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Economic Impact of Mega Sporting Events

Economic Impact of Mega Sporting Events on Host countries


Nitika Mangal

Economic Impact of Mega Sporting Events

Table of Contents

Table of Contents.............................................................................................................................2
Chapter 1: Introduction.................................................................................................................... 4
Chapter 2: Aim and Objectives........................................................................................................5
Chapter 3: Literature Review...........................................................................................................6
Chapter 4: Analysis 1 - Economic Impact of Atlanta 1996 Olympics........................................... 9
Positive Impact......................................................................................................................... 9
Negative Impact......................................................................................................................10
Chapter 5: Analysis 2 - Economic Impact of Sydney 2000 Olympics......................................... 12
Positive Impact....................................................................................................................... 12
Negative Impact......................................................................................................................14
Chapter 6: Analysis 3 - Economic Impact of Sochi 2014 Winter Olympics................................ 16
Positive Impact....................................................................................................................... 16
Negative Impact......................................................................................................................18
Chapter 7: Analysis 4 - Economic Impact of FIFA 2010 World Cup, SA................................... 20
Positive Impact....................................................................................................................... 21
Negative Impact......................................................................................................................22
Chapter 8: Analysis 5 - Economic Impact of FIFA 2014 World Cup, Brazil.............................. 23
Positive Impact....................................................................................................................... 24
Negative Impact......................................................................................................................25
Chapter 9: Overall Critical Analysis of Mega Sporting Events.....................................................27
Olympics.................................................................................................................................27
FIFA World Cup.....................................................................................................................30

Economic Impact of Mega Sporting Events

Chapter 10: Challenges in Calculating Economic Impact............................................................. 32


Chapter 11: Conclusion..................................................................................................................35
References......................................................................................................................................36

Economic Impact of Mega Sporting Events

Chapter 1: Introduction

Hosting a sporting event, and that too a mega-sporting event is considered to be a proud moment
in the history of any country. It is hard to provide a clear and well defined meaning for the term
mega-event, as its difference from a normal event is not just dependent on the number of actual
participants. It needs the fulfillment of many different factors for an event to be categorized as a
mega event. As per (Hiller, 2012)1, mega events are generally short term, one time events, which
are high profile in nature and are usually hosted by an entire city. Thus, a similar type of mega
event can keep rotating among different cities of the world, after a fixed period of time, which
ultimately serves to heighten its importance and associated curiosity. Such a hosting of a mega
event is normally accompanied by an extensive coverage by media, both digital as well as print.
The sponsorship of the mega event is generally undertaken by a committee or a body, which is
not native to the place in which the event is being hosted. This body determines the rules and
regulations of the mega event and also sets the related parameters for the duration of the event. It
is obvious from the explanation so far that the choice of the host city is not as well as the control
of the proceedings of the mega event, both are in the purview of the sponsoring body. The city is
expected to provide financial resources, social infrastructure, and security for the mega event,
and it is this very state of preparedness that becomes the primary reason for a city being awarded
as the host of the mega event. During the mega event, the normal life of the host city enters into a
state of frenzy, as well as urgency, and it results in undertaking of steps that might look
undemocratic from certain perspectives.

A few well known examples of Mega sporting events across the world are Olympic Games
organized by the IOC (International Olympic Committee), Soccer world cups organized by FIFA
(Fdration Internationale de Football Association), Euro cups in Soccer, Commonwealth Games,
1

Hiller, H. (2012). Host cities and the Olympics. London: Routledge.

Economic Impact of Mega Sporting Events

World cup in Rugby, World Grand Prix Championships, to name a few. Hosting of Olympics
events, and Commonwealth games, from an infrastructural perspective, generally entails
construction of new facilities in the form of roadways, interlinking trains, stadiums, sports
villages, and other necessary amenities. In comparison to this, Soccer world cups, and Grand
Prix championships etc., tend to make use of facilities that are already in existence, as these
mega sporting events are relevant to a single sport. The impact of single sport specific mega
events is thus, limited in its scope, compared to the response generated from Olympics and
Commonwealth games as they incorporate a wide array of sports, requiring amenities on a much
larger scale. The most potent argument which is put forth by a country that is aspiring to bid for a
mega sporting event, is the legacy which such an event leaves behind for that city or country.
Also, the governments of the aspiring hosts view such mega sporting events as initiatives that
have primarily an economic meaning attached to them. This presents a necessary trigger to
economies that are in transition, which means the economies that are making a change from
central ownership to market driven ownerships. Also, the hosting of events has a different
economic impact on developing nations compared to the impact on the economies of developed
nations.

Chapter 2: Aim and Objectives

The aim of this thesis is to critically analyze the economic impact mega sporting events have on
their host countries. Various objectives are fulfilled in due course:
1. To analyze the different positive and negative economic impacts caused by mega sporting
events.
2. To critically analyze the overall economic impact of two major Mega Sporting events, viz.,
Olympics and the FIFA World Cup.
3. To provide an overview of the motivations that drive countries to bid for such events.

Economic Impact of Mega Sporting Events

4. To discuss the challenges faced in the effective calculation of Economic impact of Mega
sporting events

Chapter 3: Literature Review


The economic impact of mega sporting events is usually traced in the increased potentialities that
such an event affords, in terms of an enhanced awareness of the particular region as a possible
destination for tourism, along with possibilities for future activities that are commercial in nature.
These factors help to attract larger number of visitors and investments in the region, thus,
creating more job opportunities which consequently leads to an economic growth of the overall
region. Thus, the major chunk of literature in the area of mega sporting events, concerns itself
with providing an valuation and analysis of how such an event has resulted in an impact that is
socio-economic in nature. A number of authors have examined the economic impact of megasporting events, and the authors paint a clear picture of the cost and benefits of hosting this type
of event.
(Davis, 2012)2 highlights gaps between forecast and actual outcomes for economic and noneconomic rewards. He examines the trade-offs and opportunity cost of these events. (Davis, 2012,
pg 51) also examines the economic impacts of different mega-sporting events such as the
Olympic summer and winter games. The Olympic Games are typically seen to have beneficial
impacts due to the prestige image created for the hosting countries. The attention this event
draws from millions of people around the world puts hosting countries in the spotlight. A
dramatic economic cycle is created by city leaders to create jobs, invest in infrastructure
improvements and attractions. The amount invested into the Olympic Games has dramatically
increased since Athens 1896 games, where only 43 sporting events took place, and that number
increased to 302 events in the London 2012 games. The author highlights both negative and
positive impacts, the study offers insight into decade-long benefits and draw backs that comes
from countries hosting mega-sporting events. Improvements made to host cities infrastructure,
improved transport system, employment and improved local services means an increase in
2

Davis, J. (2012). The Olympic Games effect. Singapore: John Wiley & Sons Singapore.

