This report is to determine how much sporting events can contribute to inward investment. 2 types of investment can be gained: short-term and long-term, as seen in figure 1.
Victoria Pauling
Centre Number: 27216
Candidate Number: 6126
Word Count: 1649
Contents
Introduction - page 2
Analysis - page 3
Conclusion - page 10
Bibliography - page 13
Figure contents
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Introduction
Major sporting events are popular international events with sports people competing from many countries across the world. These events are watched by a large worldwide audience and can act as a focus for inward investment. Inward investment is income coming into a region from another region.
This report is to determine how much sporting events can contribute to inward investment. 2 types of investment can be gained: short-term and long-term, as seen in figure 1.
Short Term Investment
Long Term Investment
* Huge increase in tourists during the event.
* Improved infrastructure and redevelopment in the host city.
* Increased income for hotels, restaurants and retail.
* Top regional and national sporting facilities.
* Increase in visitors to tourist places in the host city.
* New businesses moving into the area.
* Income from sale of merchandise and increased sales of souvenirs.
* Increase in tourism due to publicity and promotion of the city/country.
* Increased use of public transport.
* Increased number of jobs available.
* Increased income for airlines and increased use of airports.
* Set up of relationships/links with countries abroad.
* Income from the sale of broadcasting rights
* Increase in the country's GNP.
* Income from sponsorship
* Income from ticket and programme sales.
Figure 1
These areas of investment will be studied in the report and three case studies will be used to support the points raised: 2 MEDCs (Australia and England) and one NIC (South Korea).
The summer Olympics held in Sydney, Australia in 2000, focused strongly on investment, especially from businesses. The focus on industrial development, investment attraction and tourism was greater than for any other Olympic Games.
The second case study is the Manchester Commonwealth Games, the largest sporting event held in the UK since the 1948 Olympics. They too focused on investment from businesses as well as a major regeneration programme in East Manchester, which was largely brought about by the Games.
Also in 2002, South Korea jointly hosted the football World Cup with Japan, with their aim being to showcase the country to tourists and potential investors. Many peoples view of South Korea is a history of political struggle and war, and so the World Cup was seen as a way to show the rest of the World South Korea in the 21st century.
Figure 2 shows how the case studies will be used.
Case Study
Use
Sydney Olympics
Short-term - tourism, broadcasting rights, ticket sales and sponsorship.
Long-term - The Business Development Programme and related organisations and overall inward investment from the Olympics.
Manchester Commonwealth Games
Short-term - tourist industry and public transport.
Long-term - regeneration programme, cumulative causation, sports infrastructure and after use, business investment.
South Korea World Cup
Long-term - improving the country's image, tourism, business investment.
Figure 2
Analysis
In the short term, the host city of a sporting event will see an increase in visitors. During the Sydney Olympics, 1.3 million extra tourists visited Australia. This increase in tourists therefore led to increased income for the tourist industry during the event. Shops, bars, hotels and restaurants all benefited from the Games, with the city centre seeing an increase in trade of 27%, along with many tourist places. Sponsorship and broadcasting rights are other large sources of short-term investment. Sydney made $680 million from sponsorship and $1.1 billion from the sale of broadcasting rights from the Olympics.
Major sporting events can also bring long-term investment. The media plays a key role in maximising this by gaining the host city, and the country as a whole, publicity. Major sporting events are broadcast to a worldwide audience along with other programmes about the event, and many newspaper articles are written worldwide.
Visiting spectators can be a source of inward investment as they are able to see the host city for themselves. The Commonwealth Games was expected to present a vibrant and attractive image to visitors and it was anticipated that this would have a positive ...
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Major sporting events can also bring long-term investment. The media plays a key role in maximising this by gaining the host city, and the country as a whole, publicity. Major sporting events are broadcast to a worldwide audience along with other programmes about the event, and many newspaper articles are written worldwide.
Visiting spectators can be a source of inward investment as they are able to see the host city for themselves. The Commonwealth Games was expected to present a vibrant and attractive image to visitors and it was anticipated that this would have a positive impact on future visitor numbers for both business and leisure. According to Manchester City Council, every year from now on, Manchester and the surrounding area will receive an extra 30,000 visitors, spending an extra £12 million in the region.
In South Korea, KOTRA, the Korea Trade Centre, carried out a survey on 14,157 internationals before and after the world cup to find out if the event had changed their image of Korea. Figure 3 shows a summary of the results.
Responses of survey participants
Before the event
After the event
Have negative images of Korea
7%
5%
Saw Korea as a country torn in half
33%
22%
Said the world cup was their most dominant image of Korea
N/A
35%
Said their first thought of Korea was it's advanced development
N/A
25%
The world cup had a positive influence on Korea's national image around the world.
