The effects that staging a major sporting event can have on an area Essay

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Abstract

This report will analyse the effects that staging a major sporting event can have on an area. It will examine whether events of this size generate inward investment, what different types of investment that occur and evaluate their lasting value. The reasons for the growth of sport as a global industry will also be discussed in terms of their effect on investment levels.

After studying a number of major sporting events, both within the UK and from other parts of the world this report concludes that the extent to which events act as a focus for inward investment depends on the nature of the competition and the size of its audience.

Introduction

The title of this report is:

To what extent do major sporting events act as a focus for inward investment?

Before I can begin to explore this question there are several terms to define:

What constitutes a major sporting event?

A major sporting event is a competition involving a large number of competitors from a range of countries, gaining widespread media coverage.

What is inward investment?

Inward investment implies that, Goods have been brought into existence which will allow a stream of other goods and services to be produced in the future.

(Economics, A New Approach by A.G. Anderton)

Key Questions/Issues

My report will be structured around the key questions shown in the table below. I will make ongoing conclusions as I explore each question in turn, using case studies covering a range of scales and locations, and draw them together when making my final conclusion.

Key Question

Case Studies used

1) Where does inward investment come from and is it sustainable?

Athens 2004, Sport England, Silverstone, previous Olympic games, World Cup 2002 (Yokohama), World Student Games 1991 (Sheffield)

2) Increased investment in sporting events has come about due to the growth in the importance of sport which has become a global industry. What has caused this growth?

World Cup 2002 (Yokohama)

3) What different types of investment take place? Do they vary from one sporting event to another?

World Student Games 1991 (Sheffield), Silverstone, Athens 2004, World Cup 2002 (Yokohama)

4) Are there examples of major sporting events that have not acted as a focus for inward investment? Do these events have anything in common that could explain why the inward investment was less?

Embassy World Snooker Championships (Sheffield), BUPA Great North Run

1) Where does inward investment come from and is it sustainable?

To find out where inward investment comes from I will be using the following case studies: Athens 2004, Sport England, Silverstone.

Athens 2004

Athens 2004 balanced budget is 1.962 billion Euros. (see fig. 1 for breakdown). To date Athens 2004 sponsorship revenues have reached approximately 448.1 million Euro in total. This already breaks many previous records as Athens 2004 has covered its projected sponsorship revenues with only 7 out of forty potential Sponsors. Athens 2004 decided to have a limited number of sponsors, and to emphasise quality rather than quantity. (See fig. 2) (www.athens.olympic.org)

Sport England

Government funding of sport in the UK is done so through an organisation know as Sport England. They are a council who meet regularly to consider applications for funding the development of sports facilities. They make their grants from National Lottery Funds and applicants are usually expected to show evidence that their scheme will benefit the community as a whole. (www.culture.gov.uk/sport)

Silverstone

Silverstone is hoping that is will be able to gain financial support in this however as a report in December 2000 said; Silverstone would probably need to provide other uses for the local community ¦ there is no reason why the track should not have a velodrome or artificial ski slope ¦ there might even be the possibility of a watersport facility.

BRDC (British Racing Drivers Club) President, Sir Jackie Stewart wants the government to underwrite at least half the sum, believing that it is in the best interests of politicians to support the local motor sport industry so jobs and important F1 teams arent driven out of the country to more attractive destinations. (www.octagonmotorsports.com)

The redevelopment of Silverstone will be funded by three parties. Firstly by Octagon, the US marketing group that owns the rights to the British Grand Prix for the next 15 years, Bernie Ecclestones Formula One management, which handles Grand Prix racings commercial affairs, and the BRDC, which owns Silverstone itself.

To investigate whether the inward investment is sustainable I will be using the following case studies: Athens 2004, previous Olympic games, World Cup 2002 (Yokohama), World Student Games 1991 (Sheffield).

Athens 2003

* The Athens 2004 Olympic Games will leave a legacy to Athens, to Greece and to the world that will remain for generations to come.

As Sydney, Atlanta and Barcelona have shown, there are many tangible, long-term benefits to hosting the Olympic Games.

For the people of Greece, the legacy of the 2004 Olympic Games will begin with the economic benefits of investing in upgrades to the transportation infrastructure, telecommunications system, and the environment. These investments will benefit Greece for years to come.

They include:

65,000 new permanent jobs

120 kilometres of new road

290,000 new trees, 11 million new shrubs

A New International Airport

An expanded metro system

A new, ultra-modern Traffic Management Centre

An increase in tourism

A $1.3 billion boost in public sector revenues, and

35% improvement of the quality of the environment

* In addition, the skills, expertise and training of the workforce in Greece across every sector will be enhanced. The workforce will be called upon to manage large scale complex projects that require integrated planning and detailed coordination. The new skills and expertise will be valuable assets surviving the completion of the Olympic and Paralympic Games.