Economic Impact of Mega Sporting Events

ourism after the games have finished. Local businesses like hotels benefit from the boom in
increased tourism, and a new interest in the host county is generated.
(Gold and Gold, 2007, pg 116-125)3 also highlight the improvement of employment as being one
of the key positive impacts. The authors add that mega-sporting events creates three different
types of employment, direct employment for the preparation of building and staging the games,
support employment which includes hotels, construction contracts and buying goods and the last
stage being indirect employment as the games create expenditure for local economy. As a
critique to this, employment does increase in order for sporting events to be successful, but not
all of the jobs created are on full time, permanent basis. For instance, around the time of the
games, hotels usually employ additional staff members on a temporary contract. This benefit is
short term, and this usually leads to the conclusion that games does not cause a huge impact for
locals to better their lives, as they simply do not last long enough. In addition to this (Green,
2003, pg 6)4 argues this point by stating that when host cities put forward the predicted amount
of jobs they expect will be generated from them hosting the games, they fail to consider the fact
that employment migration will occur. Host city workers will come and take away jobs from the
local community. (Green, 2003) carried put a study in Vancouver in 2010 to examine
Vancouvers proposed full time employment figures they put forward in their bid, the figures
were 244,000. He thought this number was far too high and wanted to see if this was even
possible.
(Kasimati, 2003, pg 433-444)5 agrees with the previously mentioned above authors regarding
benefits, but in fact furthers his argument by arguing that he has found that despite the large
amount of economic impact studies carried out by other authors between 1984 to 2004 he has
examined in each case he explains each study was carried out prior to summer Olympic Games.
He also adds that these studies were not gathered using primary data, he suggests that the studies

Gold, J. and Gold, M. (2007). Olympic cities. London: Routledge.

Green, D. (2003). Olympic impacts. Vancouver: Canadian Centre for Policy Alternatives, BC Office.

Kasimati, E. (2003). Economic aspects and the Summer Olympics: a review of related research. International
Journal of Tourism Research, 5(6), pp.433-444.

Economic Impact of Mega Sporting Events

were commissioned by components of the games. He touches on the fact that these economic
impact studies were likely to have been made to seem all positive, in general they do not take
into account supply-side constraints. These constraints are things such as investment crowding,
price increases happening because of resource scarcity and the displacement of tourists. (Preuss,
2004, pg 209)6 concludes the same as (Kasimati, 2003), and adds that the benefits are overestimated when studies are produced by or for the Organizing Committee of the Olympic Games.
(Preuss, 2004) also points out that in order to provide a correct estimation of the true economic
impacts this will require research to be carried out several years prior the games and continue
several years after. In order to carry out this research a huge budget is needed hence the reason
no one has done this yet. This issue highlights that there is a gap in the studies being carried out.

Preuss, H. (2004). The economics of staging the Olympics. Cheltenham, UK: E. Elgar.

Economic Impact of Mega Sporting Events

Chapter 4: Analysis 1 - Economic Impact of Atlanta 1996 Olympics

The city of Atlanta, in the State of Georgia, was awarded the bid for hosting 1996 Olympics
games in September 1990, by the then president of IOC Juan Antonio Samaranch. The
announcement led to celebrations within the city, as the Olympics would be the last Olympics to
be hosted before the end of century. Looking at the success of Los Angeles Olympics, it was
envisaged that the Olympics in Atlanta would also be a similar financial success. The event
eventually turned out to be a mixed success story for the city.

Positive Impact
As per (NPR.org, 2011)7, close to 5 billion USD worth of impact resulted for the local economy,
and one of the important legacies that was left behind is the Centennial Olympic Park, right in
the middle of the city. It is said to be one of the finest Atlantas parks for public, and costed
about 57 million USD for its construction (Olympics' impact on Atlanta still subject to debate,
1992)8. The park has acted as a fulcrum for nearly 1.8 billion USD added in the capital since the
conclusion of the games, due to the construction of many hotels, apartment complexes, office
buildings, and commercial buildings. The park also sowed the seeds for the construction of
further landmarks such as Georgia Aquarium, National Center for Civil and Human Rights,
among many others. The Olympics were also a driving factor in the population boost that the city

NPR.org,

(2011).

The

Economic

Legacy

Of

Atlanta's

Olympics.

[online]

http://www.npr.org/2011/08/04/138926167/the-economic-legacy-of-atlantas-olympic-games

Available

[Accessed

at:
Mar.

2016].
8

Olympics' impact on Atlanta still subject to debate. (1992). [online] tribunedigital-chicagotribune. Available at:

http://articles.chicagotribune.com/2009-09-21/news/0909200352_1_centennial-olympic-games-billy-payne-atlantacommittee [Accessed 4 Mar. 2016].

Economic Impact of Mega Sporting Events

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received over a span of a decade, from nearly 3.5 million to close to 5.5 million in the year 2011.
Due to the awarding of the games, the city went on an infrastructure construction drive, with
many new projects ranging from various venues for the games, to accommodation facility for the
athletes. The Olympic village that was built for the purpose of the games, housed nearly 10,000
athletes during the games, and now is being effectively utilized as university dorms for a couple
of universities. One such university to be benefited was Georgia State University, that got a
dormitory of 2000 beds worth 85 million USD in the village. The other university to receive the
benefits was Georgia Tech University, who got a swimming center worth 24 million USD. Other
colleges which catered historically to the black population of the city received nearly 89 million
USD worth of athletic facilities. With all the facilities that were created, the Olympic games also
resulted in the creation of nearly 580,000 jobs between the years 1991 to 1997 (Malfas, Houlihan
and Theodoraki, 2004)9.

Negative Impact
The fund raising organization who made all the efforts for raising money for the bid, spent nearly
6 million USD in a span of two years, in the effort to win the hosting rights for the games. At the
end of it, they were completely broke, and had to turn to private investors, when they were
handed a 1.5 million USD bill footing for game winning bid party (Olympics' impact on Atlanta
still subject to debate, 1992)10. It was also opined by the citys development authority that the
funds which were used to develop many of the venues and the facilities for the games, could
have been better put to use by improving the existing city infrastructure such as the sewage
facilities. The later improvement of the sewage system as well as the roadways cost the city a
sum of 9 billion USD in the year 2009. Homeowners who were under the impression that they
9

Malfas, M., Houlihan, B. and Theodoraki, E. (2004). Impacts of the Olympic Games as mega-events. Proceedings

of the ICE - Municipal Engineer, 157(3), pp.209-220.