N/A
60%
Watched the tournament or news broadcasts more than 15 times.
N/A
54%
Figure 3
This shows that from watching and reading about the world cup, people's views of Korea have generally changed in a positive way. Many more people now see Korea as a country with advanced developments. A more positive image will enable South Korea to gain more recognition on the worldwide stage, bringing more inward investment.
Host cities also have the chance to invest through the construction of sports facilities. Figure 4 shows the sports facilities gained by Manchester from the Commonwealth games and figure 5 shows their after use.
Sports Facility
After use
City of Manchester Stadium
New home of Manchester City Football Club. Athletics track has been taken out and more seating has been added in.
Training/warm-up track
Is now used by Sale Harriers Athletics Club.
Velodrome
National cycling centre.
Tennis and Squash Centre
Will be used by regional and national clubs
Heaton Park lawn Bowls Centre
Regional centre of excellence for lawn bowls.
Belle Vue Sports Centre
Regional centre of excellence for hockey and badminton
Aquatics centre
Is owned by the 3 Manchester universities and will become a resource for the community as well as for elite swimmers
Figure 5
All of these new and improved sports facilities have an after use, which is important in maximising investment from the facilities, making it more sustainable.
The host city of a sporting event often organises conferences and business meetings to enhance inward investment from companies. For example, MIDAS, Manchester's inward investment agency, lead activities to maximise trade and investment opportunities from the Commonwealth Games. Through trade developments and supply chain initiatives, over 250 companies have experienced an increase of £27 million in their turnover as a result of the Games, and it is thought that the Games will provide the basis for £36 million of business opportunities generated by trade and inward investment.
Before the World Cup, the Korean Trade Investment Promotion Agency ran an exhibition in London to give fifty South Korean companies the chance to strike up relationships, technology transfers and links with British firms. After the world cup, KOTRA surveyed 2,022 foreign companies. The results of the survey are shown in figure 6.
Response
% of companies
Foreign companies that are already working with Korean companies said that they are interested in expanding business ties with Korean firms.
43%
Companies not familiar with Korean business that have said they are now more willing to open dealings with Korean companies.
35%
Said they purchase made-in-Korea products expressly because of its Korean origin.
7%
Figure 6
The survey has shown that the world cup has had a positive impact on businesses. Many companies are now interested in opening dealings and expanding business ties with Korean companies. Therefore, sporting events can lead to inward investment from international companies through the publicity that the country gets, as well as through holding various conferences. This business investment can lead to cumulative causation. This is a process used to explain regional differences in economic growth and usually occurs when a region has some form of initial advantage. Figure 7 summarises the process for major sporting events.
Figure 7
Because of the Commonwealth Games, cumulative causation may now be seen in East Manchester, where a major regeneration scheme is taking place. Figure 8 shows the scheme in East Manchester.
Being the focal point of the Games, the area acted as a catalyst for investment. The set up of new industries and businesses in East Manchester may then attract other industries that supply them, known as ancillary industries. Subsidiary firms, which use the products of the initial industry, may also be attracted into the region. These industrial linkages can lead to agglomeration of industry, which can lead to other multiplier effects. The expanding economic activity in the area will increase employment levels and it is predicted that 3,910 new jobs will be created in the 3-5 years following the Games. This will help to raise the total purchasing power of people in the region, which will then attract further economic development, creating yet more employment, wealth and services.
Richard Leese, leader of Manchester City Council, said:
"As the City of Manchester Stadium has grown, so has our attraction to
investors. We are now selling land in East Manchester that we previously
couldn't give away."
This shows that investment in East Manchester, and in Manchester as a whole, is increasing due to publicity from the Commonwealth Games. Land and property prices are also increasing in East Manchester due to the regeneration process.
In a report of the business and economic benefits of the Sydney Olympics, investment from the Games was outlined and is shown in figure 9.
Inward Investment
Amount (Aus$)
New business investment
$600 million
New business under the Australian technology showcase
$288 million
Post-games sports infrastructure
$2 billion
Inbound tourism in 2001
$6 billion
International exposure
$6.1 billion worth
New South Wales (NSW) infrastructure development
$6 billion
Convection business for NSW 1993-1997
$1.2 billion
Figure 9
The business investment gained from the Olympics was mainly due to the Olympic Business Round Table, who initiated a range of business promotions in association with State and Commonwealth agencies, industry and private sector organisations, in order to leverage long-term economic benefits. The NSW and Commonwealth Governments organised the most comprehensive business development programme ever held in association with the Olympics. Figure 10 shows what this programme included.
Feature
Benefit
The Australian Technology Showcase which highlighted over 300 innovative NSW technologies.