Renewed civic pride, a massive surge in volunteerism, and the return of the Olympic Games to their ancient birthplace will all shape the Legacy of the ATHENS 2004 Olympic Games. When the last medal is awarded, and the Closing Ceremony of the Paralympic Games ends, the dynamism and spirit of the Games of 2004 will remain. The city of Athens and the surrounding region will have overhauled and upgraded every major sector of the economy, channeled investment, and re-invigorated public life throughout Greece. (www.athens.olympics.org)

In the period leading up to 2004, Greece will receive $40.23 billion USD from the European Union to improve highways and other infrastructure projects.

Previous Olympic Games

Sydney

It was estimated that the Sydney 2000 Olympic Games will add $6.5 billion to the Australian GDP and 100,000 full-time jobs over a 12 year period from 1994-2006.

Australia saw an 11% increase in total visitors for 2000. Interestingly, the highest month total (565,000 arrivals) was achieved in December-3 months after the Olympic Games.

1.5 million additional international tourists are expected to visit Australia until 2006 because of the staging of the Olympic Games. This is estimated to generate an additional $2.7 billion in tourism exports.

Atlanta

The Atlanta Olympic Games added $5.1 billion to the Georgia economy.

As a result of the 1996 Atlanta Games, spending from out-of-state visitors injected $2.5 billion into the economy.

Barcelona

Prior to the 1992 Barcelona Olympic Games, Barcelona was ranked as the 16th most popular tourist destination in Europe. By 1999, it had risen to third.

The Barcelona Games added $16.6 billion to the Spanish economy between 1986 and 1993.

From October 1986 (the month Barcelona won the bid) to July 1992, the general rate of unemployment in Barcelona fell from 18.4% to 9.6%-a drop of nearly 50%.

New suburban highways and tunnels reduced downtown traffic by 15 percent.

World Cup 2002 (Yokohama)

* Since the Dynasty Cup, the opening game of the stadium on March 1st 1998, there has been 9 Japanese national team games, including the Kirin Cup and the Confederations Cup. The stadium, as well as being the home ground of the J Leagues team Yokohama F. Marinos, is also the stage of many events each year, such as Kanagawa Yume Kokutai and a 70,000 people Bz Live Concert. Under the stands we can find the Sports Medical Center, the Sports Community Plaza and the Sports Information Center, which are the core of communication for all sports concerned. The objective of the facilities is to achieve international exchange and to provide health and well being. (www.fifaworldcup.yahoo.com)

World Student Games 1991 (Sheffield)

* Since the hosting of the World Student Games in 1991, the Don Valley Stadium has continued to be of benefit to the community as a whole. All facilities, including the indoor and outdoor tracks are open for public use 7 days a week at the excellent price of ¯¿½2.70 for adults and ¯¿½2.10 for children.

* The stadium annually hosts the North of England Athletics Association Open Championships in January and is also used for various other national athletics competitions and meetings.

* The stadium is also home to several athletics clubs; the Hallamshire Harriers, Sheffield AC, Sheffield City Striders, Sheffield University AC and Sheffield Hallam University AC. The stadium regularly hosts Rugby League, American Football and Football games and is home to the Sheffield Eagles Rugby League Club.

Conclusions about Key Question 1

* It appears that there are three main sources of investment available to major sporting events. The first and possibly most important of these is sponsorship. Sponsors can be broken down into two distinct categories. There are those sponsors who give money to the event organizers in return for the rights to use the Olympic name and image on their products and in their advertising. For example Coca-Cola is the official non-alcoholic beverage for Athens 2004. The other kind of sponsor is the sponsor who provides a service or function at the sporting event. They will also benefit from increased media coverage. SWATCH are providing all of the timing and scoring equipment for the games.

* Major sporting events appear to have major, long-lasting benefits to the host city and the surrounding area long after the event has taken place. These include the provision of world class sporting facilities and venues that can be used by the general public and local sportsmen, the creation of new general public services, such as transport links, and the creation of jobs, both directly as a result of the sporting event and jobs created by the encouragement of new businesses into the area.

Having examined the sources of inward investment I will now investigate why this investment is increasing.

2) Increased investment in sporting events has come about due to the growth in importance of sport which has become a global industry. What has caused this growth?

* Increased media coverage it is estimated that the final of the World Cup in Yokohama was transmitted live to a worldwide audience of around 2 billion. Sport is now broadcast throughout the world and is one of the main ways in which many fans get access to sporting events, whether through radio, television or the internet.

* Sport is an important part of the nations shared experience and values the nations culture. It brings people together either as participants or spectators, building teamwork and community pride.