10

Olympics' impact on Atlanta still subject to debate. (1992). [online] tribunedigital-chicagotribune. Available at:

http://articles.chicagotribune.com/2009-09-21/news/0909200352_1_centennial-olympic-games-billy-payne-atlantacommittee [Accessed 4 Mar. 2016].

Economic Impact of Mega Sporting Events

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could earn better rates of rent due to the effect of Olympics were left severely disappointed.
Many small scale vendors and owners of small businesses suffered great losses after shelling out
anywhere between 10,000 to 20,000 USD to be able to sell products on the street sides.
Ultimately, most of them ended up suing the city after running into bankruptcy. The city saw
much development in terms of housing facilities than was actually needed. This resulted in many
apartments, condominiums, etc. to lie vacant, or being put up for sale in a property market that
was already facing a down slide.

As per (Malfas, Houlihan and Theodoraki, 2004, one of the major examples to provide a clear
negative impact of an event such as Olympics, was the 1996 Atlanta games. It is estimated that
near about 15000 citizens lost their accommodations to help vacate land for constructing
facilities for the Olympic games. The eviction came primarily in projects that were not private,
but public housing, which goes to highlight the kind of negative social impact that can befall
residents who had their accommodations related to state involvement. From 1990 to 1995, in a
duration of five years, the loss that the public suffered in terms of housing that was affordable,
turned out to be nearly 9500 units. Close to 350 million USD worth of state funds were
channeled towards developing infrastructure related to the games. These funds were specifically
meant for providing shelter to the poor and destitute people, providing affordable housing to
lower income strata of the society, along with providing many such services for the socially
weaker sections. The shelters which were meant for homeless people were transformed into
accommodations for backpackers who were visiting the city due to the Olympic games. This act
was exacerbated by the fact that financial incentives were provided to the organizations
providing services to homeless and poor people, to actually take the step of converting the
accommodation, so as to serve incoming visitors rather than needy people. Poverty in the state
was almost criminalized by the passage of several bills, with Street sweeps as a drastic example.
This act made it illegal to remove items from trash cans provided by the state in public places,
and that too in a city where a substantial percentage of the population, about 30%, was below the
line of poverty.

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Chapter 5: Analysis 2 - Economic Impact of Sydney 2000 Olympics

The city of Sydney was awarded the bid for hosting the Olympic games of year 2000, in the
month of September 2003. The news was received with country wide celebrations, especially in
the state of New South Wales, considering the well known passion for athletics and sports among
the Australians. In the overall impact of things, the Olympic games did not result in an additional
burden on the State Government, but they also were not considered as a resounding financial
success like the Olympic games held in Los Angeles.
Positive Impact
(Haynes, 2001)11 explains that the staging of the Sydney 2000 Olympic games were held to be a
success, and that schools and offices were closed during the period of the Olympic games.
Contributing factors which help make Sydneys games successful were the large number of
volunteers, 47,000 people volunteered, which meant saving money for employment of workers.
Transportation within the area ran smoothly followed by friendly smiles from locals making the
atmosphere polite and welcoming. Sydney games organizers and many Australians were excited
with the operational success of the games, and this success was not only appreciated by the
locals, but it also impressed the International Olympic Committee. Due to the success of the
Sydney games, other countries displayed a great deal of interest in the way Sydney games were
executed, incurring a hope that the expertise gained by Sydney would eventually help them in

11

Haynes, J. (2001). SOCIO-ECONOMIC IMPACT OF THE SYDNEY 2000 OLYMPIC GAMES. 1st ed. [ebook]

2001 Seminar of the International Chair in Olympism. Available at: http://olympicstudies.uab.es/pdf/od013_eng.pdf


[Accessed 28 Feb. 2016].

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their own experience in future. As per the detailed results provided by (Lboro.ac.uk, 2016)12,
regarding the impact of Olympics on tourism, the following observations were made:
1. Post the Olympics 2000 in the month of September, the number of international visitors
increased by approximately 400,000 compared to the visitors during the same time last year.
2. As per countrys TFC (Tourism Forecasting Council), the number of foreign tourists
attending the Olympic games was roughly 111,000.
3. Again as per data provided by TFC, from the years 1997 till 2004, the country saw an
increased influx of foreign visitors due to the brand impact of the Olympics, and the number
was approximately 1.7 million. Citing the case of the actual year of Olympics, it was found
that the number international visitors saw an increase in margin of about 10.9%. After the
games were concluded, there were active efforts taken by ATC (Australian Tourist
Commission) to cash in on the awareness generated by the Olympics. This resulted in a
jump in foreign visitors by a figure of almost 23% for the month of December in the year
2000.
4. ATC also organized campaigns such New Century, New World, Australia 2001, post the
Olympics exposure, which helped in generation of export revenue in millions due to events
associated with business.
5. As per the figures released by the IOC (International Olympic Committee), the television
audience across 220 countries of the world, for the duration of the Olympics reached around
3.7 billion.
6. As per the figures released by the IOC (International Olympic Committee), the Internet
audience, for the duration of the Olympics reached around 20 million.
7. As per TFC, the total economic benefit to the country for the duration 1997 to 2004 reached
a figure of 6.1 billion AUD, due to the effects of the Olympics.
8. There was a significant advancement of the Brand Australia as a result of the successful
hosting of the Sydney Olympics.
12

Lboro.ac.uk,

(2016).

GaWC

Research

Bulletin

http://www.lboro.ac.uk/gawc/rb/rb154.html [Accessed 1 Mar. 2016].

154.

[online]

Available

at:

Economic Impact of Mega Sporting Events

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9. Post the Olympics, the ATC was sent an invitation to present the facts, figures and the entire
case study in the year 2001, at the first of its kind IOC conference in Barcelona on Sports
and Tourism.

Negative Impact
(Searle, 2002)13 reported that Sydney had no legacy plans for their stadium calling it a uncertain
legacy. As per analysis provided by (Malfas, Houlihan and Theodoraki, 2004), prior to the
Sydney Olympics in the year 1998, when the actual infrastructure activities were being
undertaken, there was a sharp increase in the housing prices by a value of 7% over the prevailing
inflation rate; the normal rate being just 2%. Also, in the area called the Olympic corridor, which
primarily housed tenants who were from the lower income strata of the society, and where there
high degree of unemployment rates to the tune of nearly 38%, the overall percentage of housing
rents saw an increase by a margin of nearly 23% during the same financial year.
(Giesecke and Madden, 2011)14, undertook a detailed study and analysis of the actual measurable
economic impact of Olympics in Sydney in the year 2000, and came up with the following
observations:
1. The cost of construction was covered by the state of New South Wales, and only the GDP of
NSW was affected in a positive manner, and not the GDP of the entire country. In fact there
were losses as far as the consumption in public and private was concerned. This loss figure
was estimated at about 2.1 billion USD.
2. The impact of the Olympics on the construction and finance sector also generated negative
country wide figures. As per Macroeconomic % deviations from actual baseline figures, the
area of Export and Import Volumes saw respective declines by 0.04 and 0.03% for the year
13

Searle, G. (2002). Uncertain Legacy: Sydney's Olympic Stadiums. European Planning Studies, 10(7), pp.845-860.

