To what extent do major sporting events boost, local, regional and national economies?
To what extent do major sporting events boost, local, regional and national economies?
The term 'economic impact' used in isolation is interpreted in different ways in both short and long term. Therefore, UK sport has adapted the following definition within its major events strategy:
'The net economic change in a host community that results from spending attributes to a sports event or facility'. (Turco and Kelsey 1992)
For the purpose of this report I will use the following definitions:
Local Economy = Have or relating to a city, town, or district rather than a larger area that has economic effect.
Regional Economy = Have or relating to a large geographic region that has economic values.
National Economy = Of, relating to, or belonging to, a nation as a organised whole with economic issues.
I will look at how Major Sporting events within the U.K; boost the local, regional and national economy. I will use examples of sporting events held within the U.K and assess whether or not they have been beneficial to the local, regional and national areas.
A major sporting event, is an event that will affect a large region of any country, it is also an event that is watched internationally by millions. Examples of major sporting events consist of the Olympics, which are held every four years, the World Cup or Wimbledon.
Stimulate and reinforce sports development
Employment opportunities Investment in infrastructure
Showcasing Britain across the world Establish trade and investment
links between regions in the country
Transport links improved
Developing cultural and artistic programmes
These benefits will differ in impact depending upon the type of event and the sport itself. Different sporting events will bring economic benefits that differ over space and time.
Inevitably hosting a major sporting event within the U.K will have an economic impact, although the event needs planning and investment incorporated with the hosting of the games for it to be beneficial to the area. Games such as the 2002 Manchester Commonwealth games and the 2012 London Olympic bid have both had a major economic impact on a local, regional and national scale. Sporting events such as these are extremely diverse from events such as the F.A Cup final and the 6 Nations tournament, as they are a single location event, spaced over more than one stadium and continue to go on over a period of weeks, whereas smaller events such as the F.A Cup final, take place in one day and in one stadium, therefore economic impact differs for different sporting events.
There are several different types of sporting events and the economic impact at different scales will depend on the type of event. The three main events are listed below:
Without doubt more advantages are expected from the hosting of the games, this is made evident within this table.
Global Event (2012 London Olympic bid)
National (Manchester Commonwealth games)
One-Off (F.A Cup Final, Millennium Stadium)
Advantages
Advantages
Advantages
Regeneration and New housing
Employment - 9,000 full time jobs, Businesses will relocate for games
Boost to the convention industry
Civil regeneration - derelict land got an instant boost.
Inward and Outward Investment
New facilities
Increased tourism
Economic benefits
Improved infrastructure
Enhancing regeneration in ...
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Without doubt more advantages are expected from the hosting of the games, this is made evident within this table.
Global Event (2012 London Olympic bid)
National (Manchester Commonwealth games)
One-Off (F.A Cup Final, Millennium Stadium)
Advantages
Advantages
Advantages
Regeneration and New housing
Employment - 9,000 full time jobs, Businesses will relocate for games
Boost to the convention industry
Civil regeneration - derelict land got an instant boost.
Inward and Outward Investment
New facilities
Increased tourism
Economic benefits
Improved infrastructure
Enhancing regeneration in Manchester and the North West region
Improved road networks - Bus networks improved for travelling fans
Relocation of businesses near the vicinity of
the stadium
I will show in this report how contrasting sporting major sporting events can boost local, regional and national economies. It is important to highlight that not all sporting events will boost the economy at all scales. I plan to use 3 examples of major sporting events in this report as shown on the map below.
Employment, Infrastructure and the overall stature of the region all benefit from these types of events. Events such as these put the U.K at the centre of the world stage, they provide opportunities to promote culture, U.K values and expertise and bring with them a range of both sporting and non-sporting public benefits, most notably the economic and social development that enhance the life of the nation. Regionally Manchester will profit from the games to a great extent, the Lord Mayor of Manchester makes this apparent as he says 'The commonwealth games will be our showcase to the world, a great opportunity for the people of this great city to participate in the biggest multi-sports event the U.K has ever seen and to meet people from all over the Commonwealth', this therefore clearly illustrates the importance of the games, and the impact its having on the city of Manchester.
I will investigate 2 different sporting events, 1 of which have already been hosted within the U.K, and one that is a bid, and I plan to assess whether each of these sporting events were economically beneficial not only to the local and regional areas but the U.K as well.
The 2002 Commonwealth Games, Manchester.
Local
Employment - direct and indirect jobs created within the local area.
Improved infrastructure to many of the buildings.
Regeneration to parts of Manchester run down.
Improved transport links.
National
Media coverage with a target audience up
to 1billion people.
A greater capacity and image to host
additional events, such as business
conferences, major entertainment events
and more major sporting events.
The Manchester 2002 Commonwealth games, the largest sporting event to be held in the U.K since the 1948 Olympic games, is an example to how sporting events contribute to the enhancing regeneration of our country, as Manchester and the North West all benefited. The impact of the games compares favourably with reported impacts from other international sporting events in the U.K and places them on par with the rate of economic benefits achieved by the host cities of the last four Olympic games. The games generated a total of 16,000 jobs that will last from over a few months to over 10 years, the games would also bring an additional £22 million expenditure into Manchester, as well as the tourist industry greatly benefiting as an additional 300,000 visitors will visit Manchester in the future. Additional employment impacts, including direct and indirect effects, will be the greatest in the East of Manchester area, which was the focal point for the games. The additional employment amounts to 2,400 jobs, and for the North West 1,920 jobs, and over 420 jobs in the whole of the U.K.