* Participation in sport at an amateur level has increased in recent years. Amateur sport is important to improving quality of life. Sport provides role models for the pursuit of personal excellence. Competitive amateur sport also stimulates broadly based participation in physical activity, leading to better health, higher productivity and a stronger social fabric. This has led to increased interest in professional sport, resulting in higher attendance and increased revenue.

* Increasing government intervention in sport at a professional level has also increased its importance. Our elite athletes are supported using lottery funding under the World Class Performance Programme by UK Sport and Sport England. Awards have been made to the governing bodies of over 37 sports, ranging from wheelchair basketball to athletics. This enables our top athletes to improve their performance and win medals in the Olympics and major international competitions. Those athletes at the elite level are also starting to feel the benefits of the United Kingdom Sports Institute. Funded by the lottery, these are centres of excellence where first class facilities and services are available to athletes.

This includes sports science, medicine, nutrition and coaching expertise. There are ten centres of excellence in England. Many of the centres have sports-specific roles, for instance most of the elite swimmers use the new facilities at Bath University. Money raised by the National Lottery is also being directed at bringing top events to the UK, such as the World Athletics Championship in 2005. Not only does this give us all the opportunity to watch the best competitors in the world, it is a boost for the country and sports as a whole. (www.culture.gov.uk/sport)

Having investigated the reasons for increased inward investment we must now examine how this investment is being used.

3) What different types of inward investment take place? Do they vary from one sporting event to another?

To answer this key question I will be using the following case studies: World Student Games 1991 (Sheffield), Silverstone, Athens 2004, World Cup 2002 (Yokohama).

* If a sporting event is given the responsibility of hosting a major sporting event and their sporting facilities are not already of the required standard to host that event, then investment is needed to redevelop or create them.

World Student Games 1991 (Sheffield)

Following a successful bid for the World Student Games in 1991, the City of Sheffield undertook a programme to provide world class sports facilities for the City, including an Athletics Stadium with a fully equipped grandstand. The grandstand is in effect a four storey building containing all the support facilities such as changing rooms, as well as an 85 metre indoor track and practice area. (www.sivltd.com/donvalley)

Silverstone

Over the next 3 years Silverstone, the home of the British Grand Prix will undergo a $70 million redevelopment, including the improvement of key trackside facilities such as pit garages and competitor accommodation facilities, as well as 1.5 kilometres of new track to improve overtaking opportunities on the circuit. These improvements follow speculation that the British Grand Prix could be moved to Brands Hatch and strong criticism from the Head of Formula One Management, Bernie Ecclestone. (www.grandprix.com)

* It is also important that facilities available to spectators at major sporting events are of a high standard, as it is the public, in combination with sponsors that generate most money for the organisers.

World Student Games 1991 (Sheffield)

The Don Valley Stadium, Sheffield has state of the art spectator facilities, including:

* 1500 lux floodlights to accommodate a full colour spectrum TV (see fig. 4)

* A fully electronic timing and results system with photo finish facilities

* A huge electronic scoreboard (see fig. 3)

* A fully integrated state of the art public address system

* Full catering & hospitality facilities as well as food and drink concession points.

The Stadiums major focal point is its grandstand which holds 10,000 spectators. 15,000 spectators can also be accommodated on the open terracing making the seating capacity 25,000. (See fig. 4) (www.sivltd.com/donvalley)

Silverstone

As part of extensive redevelopment of Silverstone, the old club at the entrance to the pit lane was replaced with a new building that offers improved facilities for club members and their guests. The impressive three-storey building houses a restaurant, bar and club accommodation, as well as pit lane and roof terracing viewing areas. Plans have also been recently announced to greatly improve facilities in the general public viewing areas, including directional signage inside the circuit, catering, retail and modern toilet facilities. This follows on from the successful road development and improved traffic management at this years Grand Prix. (www.octagonmotorsports.com)

* The potential for tourism generated alongside major sporting competitions means that a lot of money is invested on improving the appearance of an area before hosting the event.

Athens 2004

Athens is being transformed into the host city for the 2004 Olympic Games. An extensive programme of interventions for the aesthetic upgrading of the city, along with the creation of Olympic Celebration sites, will enhance the Games experience for visitors and residents alike. An extensive Urban Regeneration Programme is already underway which will include the development and construction of new pedestrian roads, the redesigning of open public areas, the creation of new green areas (see fig. 5), improved street illumination and the removal of illegal advertising boards. (www.athens.olympic.org)

World Cup 2002 (Yokohama)

The broadcasting of Yokohamas name throughout the world during the 2002 FIFA World Cup will in itself have been excellent publicity for the city. Moreover, hopefully it will have had important effects in the area such as the attraction of movement into Yokohama by foreign businesses. Leading up to the games the city worked to improve the urban infrastructure (parks, roads etc.) and to develop its human resources and networking through programs keyed by citizen volunteer activities. To bolster arrangements a City Sales campaign built around the World Cup, with hospitality arrangements to benefit both visitors and residents was established. (www.fifaworldcup.yahoo.com)

Conclusions to Key Question 3

* I would suggest that the type of investment and therefore possibly the level of investment required for a sporting event varies depending on the nature of that event. An event such as the Olympics which encompasses a broad range of sports will obviously require a greater level of investment than a single sport event such as the Football World Cup.