14

Giesecke, J. and Madden, J. (2011). Modelling the Economic Impacts of the Sydney Olympics in Retrospect -

Game Over for the Bonanza Story?*. Economic Papers: A journal of applied economics and policy, 30(2), pp.218232.

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1999-2000. The real GDP had a decline by 0.02%, while Capital stock had a downturn of
0.04%.
3. In terms of State GDP deviations from the baseline data, only the state of NSW showed a
positive deviation of 0.05, and rest all other states like Victoria, Queensland, South Australia,
Tasmania, Western Australia, and NT had negative deviations. This implied that the positive
impact was only localized to the city that was hosting the games, and did not filter to the rest
of the country. In fact the positive deviation figure had an immediate decline of 0.03% in the
next year, which went on to show that the effect of the Olympics was very short lived.
4. The prices of real estate showed an annual increase by 10% from 1993-1999 in the city of
Sydney, but after the conclusion of the games, the property rates dropped drastically, which
again highlighted the fact that the euphoria created by the mega sporting event was a short
term bubble.
5. Also, inadequacy in the management of international visitors saw a decline in the visitors
just immediately after the conclusion of the games.

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Chapter 6: Analysis 3 - Economic Impact of Sochi 2014 Winter Olympics

IOC in the year 2007, selected the city of Sochi in the Krasnodar region of Russia, to host the
Winter Olympics in 2014. It was an important event in the calendar of world events due to the
re-emergence of Russia as a power under Vladimir Putin after the breakup of the erstwhile USSR.
This was the second time that a Russian city was elected to host the Olympics, the prior event
being the 1980 Moscow Olympics.

Positive Impact
As per (International Business Times, 2014)15, the city of Sochi benefited a lot from the
Olympics games, in terms of infrastructure, and construction projects.

15

International Business Times, (2014). The Economic Impact Of The Winter Olympics: Not Great For Russia But

Sochi Stands To Gain. [online] Available at: http://www.ibtimes.com/economic-impact-winter-olympics-not-greatrussia-sochi-stands-gain-1554153 [Accessed 1 Mar. 2016].

Economic Impact of Mega Sporting Events

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Source: International Olympic Committee

As is evident from the above chart, the growth rate of the region of Krasnodar has been much
more as compared to the growth in other Russian cities. Almost 235 number of development
projects were undertaken in the Krasnodar region, out of which projects related to the
development of roads numbered 37. Benefit to the local residents stems from the fact that, the
facilities developed for accommodating visiting athletes are to be later on turned into housing
that is affordable for the local population. Apart from this many other projects in infrastructure
sector were undertaken which saw development of railways and new restaurants and hotels,
along with upgrading the existing airports. (Bras et al., 2016)16 outline that the economy of the
city of Sochi has seen a growth of nearly 15% from the years 2009 to 2012, which is mainly
because of the expenditure by the Government for developing the facilities for the games.

16

Bras, A., Cofio, A., Nunnery, J. and Royce, C. (2016). Efficiency of the XXII Winter Olympic Games

in Sochi, Russia. Undergraduate. University of Florida.

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Nearly 85% of the infrastructure of the city was built from the beginning, with the approach of
the government being quite sustainable in terms of infrastructure. The administration plans to use
the same venue as the Olympic stadium for the soccer matches in the world cup to be held in
Russia in the year 2018. Also, many of the facilities that have been created for the games, can be
re-used and re-packed to other destinations in the country, thus adding to the overall
sustainability. Another major benefit for the city has been in the form of tourism. The purpose of
using Sochi as a bidding city was to help in creation of the city as a destination for skiing
vacations. This would potentially help the revenue that Russia gains from the tourism sector, as
tourism just accounts for about 1.5% of the countrys GDP. As per estimates from the
government ministries, the country hopes to attract more than 7 million foreign tourists after the
conclusion of the games, out of which it is expected that nearly half the number of tourists would
be residing in the city itself.

Negative Impact
The cost of Sochi Olympics to the Russian economy was about 51 mrillion USD. The figure
although looks huge, was only about 2.4% of the Russian GDP, which is nearly 2 trillion USD.
By far the winter Olympics in Sochi are the costliest ever in the history of Olympics, and this
puts into perspective the fact that winter Olympics has much lesser athletes, as compared to the
number of athletes in the summer Olympics. It was noticed by (Gorlova and Vidishcheva,
2013)17, that the costs of raw material required for construction activities, i.e, gravel and sands
etc., increased sharply by more than twice in Sochi, to 800 rubles from the earlier figure of about
360 rubles during the implementation phase. Interesting to note was the fact that the prices of
these raw materials remained about half of this value. (Bras et al., 2016) analyzed that Russian
economy already has a very stable rate of employment, and not much of the Russian population
is unemployed. So creation of employment was one area that did not have much positive impact
due to the hosting of the Olympic games. The labor market in Russia is very competitive

17

Gorlova, A. and Vidishcheva, E. (2013). The Financial Matter of Sochi XXII Winter Olympic Games. European

Journal of Economic Studies, 5(3), pp.156-158.

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compared to other markets with similar jobs, and it was proving tough for the administration to
find cheaper and available labor to undertake the construction tasks. This was one of the primary
reasons for a rise in the overall costs of the infrastructure projects related to Olympics, which led
to subsequent rise in the overall costing of the games.

