the sur-vey results online, unwillingness to pay is 29.2%, 34.6% and

19.4% of respondents, for entering the Museum on Sunday mornings, for entering the park on Sunday mornings, and for entering Serralves em Festa, respectively. The structure of the sample of total respondents and for respondents who are not willing to pay is relatively similar, although one can verify that the calculated indicator is greater than one for the two younger age groups, for the two classes of lower income and for the most frequent visitors (especially those who visited Serralves over a month ago and less than one semester ago, and whose main reason for visiting the Serralves Foundation was the Serralves em Festa).

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TEcHnical daTa of THE STudY

TITLEThe Economic Impact of the Serralves Foundation

PROMOTERSerralves Foundation

GENERAL PROJECT COORDINATIONPorto Business School

TECHNICAL TEAMJosé da Silva Costa Professor at Faculty of Economics, University of Porto, and scientific coordinator of the study

Pedro Brito Quelhas Assistant Professor at Faculty of Economics, University of Porto

Armindo Carvalho Visiting Professor at Faculty of Economics, University of Porto

Paulo Sérgio Carvalho Research Assistant

OPERATIONAL PROJECT MANAGEMENTPaula MarquesCoordinator

Joana Alves

PROJECT DIRECTIONSerralves FoundationOdete Patricio General Manager

DATE Of IssuEFebruary 2013

serralves foundationRua D. João de Castro, 2104150-417 Porto · PortugalT. +351 226 156 500www. serralves.pt

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