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The Impact of Hosting Major International Sports Events on a Country

Sport nowadays is popular as ever before. The number of sport competitions is increasing and are grabbing the attention of every one of all ages. Some of them are known as Major International Sports Events or 'mega sports events'. Examples of such competitions are Olympic Games, Football World Cup, Commonwealth Games and some other International Championships. They are becoming more and more famous these days. The number of countries and cities that want to host these kinds of sport competitions is increasing (Milena M. Parent, year, p. 147). Obviously, the reason for this is that 'mega sporting events' may bring a major number of short-term and long-term economic benefits to the hosting area.

It is known that hosting a 'mega sporting event' is extremely costly. Baade and Matheson (2004) state, that hosting such event requires large amounts of expenditure on the infrastructure as well as on security (as cited in Maassoume Barghchi, Dasimah bt. Omar, & Mohd Salleh Aman, 2009, p. 189). However, there are a range of positive effects including economic effects that 'mega sporting event' can bring to the hosting area. Matos (2006) distinguishes three main benefits of such events, which are called 'holy trinity of mega events benefits', namely economic growth, infrastructure legacies and image promotion; economic benefits are responsible for justifying 'mega event', covering all the investments and expenditures (as cited in Florek, Breitbarth, & Conejo, year, p. 80). As far as 'mega event' is justified, it can be considered as a successful 'mega event'. Sydney Olympic Games, which was held in the year 2000, can be a good example of a successful event. The games regenerated the whole economy of Australia. In the opinion of Bob Carr, the Premier of South Wales, Sydney Olympics is a sign of improvement of Australian economy and a fundamental for its further development (Locum Destination Review, 2001, p. 33).

On the other hand, economic impact is difficult to predict and to evaluate before the sporting competition. Therefore, not every 'mega sport event' can be successful, which means that not all economic impacts are positive. Ritchie, Shipway and Cleeve (2009) affirm that "the costs associated with hosting a mega sporting event, such as the Olympics may outweigh the positive benefits for some residents, who may reduce or withdraw their support for the event" (pp.145-146) .

The Impact of 'mega events’ on a country's economy is a very controversial topic to discuss, because few researches were conducted on this.

Positive Impact of Hosting International Sports Events on a Country's Economy

Elmer Sterken (2006) affirms that organizing Major International Sports Event such as the Olympic Games and Football World Cup needs investments equal to approximately 10 to 20 billion U.S. dollars. She also states that, given this amount of finance, economic effects are undoubtedly beneficial (p. 376). Economic benefits may follow from investment and sponsorship, tourism, telecommunications etc. The reason for this is the fame of 'mega sports events', as it involves foreign investors, tourists, mass media, and communication organizations.

It is generally known that investment plays a major role in the economic growth of local area. As mentioned before, hosting a 'mega sports event' requires lots of finance, because new sports facilities must be improved and built and surely new infrastructures must be created. For example, as the requirement of FIFA, Football World cup host country must provide at least 8 modern stadiums. All the expenditures and investments done are likely to bring much more profit instead.

Regarding an infrastructure development, this may lead to the technological progress and better productivity in the economy of host country.

As for construction sector, which include sporting venues, accommodation for participants and facilities for officials and the media, it is also expected to be very beneficial, as it is likely to provide new additional workplaces during the pre-event phase of the competition. In other words it can be stated that due to the infrastructure development unemployment can be reduced to some extent. For instance, according to the statistics, due to the Olympic Games in Barcelona at least 88,7 per cent decline in unemployment was registered from 1986-1992 (Brunet, 2005, p. 9).

In addition, there is another long-term positive impact of investment on local economy. Being already highly developed, infrastructure of the country automatically cut the costs for hosting another 'mega sports events' in the future, even if next event's organization cost may exceed the previous one.

The next economic impact major international sport events may bring to the host country is tourism development. Nowadays 'mega sports events', like Olympic Games and FIFA World Cup are supposed to be large tourism destinations, as they attract a major number of people. Therefore millions of people from all over the world tend to attend them every time they are held.

As a result, tourism as well as infrastructure development promote job creation, because a lot of markets, hotels, entertainment facilities like night clubs etc. are most likely to be created for the foreign visitors.