As per government reports released in the year 2006, it was announced that merely 90,000 jobs
would actually be created in the city and its neighboring areas, and about a half of this number
would be permanent in nature and located in the city itself. Out of the figure of 90,000 jobs,
nearly 30,000 vacancies were projected to be filled by the labor from the neighboring countries.
This filling up of labor vacancies by foreign labor offsets all the benefits that are created by the
creation of jobs, and also leads to a lowering of the overall economics of the region. Apart from
the permanent jobs, a number of temporary jobs were also created, about 145,000 in number.
This total number of 235,000 total number of jobs helps Sochi to climb to number third position
in terms of the overall jobs created by Olympic hosting cities. But if a careful analysis is done of
the overall costs involved in the games vs. the number of created jobs, it becomes clear that a
higher number of jobs should have been created with the kind of expenditure that was incurred
for the games. Moreover, there were instances of high level corruption that were reported while
undertaking construction contracts for infrastructure like roads. (Fox News, 2014)18, provides an
example for the most expensive road, called The caviar road, which runs from Sochi to
Krasnaya. This was built with an expenditure of a whopping 9.4 billion USD, and the cost of the
road exceeded the entire cost of hosting the winter Olympics in Vancouver in the year 2010. As
per calculations from Wall street experts, the per kilometer costs of the road turns out to be
roughly 200 million USD. In the end, it turns out that although the Olympics did not add on to
any of the existing debt of the Russian economy, it also did not lead to any overall benefits for
the economy of the country, save the setting up of an Olympic legacy in the relatively unknown
18

Fox News, (2014). Russia's $9.4B road to Sochi latest in long line of Olympic boondoggles | Fox News. [online]

Available

at:

http://www.foxnews.com/sports/2014/02/07/sochi-olympic-price-tag-soars-critic-slams-road-that-

could-have-been-paved-with.html [Accessed 1 Mar. 2016].

Economic Impact of Mega Sporting Events

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city of Sochi. It woul also be another challenge for the Russian administration to effectively
utilize the legacy left behind the Olympics, and ensure that infrastructure created at the costliest
expenditure do not eventually turn out to be non maintained buildings.

Chapter 7: Analysis 4 - Economic Impact of FIFA 2010 World Cup, SA

2010 FIFA world cup in South Africa, was the first time that a soccer world cup was being held
in the continent of Africa. The announcement was met be cheers from all over South Africa, as it
would provide an opportunity for the country to showcase its economic and sports potential on a
global level. After abolishing Apartheid in the year 1991, this was a proud moment for the
citizens, to showcase a global image and market the brand of South Africa.

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Positive Impact
As per (FIFA.com, 2010)19, nearly 300,000 visitors toured South Africa for the duration of the
world cup, which proved a boon to the tourism sector of the South African nation. It was also
researched that majority of the visitors were likely to visit the country again and tour the country
as tourists. The expenditure by the number of international tourists who visited South Africa,
reached a figure of about 3.64 billion Rands, as per (Southafrica.info, 2016)20. The world cup
also had noticeable impact on the countrys GDP, which was an additional figure of about 0.54%.
Out of this 0.54%, almost 0.06% was due to expenditure by FIFA, and the rest 0.48% came from
international tourists. These statistics were very significant from the perspective of the South
African economy, since the overall GDP growth range was between 2 - 2.5%, which does to
show that a single mega event accounted for nearly a fourth to fifth part of the overall annual
GDP. There were also volunteer activities by nearly 15000 South Africans, helping them to gain
valuable training and experience of hosting a Mega sporting event.
The real success of the world cup for South Africa came in the form hosting a hiccup free event
in terms of logistics, and very few crimes for the duration of the event. The event was televised
to an international audience of nearly 32 billion, and it helped to create a brand image of South
Africa in times of an ongoing international economic crisis. Also, as per released statistics, the
night units sales saw an increase of almost 15.3% in the month of the world cup, compared to the
values of the last year. This helped in generation of an additional revenue of nearly 2.3 billion
Rands for the month of the world cup, as compared to the last year revenue of about 1.4 billion
Rands. This total increase of revenue in the industry of tourism accommodation was an increased
percentage value of almost 55.3 from the last year figures.
19

FIFA.com,

(2010).

Study

reveals

tourism

impact

in

South

Africa.

[online]

Available

at:

http://www.fifa.com/worldcup/news/y=2010/m=12/news=study-reveals-tourism-impact-south-africa-1347377.html
[Accessed 1 Mar. 2016].
20

Southafrica.info,

(2016).

World

Cup

impact

'still

massive'.

[online]

http://www.southafrica.info/2010/2010spend-220410.htm#.VtXi0h_S3VN [Accessed 1 Mar. 2016].

Available

at:

Economic Impact of Mega Sporting Events

22

Negative Impact
According to (Bond and Cottle, 2016)21, the government of South Africa was more of a
guarantor to FIFA and all of its commercial venture partners in terms of net revenue earnings,
and accumulation of capital. In fact the main body that actually benefited from the 2010 world
cup was FIFA, and its business associates. As per facts and figures by FIFA, the event resulted in
an overall earning of about 25 billion Rands, an equivalent of about 3.4 billion USD. The entire
sum of the earnings was totally tax free for FIFA, and it was jump of about 50% from its earning
from the last 2006 world cup held in Germany, making the African world cup a highest grosser
so far for the international body. As per a release from a survey of the labor force in South Africa
post the conclusion of the world cup, it was found that the total number of jobs that were created
actually saw an annual decline of nearly 4.7%, which meant a reduction of almost 627,000 jobs,
which a significant number for the economy overall. The main sector that faced the actual
decrease in number was the construction sector, as most of the construction projects got over
after the world cup. The total downturn in this sector turned out to be an annual number of nearly
111,000 jobs. The investment made by the South African government to the tune of 17.4 billion
Rands for the construction of world cup stadiums, was totally financed by the public funds,
unlike in the case of Germany where almost 60% of the expenses were financed via private
investors. (Maennig and du Plessis, n.d.)22 conclude after a thorough research, that the overall
economics related to the international visitors to South Africa during the world cup was much
smaller compared to initial estimates, at least if short term impacts were to be seen. An economic
impact from tourism is directly proportional to the actual number of arrivals, and their analysis
presents a statistics anywhere between 40,000 and 90,000 visitors. The cities where the actual
soccer matches were held, were found to have accommodation occupancy rates lesser than 100%,
which implied that there was deficiency in tapping of resources by the administration. The levels
21

Bond,

P.

and

Cottle,

E.

(2016).

1st

ed.

[ebook]

CCS.

Available

at:

http://ccs.ukzn.ac.za/files/Bond%20Cottle%20World%20Cup%20economics.pdf [Accessed 1 Mar. 2016].


22

Maennig, W. and du Plessis, S. (n.d.). The 2010 World Cup High-Frequency Data Economics: Effects on

International Awareness and (Self-Defeating) Tourism. SSRN Electronic Journal.

Economic Impact of Mega Sporting Events

23

of occupancy in the city of Cape Town for the initial couple of weeks of the tournament, were at
a disappointing figure of almost 34% and 40% respectively. Also, there was no substantial
increase observed in the number of international flights that landed in the country between the
months of April and August.