Contributed to $288 million in new sales, investments and exports to December 2001, including over $9 million by ATS companies located in NSW.
Business Club Australia (BCA)
Provided significant networking opportunities. BCA linked to the Commonwealth Trade Visitors Business programmes and attracted 16,000 visitors to networking events.
The Sydney Media Centre
Hosted 5,000 unaccredited journalists and 55,000 visits for briefings, story leads, images and information on NSW and Australian new business investment exceeding $600 million. The publicity lead to more investment.
Post-Games business strategies.
Assisted in the generation of sports infrastructure and services sales worth $2 billion.
Figure 10
The investment gained from the Olympics shows that setting up organisations to promote business opportunities can have a substantial effect on inward investment from a sporting event.
Conclusion
Major sporting events are an opportunity for host countries to invest. This report has analysed how this can be done in the short and long term. Most investment is gained in the long-term, mainly through businesses and tourism. Therefore, the focus tends to be on these two ideas. From the examples used, it is clear that the most successful countries are those that form an organisation or committee to compose plans for maximising inward investment from businesses and tourism, such as the Sydney Business Development Programme which enabled Sydney to gain billions of dollars in inward investment. Successful plans can lead to cumulative causation, as shown in figure 7 and may now be seen in East Manchester along with other multiplier effects, following the Commonwealth Games. Investment can also be gained through the construction of sporting facilities, such as those built in Manchester.
Media coverage and promotion of the host city and country are key elements in the extent of inward investment gained. Positive promotion of the host can change people's images of the country, for example South Korea where the world cup has given many people a more positive view of Korea. Figure 11 shows how this positive promotion can kick-start other processes.
Figure 11
The extent of inward investment gained depends on stage 1: promoting the country. The amount of promotion depends on the planning and development of various programmes by regional and national governments. It has been shown by Sydney, Manchester and South Korea that successful schemes can enhance the extent to which the country benefits from inward investment from sporting events.
For a country to fully benefit from the investment, they must ensure that it is sustainable. All developments need to have a viable after use so that maximum investment is achieved during the event and in the future. If new infrastructure does not have a use after the event, then investment levels will drop, and therefore will not be sustainable. If a country wants to ensure maximum benefits then sustainability is the key factor.
The Commonwealth Games were deemed a huge success. The high level of organisation allowed Manchester to benefit greatly from the event, mainly through business investment and regeneration as well as through tourism and infrastructure. Sustainability was considered and so all new developments have an after use, as seen in figure 5. The regeneration programme will continue to improve the image of East Manchester, attracting many investors to it, increasing job opportunities and therefore making investment from the programme sustainable.
Bibliography
Websites
www.business.nsw.gov.au/facts.asp
- Business and economic investment from the Sydney Olympics.
www.commonwealthgames.com/Manchester/A_Lasting_Legacy/default.asp
- Regeneration of East Manchester, sports development and long-term economic benefits from the Commonwealth Games.
www.manchester.gov.uk/corporate/games/impact.htm
- Legacy, redevelopment and business opportunities from the Commonwealth Games.
www.manchester.gov.uk/news/2002/mar/thanks.htm
- Impact on tourism, economic benefits and sports development from the
Commonwealth Games.
www.mbs.ac.uk/student life/html/commonwealth_games.cfm
- Short-term and long-term investment from the Commonwealth Games.
www.alumnet.umist.ac.uk/mainstream/current/games.html
- Sports investment from the Commonwealth Games.
Newspaper Articles
'Games city is 'party capital' of England' (Manchetser Evening News, 29th July 2002)
- Short term investment from the Commonwealth Games.
'Massive tourism and leisure boom in Manchester' (Manchester Evening News, 31st July 2002)
- Short-term investment from the Commonwealth Games.
'Korea's image improves following World Cup' (Kim Sungin, Korea Times)
- KOTRA survey results.
'Today the World Cup, Tomorrow the Hub of Asia' (R. Ben Weber, Korea Economic Institute, Volume 4, Number 6, June 2002)
- Short-term and long-term investment from the World Cup.
'Is South Korea the new Thailand?' (Julia Day, The Guardian, 22nd May 2002)
- Business and tourism investment from the World Cup.
Books
'Changing Environments', Digby (Heinmann, 2000)
- The Sydney Olympics long-term and short-term investment.
'The complete A-Z Geography Handbook - second edition', Skinner, Redfern and Farmer (Hodder and Stoughton, 2000)
- Definitions, cumulative causation and the multiplier effect.
'Official Spectator Guide' - Commonwealth Games
- Location Maps of the Commonwealth Games sports facilities in Manchester.
'Manchester 2002 information pack'
- Sports venues and impacts on Manchester.