Readers Question: Evaluate the arguments for and against the view that major sports events are good for the economy? (15)
Major sports events such as the World Cup and the Olympics are often seen as a potential source of economic regeneration. Yet, there presence often invokes powerful opposition. These are some of the economic benefits and potential costs of major sporting events.
1. Encourages Investment in infrastructure.
Major sporting events usually require upgrades to transport and communication links. This investment leaves a lasting legacy for the whole economy. Better transport links reduce congestion and helps to improve efficiency for local business. It can help increase productive capacity and shift AS to the right.
2. Influx of Foreign Visitors.
A major sporting event like the Olympics can attract 10,000s of people for the month of the duration. These foreign tourists bring a boost to the local economy. In particular the local tourist trade, shops / hotels will benefit from the surge in visitor numbers. However, it is worth noting that these visitor numbers tend to be temporary. The major sporting event only lasts for a few weeks; potentially there could be many empty hotel beds in the future. On the other hand people argue a major sporting event can lead to a long term growth in visitor numbers. e.g. China hopes that the forthcoming Beijing Olympics will help create a new idea of China as a tourist destination. Barcelona saw higher visitor numbers continue after the Barcelona Olympics.
3. Job Creation.
Typically, major sporting events require investment in building stadium and hotels. This creates jobs for the local economy for upto 4 years before the event. These extra jobs help create a positive multiplier effect amongst the local economy. It is hoped that the London Olympics will help regenerate the East end of London.
4. Higher Economic Growth.
It is estimated that the ‘Olympics Effect’ leads to a boost in economic growth due to the higher investment and foreign visitors. This leads to higher tax revenues for the government
Costs of Events like the Olympics
1. Expense
The cost of hosting a major sporting event has increased significantly in recent years. It includes, not only, all the investment but also the heightened security. It is hard to meet these costs through sponsorship and ticket sales alone. Therefore, it can lead to higher taxes for the local population.
2. Will the infrastructure be used in the future?
The Olympics requires a lot of investment, which may not necessarily be used in the future.
3. Disruption during the event
It is feared that during the Olympics there will be a disruption to local businesses not effected. For example increased security features make it more difficult to continue normal business.
Evaluation
- It depends how much investment is required in the first place. e.g. do all stadiums need to be built
- Can firms keep to initial cost estimates (e.g. New Wembley was much more expensive than first predicted)
- Some sectors of the Economy benefit much more
Further Reading
24 comments ↓
preety much sums up my views really.org
oh yes alex i agree…this essay gets straight to the point.
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I think costs and benefits of the olympics is similar to hairdressing, sometimes you get a good cut = benefits, sometimes a bad cut = costs. On a lighter note i have just contracted malaria. In my last days of life i am writing an article on sustainable sporting events. I stumbled accross this site on my research. Thnaks very much economis help
wish me luck! R.I.P
[...] These are some of the costs and benefits of hosting the Olympics [...]
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[...] Costs and benefits of Olympics [...]
i agree some cost of benifits
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By the way this helped me with my research paper at the University of Kansas in Lawerance, KS
Here in Canada, where the obscenely expensive 2010 party called the Winter Games is in full swing, it’s clear that this is all about money and partying (with athletic achievement a much-ballyhooed but less important factor – that’s why each sport has its own world championship).
And Vancouverites will continue to pay for these Games long after the drunken fans have returned home after 17 days. According to economist Dr. Jeffrey Owen at Indiana State University, it’s a myth that hosting an Olympics event makes good business sense, despite what all those economic impact studies predict.
“To date, there has not been a single study of an Olympics or other large-scale sporting event that has found empirical evidence of significant economic impacts.”
More on this at: ‘Why the Olympics Are Bad Business’ at
http://ethicalnag.org/2010/02/14/olympics/
[...] aside there is also the question of whether sporting events are economically viable. Here it is argued that there are many economic advantage to hosting large sporting events. But the games in [...]
this website is really good
good points
These are really true…Here in South Africa, I’ve seen lots of positives about hosting a major sporting event but also negatives. Its much like business though, If you are willing to gamble (take a risk), you might find yourself reaping really good fruits in future (in terms of investments-fdi)
Thank you, this has helped with an essay I am writing. I have been researching into how businesses will benefit from the London 2012 Olympics, and speculating on how those who advertise specific Olympic Services may suffer after the games have finished. If you look at http://www.olympicbusinesspages.com, you can see all of the sectors which expect to benefit in some way – there are of course the obvious ones such as hotels and transport, but also attractions who will gain extra visitors on days when visitors are not attending an Olympics event and need something to do. Also businesses such as estate agents for those interested in renting a property close to the Olympics. Thanks again for the information, much appreciated!
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