There was also a review setup by the Competition Commission of South Africa to look into the
pricing that were quoted for product and services during the implementation phase of the world
cup (Bond and Cottle, 2016). It was eventually found that there were many artificial escalations
in overall pricing, and the major companies of the country that were awarded construction
contracts for the world cup were actively involved in prohibited practices such as bid rigging and
collusion. This resulted in a escalation of prices of raw materials required for construction
activities, and caused the administration to spend a larger amount of money collected from tax
paying citizens for the completion of the projects. Also the hype and excitement resulting from
the world cup, caused an increase in spending from the consumers, which served to raise the
indebtedness of about 11 million population to record new levels.

Chapter 8: Analysis 5 - Economic Impact of FIFA 2014 World Cup, Brazil

The executive committee of FIFA chose Brazil as the host city in the year 2007, for the FIFA
2014 world cup. This led to a country wide rejoicing among its citizens, given the well known
passion of Brazilians for the game of soccer. It was projected by the government that the world
cup would pave way for creation of many jobs, as well infrastructure overhaul of the venue cities.
As per government estimates, an approximate of 15 billion USD were funneled into the
countrys economy, leading to a creation of around a million jobs, which was approximately

Economic Impact of Mega Sporting Events

24

about 15% of the annual job creation figure as per (VOA, 2016)23. It was also highlighted that
the world cup will highlight Brazil on the world map, and will also lead to its citizens
understanding more about international hospitality. Another area which was stated to get a major
boost due to the award of the mega sporting event was tourism, and it was expected that Brazil
would attract about 600,000 tourists from all over the globe, which would further generate
revenue for the economy apart from an international recognition. After the conclusion of the
world cup, there were mixed reactions about the impact of the mega sporting event. According to
some analysts, the government of Brazil had grossly overestimated the revenue and job creation
figures, while the analysts who discussed the positives pointed to the boom in tourism for the
world cup duration, along with the building of new infrastructure facilities. Following is an
analysis of the positive and negative impacts of the FIFA 2014 world cup on the economy of the
host country Brazil:

Positive Impact
One of the major positive impacts of the 2014 world cup for Brazil was in the tourism sector.
The number of foreign tourists to have visited the country turned out to be about a million, as
opposed to nearly 600,000 estimated earlier, and the domestic tourist movement across the
country was nearly about 3 million. As per further projections from the Ministry of Sport the
benefits from the increase in tourism were not a one off phenomenon, and would potentially
result in revenues upto 90 billion USD over the next decade (Kcleconomics.com, 2016)24. As per

23

VOA, (2016). Mixed Opinions About World Cup Impact on Brazilian Economy. [online] Available at:

http://www.voanews.com/content/mixed-opinions-world-cup-impact-on-brazilian-economy/1948184.html
[Accessed 29 Feb. 2016].
24

Kcleconomics.com, (2016). Brazil and the World Cups economic impact A look back | KCL EFS. [online]

Available at: http://kcleconomics.com/a-look-back-to-2014brazil-and-the-world-cups-economic-impact/ [Accessed


28 Feb. 2016].

Economic Impact of Mega Sporting Events

25

(Harris, 2014)25, the expenditure by total 3.7 million tourists led to an addition of about 11.1
billion USD to the countrys economy, which is an increase of roughly about 0.5% in Gross
Domestic Product (GDP).
Negative Impact
The 2014 world cup ultimately resulted in more negatives than positives for Brazilian economy.
The expenditure on the world cup was close to 13 billion USD, with an additional expense of
about 2 billion USD for purposes of security as per (VOA, 2016). Also, even though there was a
net increase in the tourist influx of the country, reports by Brazilian Airline Association put forth
a different picture. As per statistics, the number of tourists utilizing air traffic services actually
saw a decline compared to the number for the past year. This decline was about 11 to 15%, and
the main reason for them was the higher rates of ticket prices due to the onset of the world cup.
In the area of job creations, the statistics recorded in the Ministry of Labor actually show a
decline in the hiring rates since the year 1998. Apart from this, the countrys inflation also tipped
to the higher mark of about 6.5% for the month of June, and this ultimately impacted the
consumers within the country. This rise in inflation due to an increase in product prices brought
about by the world cup were quickly curtailed by the government, as soon as the world cup got
over (Kcleconomics.com, 2016). As per (WSJ, 2016)26, a report released by the countrys
National Confederation of Industry indicates that since the year 2010, the production in
industries was at the lowest for the month of the world cup, with about 32% of the industrial
capacity remaining non utilized. The citizens of the country predominantly utilized their days
watching the soccer matches, and the same trend was observed in the automotive and steel
sectors as well. The industrial production of crude steel feel down from the last years figures by
about 4.9%, while the steel sales to the local market from the domestic steelmakers saw a decline
25

Harris, W. (2014). FIFA World Cup Financial Impact to Brazil Economy. [online] Business of Soccer. Available

at: http://www.businessofsoccer.com/2014/06/20/fifa-world-cup-financial-impact-to-brazil-economy/ [Accessed 29


Feb. 2016].
26

WSJ,

(2016).

World

Cup

Hit

Brazils

Economy

Hard.

[online]

Available

http://blogs.wsj.com/moneybeat/2014/07/18/world-cup-hit-brazils-economy/ [Accessed 28 Feb. 2016].

at:

Economic Impact of Mega Sporting Events

26

of nearly 21%. More worrying were the statistics for the automotive sector, where the June
month production of auto-motives fell by nearly 33%. The auto industry forms about one third of
the economy of the country that is service oriented, and hence the decline of production and sales
had an overall impact on GDP as well, which pretty much remained as a flat curve for the
duration of the mega event.

The expenditure incurred by the country fails to justify all the investments made for construction
of amenities and infrastructure. As per (Kcleconomics.com, 2016), a new stadium was built in
Manaus costing about 319 million USD, and that too only for for the purpose of four games. It is
highly unlikely that the stadium will ever be put again to use, while its monthly maintenance
costs stand at a whopping 250,000 USD. Most of the investment bankers, economists and the
analysts put the hosting of the world cup as a case of an opportunity had the potential to be
fruitful for the countrys economy, but that was ultimately wasted. Whatever boost was provided
in the short term to the countrys service sector by an increase in tourism, was promptly
counterbalanced by the losses in the industrial and auto sector. The critics remark, and perhaps
rightly so, that short term excuses such as mega sporting events are not the answers for dipping
economies, but it is a combination of solid planning and investment that helps to brings in the
desired results.

