Analysing the economics of the world’s leading sporting events is not easy, but it seems increasingly clear that the scale of the Beijing Olympics will put past events in the shade – at least in levels of investment and economic impact. Comparing events is not easy given the marked differences in structure and logistics. The Olympics with the massive central infrastructure development around the Olympic Village is still viewed as the largest single event. Our best estimates of the Beijing Olympics put the likely total economic impact and scale of investment at around $30Bn. This is not only greater than any contemporary event but is larger than the Berlin and Moscow Games.

Our best estimates for the Athens, Sydney, Barcelona and Atlanta Games are that direct investment in facilities was – at current prices - around $7Bn, with around $2Bn in direct event-related expenditure and around $2Bn in related infrastructure. Within these, there are significant variations with, for example, airport improvements in Athens improvements costing around $1Bn alone.

It seems that both the Beijing and the London Games will significantly exceed these figures with the direct and indirect HM Government investment in the London Games already put at over $15bn. Even this figure does not include any estimates of expenditures by competitors, spectators and tourists.

Close behind the Olympics in scale is the FIFA World Cup. The very different structure of the Soccer World Cup adds significantly to the problems of estimating its economic impact. The organization of the eliminators places considerable emphasis on a two stage structure. There is an initial, “open” eliminator involving over 100 national teams and the finals themselves. The best estimate for the latest World Cup in Germany is that the eliminator produced revenues (largely for national sporting authorities) of around $3bn, while the finals in Germany generated around $7bn including improvements to stadia.
This was somewhat less than the economic impact of the previous World Cup in Japan and South Korea of around $15bn at current prices because of the more limited stadium and related infrastructure costs.

The Ten Biggest Global Sporting Events (Direct and Indirect Impacts)

The structure of these giant events varies considerably with direct effects on their economics. The Olympics, FIFA World Cup, UEFA Championships, Rugby and Cricket World Cups are sometimes classified as “once in a lifetime” events not only because they occur at relatively wide intervals – every four years – but because they change locations at the same time. Facilities built by a host city or nation are unlikely to be used again for the same event, albeit other uses and users can emerge.

Measuring the economic impact of sporting events, especially giant events like the Olympics and the World Cup requires that we look beyond the short-term costs before and during the event to the longer term economic impact. Sometimes success with one event can affect others. Most commentators believe that Valencia’s success in hosting the America’s Cup in 2007 encouraged Formula 1 to include Valencia in its future programme. Inevitably there were several dimensions to this decision. In part; the rail, road and air infrastructure improvements made a difference, but the commitment of the local community was a key intangible factor. Intangible benefits are especially important when we look beyond the direct economic effects to the indirect and induced effects. These can create positive “ripple effects” that can deliver gains for years after the event.

Among annual competitions, Formula 1 stands out for its scale and potential economic impact especially where new circuits are designed and built. As a “one off” event, the Superbowl is the biggest single event not least because as it moves from City to City it boosts not only the profile of the host city but draws media ands from across the world, all despite little in the way of “direct” prize money.

Prize Money is seldom the major factor in defining economic impacts. Perhaps, the single prize in world sport lies in winning the English Football League Championship Play-off. Promotion makes this worth around £60M, roughly double the additional income Manchester United can expect from winning the UEFA Cup in the same year.

The Biggest Event “Prizes” in World Sport

Filed under: Beijing Olympics, Economics of the Biggest Sporting Events, Uncategorized by admin