During the 'mega sport event' millions of people are able to go to the hosting country to watch it. Also they can purchase hotel rooms, meals, drinks, transportation, tickets on the games or matches etc. This means that tourism boosts the expenditure and promotes an increase in retail trade, which is very beneficial for the hosting economy. In addition, foreign visitors will undoubtedly be interested in the famous and historical places of the host country, which means a lot of sightseeing will be done. Nowadays, tourism is the most reliable factor for huge economic growth. Brad R. Humphreys (year) believes that economy of Poland and Ukraine will significantly benefit in a direct way from the tourism development during the soccer competition EURO 2012 (p. 9).

When hosting a 'mega sporting event' it is very important to be able to provide the increase of awareness of hosting country as a tourism destination. For that purpose, involvement of the media is necessary. Morphet (1996) has affirmed that media is very essential part of promoting the host are as a tourism destination (as cited in Malfas, Theodoraki, & Houlihan, 2004 p. 213). The reason for that are media-related advertisements and commercials can attract not only tourists, but also foreign sponsorships and investment. This, in turn, is very beneficial for the economy of the hosting country.

All the mentioned impacts are very important for the hosting area and before the organizing a 'major sport event' they should be deeply analyzed on a particular country in order to succeed.

Negative Impact of Hosting International Sports Events on a Country's Economy

Economic impacts of 'major sports events' like Olympic Games or FIFA World Cup are very difficult to predict. Thus there is no 100 per cent guarantee that particular 'mega event' will bring more positive outcomes rather than negative ones. For example, organizing such events may lead to the difficulties in the life low-income population (Malfas et al., 2004, p. 213).

As soon as a particular country or city has won a bid for 'major sport event' the preparation is started. As mentioned before, new infrastructure and sport facilities should be created for the event. At that moment government usually stop house-building works and sometimes evict residents in order to build up new stadiums and roads need for the 'mega event'. That is a huge loss of money for the government. Furthermore it may negatively influence the social life of the country, because a lot of people will have to allocate to other places, probably more expensive than previous ones. The 1996 Atlanta Games is a good example for this. The commission group, which studied the social life there, affirmed that 15000 residents lost their residences and 9500 units of available houses were lost (Malfas et al., 2004, p. 213).

Furthermore during the ‘mega sport event’ prices can rise. This will directly affect the population expenditure, as it will considerably go down. This is also relevant to the tourism of local area, because high prices might decrease the number of tourists’ arrivals. This, in turn, cuts the foreign visitors’ expenditure.

Failed Major International Sports Events: Reasons

As far as there are some disadvantages of hosting a ‘mega sport event’, they can rise to significant problems, either economic or social. The reason for this is that a lot of issues are not considered before the event. Also few researches have been conducted on benefits of major events. That is why nowadays there is no guarantee of success in hosting major sport events. For example, in most cases hosting countries made huge profits in their budgets, but not every of them had long-term perspectives.

After Montreal Olympic Games, which was held in 1976, the city came up with the serious funding problems. The Games left the legacy of deficit funding and it took more than 2 decades to this city to handle that problem, repaying the costs of organizing that event. Ritchie et al. affirm that this is due to the mismanagement of expenditures, as costs related to hosting such events may change over a time (p.146). Exactly after Montreal Games, economic impacts and development issues started to be studied.

It is also true that many researches often skip social and cultural impacts, because they are considered to be negative ones and it is difficult to measure them (Ritchie). However they are, in fact, they are linked with economic impacts. For example, 2002 FIFA World Cup’s economic benefits were much lower than expected. As many people believe, that was because soccer was not a major type of sport in Asia.

Conclusion

As sport is considerably developing these days, it tends to conduct more and more International Sports Events. Some of them have already reached a status of ‘mega sporting events’ like Olympic Games and FIFA World Cup. That means a lot of preparation and expenditure is required to host these events. It is obvious fact that the main reason why lots of countries and cities bid for hosting such events is that it may bring a lot of economic benefits to the local area. The impacts may be short- and/or long-term as well as positive (tourism development, new infrastructure, regeneration of a country’s economy) or negative (high prices and evicting residents). However these effects are difficult to be examined and evaluated. Furthermore sports authorities often ignore some social and cultural impacts. As a result, some of the countries and cities, which host a particular ‘mega sport event’, do not gain the expected outcomes. In order to succeed in organizing a ‘mega event’ all the impacts should be deeply investigated towards the hosting country.

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