Chapter 9: Overall Critical Analysis of Mega Sporting Events

Olympics
Bidders for the Olympic Games must be committed to creating sustainable legacies, this is a
requirement from the Olympic movement. It is the host citys responsibility to create these
legacies that will help the environmental, social and economic issues that the country faces. This

Economic Impact of Mega Sporting Events

27

is done by bidders setting specific legacy plans in which they hope to fulfill. Different
participating stakeholders understand different things by legacy. Individual bidders generally
mobilize the use of legacy plans in their favor, and these documents focus on politics, the
community, volunteers and the overall impact on the city. In addition to that, whatever is
understood as legacy will be completely intangible, if adequate long term planning is not put in
place before the beginning of the mega sporting event.
(Sanburn and Sanburn, 2016)27 point out that perhaps the most risky of the mega sporting event
in terms of economics are the Olympics. A few observations of the aftermaths of the Olympics:
1. Most of the times, mega-sporting events, such as the Olympics, serve to exacerbate social
problems and deepen existing divides among residents. Since the year 1960, each and every
Olympic game that has been hosted has failed to meet its initial budget, and has invariably
shot over by almost 179%. Barcelona Olympics, which took place in the year 1992, overshot
the budget by a margin of about 417%, and London 2012 Olympics have by far turned out to
be the most expensive of the sporting event, almost at 14.8 billion USD.
2. In the case of Athens 2004 games, the Olympic site was eventually abandoned and the
economy was financially crippled as a result of the games. Even if there were any positives,
the negatives have far outweighed them. Athens was not the only city that suffered from the
lack of use for their specialized facilities. Sydney also faced the same issue after the
conclusion of Olympics, and (Searle, 2002) reported that Sydney had no legacy plans for
their stadium calling it an uncertain legacy.
3. Nagano, the host city of the 1998 Winter Olympic Games, faced severe financial
consequences for hosting such a big event and taxpayers suffered debts of up to 20,000 per
household to balance the citys books, and similar city debts were created from hosting the
1976 Olympics in Montreal, Canada. (Malfas, Houlihan and Theodoraki, 2004) reported that
the job generation due to the Olympics was only temporary in the Barcelona 1992 games,
27

Sanburn, J. and Sanburn, J. (2016). London's Loss? Why Hosting the Olympics Is Bad Business. [online]
TIME.com. Available at: http://olympics.time.com/2012/07/26/londons-loss-why-hosting-the-olympics-is-badbusiness/ [Accessed 28 Feb. 2016].

Economic Impact of Mega Sporting Events

28

and during the duration of the games, there was an overall decline in unemployment rates to
9.6%, from the normal rate of about 18.4%.
4. The impact of initial studies is often overstated in many respects. In the case of Sydney 2000
Olympics, the accommodation occupancy was reported to be at the level of 100%, but it was
overlooked that other cities like Melbourne had a corresponding decline of nearly 19% from
the last year levels, and that the decrease observed in city of Brisbane was about 17%, as per
(Bond and Cottle, 2016).

(The economic impact of the Olympic Games, 2004)28 provides with a detailed financial impact
of the Olympics held till the Sydney event.

28

The economic impact of the Olympic Games. (2004). 1st ed. [ebook] PricewaterhouseCoopers European
Economic
Outlook.
Available
at:
http://www.pages.drexel.edu/~rosenl/sports%20Folder/Economic%20Impact%20of%20Olympics%20PWC.pdf
[Accessed 2 Mar. 2016].

Economic Impact of Mega Sporting Events

29

Source: (The economic impact of the Olympic Games, 2004)

1. The Olympics held in Montreal city in the year 1976, resulted in great negative financial
impact to the overall its economy. So much so that it took almost three decades to pay off
the deficits generated by the Olympics. The city utilized almost all of its public funding
collected from the tax payers in building the amenities and infrastructure needed for hosting
the games. The resulting deficit from the Montreal Olympics led to a sharp decline in
countries subsequently bidding for the Olympics.
2. The Los Angeles Olympics held in the year 1984 were a huge commercial success and this
led to a large number of cities again bidding for Olympics, post the financial disaster
observed in Montreal. The citizens of Los Angeles overwhelmingly voted against the
utilization of public funds for financing the games, and thus they were the first Olympics to
allow the entry of private sponsors. This paved the way for commercialization of this Mega
sporting event, and also led to an establishment of global deals of sponsorship for the
Olympics. Due to these factors, the Los Angeles games resulted in a surplus of finances after
the conclusion of Olympics, but the long term economic impact of the games was not much
as the games did not result in any building up of new infrastructure.

Economic Impact of Mega Sporting Events

30

3. Both the cities who subsequently held the next Olympics, Seoul in the year 1988 and
Barcelona in 1992, vastly improved upon the existing infrastructure of the cities, and
simultaneously generated extra cash as well. The main improvement sectors for both these
countries were that of telecommunications, transportation, housing facilities, and other
community specific facilities.

FIFA World Cup


(Bond and Cottle, 2016) provide the following critical analysis of hosting FIFA world cups
across various host cities:
1. FIFAs criteria for granting hosting rights to cities, does not really incorporate whether there
is a mass appeal, or much existing amenities and infrastructure for the sport. As long as
commercial interests of FIFA are served well, and its budgetary considerations are taken into
account, the other factors as outlined earlier do not hold much ground in favor of exploring
newer markets. This was aptly highlighted by the awarding of bid to Korea and Japan for
hosting the 2002 world cup. Korea and Japan had very less number of existing stadiums for
soccer, and after the bid was awarded Korea spent nearly 2 billion USD for building 10
stadiums, and Japan spent nearly 4 billion USD to build as many as 7 stadiums, while
renovating 3 of the existing ones.
2. The statistics related to number of tourists for the world cup held in the year 2002 in Korea
and Japan are bit stretched. Around 400,000 tourists from Europe visited Korea during the
world cup duration, but it was overlooked that nearly a similar kind of decline was observed
in visitors to Korea from Japan, when comparisons are made from the last year figures.
3. Looking at the analysis of the 2006 world cup held in Germany, it was opined by the GIER
(German Institute for Economic Research) director that there were only two gainers in the
world cup, FIFA and Association of German soccer. FIFA earned close to 187 million Euros,
while the German association earned nearly 21 million Euros. It was also found that there
were almost nil impacts on unemployment post the conclusion of world cup, with hardly any
economic impact to the country as a whole.