The games are seen as a catalyst, a focus and foundation for regeneration in East Manchester. At the same time, it has shaped existing regeneration initiatives and defined policy priorities. More generally, the games are seen as a contribution towards the new image of the area and encouraging diversity, therefore the economic impact Manchester has received has been staggering, and is an example of how major sporting events benefit the entire country.
Overall it is possible to say that the Manchester Commonwealth Games where a success as the benefits outweighed the expenditure put into the games. This point is emphasised as many of the beneficial impacts that came out of the games consisted of employment impacts, infrastructure improvements and improved sports facilties. Also new economic activity tends to displace economic activity elsewhere. However, because of the wider role and function of the games, the loss is much less than would have been expected.
In contrast the 2012 London Olympic bid, has already been beneficial to the London region, although the actual games haven't been held in the U.K and most surprisingly London hasn't been confirmed as the intended host for these games. A London bid was recognised as the only city in the UK that stood a chance of bringing the Olympics to the British Isles after several failed bids by Birmingham in 1992 and Manchester in 1996 and 2000. It was therefore made clear following this that only London from the U.K had a chance of being selected by the IOC (International Olympic Committee) when put up against other rival cities most notably Paris, Madrid and New York. The government is keen to ensure that if the Games come to East London, as there will be a lasting sporting legacy and regeneration of the area.
Staging the world's biggest sporting event is not only a logistical nightmare but also it is a huge financial burden on the host nation, even the most modern of cities in the world will struggle to host it and only the last 3 games have made a profit. The cost of staging the games is estimated to be anything from £2.5 - 3 billion and in the event of a successful bid that figure may have to be inflated. It is therefore questionable whether London is going to come up with 3 times the amount of money it cost to build the Dome, and unlike the Dome which was money wasted, will it be money well spent?
The decision to bid for the games has been met with mixed reactions with some people calling it a 'colossal waste of money', however a recent poll seemed to suggest that around 80% of Londoners are behind the bid. The National Lottery will be contributing £1.5b over the course of the next 8 years and they will be launching a new special Olympic lotto game to help raise the funds. The London Development Agency and London tax and ratepayers will raise the rest of the money. Londoners will see further increases on their council tax bill to the tune of around £20 a year and business rates in the capital will also see substantial increases.
The epicentre of the games will be a brand new 80,000 seater state-of-the-art stadium being built on the site of a derelict dog racing track in Hackney, a rundown area of East London better known for drug dealing and a spiralling crime rate. Hackney and surrounding areas will experience an immense transformation with new housing and transport infrastructure and with the last 3 Olympic games recording a profit a successful bid for London could do wonders for the UK economy. Considerable benefits will arise due to the staging of these games.
Although the games is a major financial gamble, if they where to go ahead in London, the economic impacts would be exceptional, with the U.K being the centre stage for one of the biggest sporting events in the world. Whilst if the bid was rejected the spending that has already been put into the bid would be disastrous, as the earnings from the Olympics is expected to pay off the payments already being put into the bid.
Influx of foreign money could work
wonders for a variety of different businesses
in London, such as hotels, restaurants,
wine bars and pubs.
Estimated £2 - £4 billion spent
by tourists within the 3 weeks.
1,000,000 will descend on London
and the surrounding regions.
Estimated £2 - £4 billion spent by tourists within the 3 weeks.
Athletes will benefit from being on home soil.
Encourage youngsters to pursue dreams of representing their nation.
The Olympic games features athletes from
all over the world, these guiding principles
will rub off on everyone that takes part and
be a driving force for breaking down divisions
whether they be by age, gender, race or religion.
A derelict and failing part of
London got an instant boost.
Improved infrastructure in a part
of East London will benefit from
a provision of 4,000 new houses.
9,000 new jobs of which 3,000 will
directly serve the local economy in
East London
Hundreds of businesses will also be encouraged to relocate
to the area through improved technological and transport links.
The games are seen as a very important feature the U.K could possibly have; this is made evident through the Chairman of the London Business Board, Ian Barlow who states
'All of the contact we have had from business has confirmed that this will be good a good thing - for London and the U.K'
This is an enthusiastic quote, which makes clear relevance of how important the games will be if hosted in London. It draws attention to the how beneficial the games will be to businesses within London.
Although the bid has been extremely beneficial to the regeneration of parts of London, it will a be tragedy on the financial side if the bid is rejected, London has put so much behind the bid that the overall expenditure exceeds the benefits if the proposed bid is rejected
Independent Cost Benefit Analysis
* The IOC will give approximately £1 billion towards the staging of the games, through the sale of worldwide TV rights sponsorship.
* The IOC requires 42,000 hotel rooms by 2012.
* Sporting facilities needed to cater for training athletes totalling £2,000,000.
* The cost of overruns could bring the final bill to £7.2bn.
* Forecast revenues of £2.5bn.
* The government and the mayor of London have agreed a total funding package of £2.4bn.
* To cover overruns, the government has so far assumed contingency funding of £1.2bn
This therefore makes the bid a gamble, although the London people are reaping the benefits as parts of the city is regenerated.
In conclusion it can be said that major sporting events do have a major economic impact. From the evidence I have collected, I can conclude that there has been a significant impact on the local, regional and national scale, from the regeneration of certain areas, and income through tourism and sponsoring. I have analysed two major sporting events, one of which has already been hosted within the U.K and one, which is a bid, I used these case studies to distinguish impacts they have had on the local, regional and national scale. And can confidently say that these major sporting events have been successful.