Economic Impact of Mega Sporting Events

31

4. When it comes to the economics of the building stadiums for the world cups, there are very
specific requirements from the apex soccer body. FIFA requires that there be a provision of
a minimum of 8 stadiums, that are completely modernized, and also can hold anywhere
between 40,000 to 60,000 spectators. The following chart provides an overall representation
of the expenditure made by the host cities so far for world cups. This data excludes the data
from the 2014 Brazil world cup. The cost for France for the stadium construction for hosting
the 1998 FIFA world cup was almost 700 million USD. South Korea and Japan co-hosted
the 2002 world cup, and had respective expenditures of about 2 billion and 4 billion USD.
The stadium construction cost for Germany for hosting 2006 world cup was around 2.2
billion USD, while South Africa incurred an expenditure of nearly 2.5 billion USD.

Source: (Bond and Cottle, 2016)

Chapter 10: Challenges in Calculating Economic Impact


It is not always easy to ascertain the direct economic impact of the Mega sporting events on the
host cities. Many times, there are many intangible factors that lead to cities opting for a bid for
these events. These intangible factors ultimately go on to have a tangible economic impact on the
economies of the individual cities, in fashion that gradually reveals itself over a period of time.
One such major intangible factor is that of the legacy that is left behind by such events. This

Economic Impact of Mega Sporting Events

32

legacy factor manifests itself in various ways for different cities around the world, and thus, there
is no single fixed formula to ascertain the actual economic impact of these mega sporting events.
A few challenges that are normally encountered while conducting economic impact studies are
as follows:
1. The impact estimated by sporting studies has generally turned out to be less accurate as
compared to the real impact afforded by such mega sporting events. The agencies
calculating such impacts have been often criticized for the fact that the organizations who
prepare such analysis reports often possess a hidden, or sometimes no so hidden vested
interest in the award of such events. More often that not, the basis of such reports is a
premise that is purely academic in nature and many times far removed from reality. Such a
premise is based on the convenient assumption that an event of such a grand scale, would
invariably lead to an economic development of the area in which they are held. Thus, the
main challenge lies in identifying appropriate bodies or organizations that can make a
detached study, and present an unbiased view of what is likely to be the actual economic
impact of holding a mega sporting event.
2. It is not always possible to know whether the visitors who are visiting a city which is
holding a mega sporting event, are there for the purpose of attending the current event or for
any other purpose. The number of visitors are directly taken to impact the economics of the
event, and if this figure is not accurate, then the resulting study and estimates cannot present
an accurate picture. Many scenarios arise in such a case. It is possible that a visitor who
visited a city and watched a sporting event, could have been a tourist at some other place had
the event not been happening. And if such were the case, he possibly could have spend more
while visiting another tourist attraction. This scenario results in an overall loss to the
countrys economy, and is often overlooked in the economic impact studies.
3. Another important point that is many times difficult to capture for an accurate analysis of the
economic impact, is the factor of overcrowding. The loss that is presented by potential
visitors getting dissuaded from visiting an overcrowded host city, is tough to estimate
accurately, thus further diluting the economic impact.

Economic Impact of Mega Sporting Events

33

4. Mega sporting events can be understood to be more of self contained economic centers by
themselves. Businesses, firms, vendors who are allowed to display and sell their products,
often come within the premises of the event venues, and more often than not, may be total
outsiders to the hosting citys or even countrys local economy. In such a case whatever
revenue generation is credited to such authorized firms, may not be a direct reflection of the
actual impact on the host economy.
5. The construction of new stadiums and facilities is often cited as an economic impact to the
host city. There is an important fact that is often overlooked in the zeal to go for a bid for a
mega sporting event. In many cases in the past games, it has been observed that a great
percentage of the newly constructed infrastructure remains unused after the conclusion of
the event, and only serves to add to the economic burden of the city in terms of maintenance
costs. If the new infrastructure is somehow re-used, or can exist with the existing local
economy in a symbiotic fashion, then its inclusion as an indicator of positive economic
impact is justified. If it does not result in a seamless integration with the citys economy,
then its actual economic impact needs to be revised and re-assessed accurately.
6. There are many hidden costs that are associated with holding an event. The point just
described above is a good example of a hidden cost, which incorporates the upkeep of the
constructions undertaken before beginning of the games. Another hidden costs relates to the
hotel infrastructure industry. Many hotels and restaurants undergo massive upgrades to their
existing amenities due to the holding of mega sporting event. After the event is concluded,
such additional facilities and amenities upgrades, may be rendered unusable due to
downward spiral of tourists. This has a negative impact on the hotel industry and the
assessment of its appropriate economic impact also proves to be a challenge.
7. When new facilities are constructed for the mega sporting events, they often involve a direct
impact on the economically backward sections of the society. Many times poor population
needs to be relocated to different areas, or the event may cause an un-affordable increase in
the rent of accommodation. If poorer sections of the society are relocated they may
introduce poverty, and other social problems in the destination area. Taxpayer is also

Economic Impact of Mega Sporting Events

34

overburdened in this whole scenario, as to foot the costs of such a relocation, subsidies may
need to be granted to the poor, and additional transportation links and associated facilities
may need to be constructed. Often, the state government is directly involvement in the
eviction and relocation of the people, and it adds on to the existing burdens of the
administration. This results in an overall negative impact on the economy of the city, and
also poses a challenge in the accurate determination of the economic impact.

Chapter 11: Conclusion


Every city has its own reason to bid for a Mega sporting event. A supporting argument that is
often put forth in supporting the bid of a city in front its own populations, is that the city stands
to rise in status, and can climb to the unique club of global cities who have been actual hosts.

Economic Impact of Mega Sporting Events

35

With the advent of globalization across the world, such an argument does hold some merit in the
perceived potential of the events to attract high degree of capital investments from around the
world, as well as a large amount for international tourists. However, it is increasingly being
argued that hosting of Mega sporting events such as the Olympics and the FIFA world cup
provides a very short lived impulse to the overall economy of the host cities, and to the country.
The long term benefits are rarely seen, as the impulse that was injected to the economy
eventually weakens over a period of time, and the economy once again returns to the same state
as it existed previously. It has been opined by many observers, as well as those who have been
closely associated in hosting of the games in their respective cities, that Olympics are not about
making a quick buck, and nor are they about real economic impact to the host cities. They are
more about being large scale mega corporate events, rather than events which actually benefit the
common man, or help in the development of the city and its institutions. Thus, Mega sporting
events are more of a mixed bag for any country that plans to host such an event. A careful
planning and analysis needs to be done on the best way to effectively utilize the resources during
such an event. Due care also needs to be taken that improvements so made during the event have
a long lasting legacy, and actually prove beneficial to the city and the country that hosts them.

Economic Impact of Mega Sporting Events

36

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