* I have been able to identify three key areas of investment. Firstly and probably most important is investment in the provision of sports facilities. Without adequate facilities an event will never be successful. Secondary to this is investment in spectator facilities. The paying public are the main source of revenue for any sporting event, so they need to be fully catered for. If they are unhappy with the service they receive, they wont return. Low attendances would probably render the event a financial failure.

Normally the projected revenue from ticket sales is incorporated into the event budget (see fig. 1). Lastly but also significant is investment in the surrounding area as a whole. For an event to be successful it is important that the infrastructure is capable of dealing with a large number of people. The image sent out to the rest of the world also has to be considered, as hosting a sporting event puts the area under close media scrutiny. A positive image can encourage new business to the area.

Having examined sporting events that have acted as a focus for inward investment and the type of investment that has occurred we now need to see if there are event that have not resulted in investment and the reasons for this.

4) Are there examples of major sport events that have not acted as a focus for inward investment? Do these events have anything in common that could explain why there was less investment?

To answer this key question I will use the following case studies: Embassy World Snooker Championships (Sheffield), BUPA Great North Run.

Embassy World Snooker Championships (Sheffield)

The Embassy World Snooker Championships are held at the Crucible Theatre in Sheffield, every year in April. For 17 days each year, the largest theatre complex outside of London is transformed into what is recognised as snookers No. 1 venue.

Organisers move into the theatre 6 days before the beginning of the championship to prepare the arena. The theatre floor is hollow so a series of jacks have to be put under the two tables, which weigh one and a half tonnes each. The stage is carpeted and the Embassy snooker arena is installed complete with press seating, boxes for the BBC commentators and photographers and the TV cameras (see fig. 6). Back stage, the rehearsal room is transformed into an Interview Room. (www.embassysnooker.com)

The Studio which is also part of the Sheffield Theatres Complex is transformed into a two table practice area and the TV set for the BBC team and front man.

The Crucible holds less than 1,000 spectators and tickets are eagerly snapped up by the sports fanatical followers.

Why has there been little inward investment?

* The size of the auditorium means that the revenue generated by the event is limited. This means there is less money to re-invest in the event and Sheffield as a whole.

* The Crucible theatre is only a temporary sports venue for 17 days out of every year. For the majority of the year it is a normal theatre, staging touring and in-house productions.

BUPA Great North Run

The BUPA Great North Run is the worlds biggest half marathon, with 47,000 people running from Newcastle city centre to South Shields a festival of fun runners, colours and an estimated 8 million pounds is raised for good causes each year.

Since it started in 1981, around half a million people have completed the 13 miles and 192 and a half yards run. The first marathon attracted only 12,000 participants but its popularity has rocketed and now many thousands of applicants are unable to get an entry.

There were people from 25 different countries competing in this years event.

The Great North Run has attracted many celebrities and well known personalities. Kevin Keegan once ran the Great North Run wearing the red and white stripes of Sunderland and the black and white stripes of Newcastle United. Soccer star Paul Gascoigne once pushed a wheelchair athlete all the way round the Great North Run circuit.

Why has there been little investment?

* The Great North Run is a charity sporting event. All money generated through the event are donated to charity and not re-invested in the area.

* The event is run around the streets of Newcastle so does not require any purpose built facilities which would require investment.

Conclusions to Key Question 4

The most common reason for little investment in a sporting event appears to be the lack of need for permanent sporting facilities. Facilities provision is the most costly aspect of a sporting event so where they are not required, investment is significantly less. Another reason for lack of investment, as demonstrated by the Great North Run, is if it is a charity sporting event. These events set out to make as much money for good causes as possible so dont spend money unnecessarily. Small maximum attendances also reduce investment. Money from ticket and merchandise sales is one of the main sources of income, so a small venue will only generate a little money for re-investment.

Final Conclusion

The initial question that was asked at the beginning of this report was: To what extent do major sporting events act as a focus for inward investment?

I examined this issue using four key questions, making ongoing conclusions as I went along. The following conclusion is an accumulation of my findings throughout the report:

* I have reached the conclusion that the majority of sporting events do act as a focus for inward investment. Through my research and analysis of a range of different types and scales of sporting events I believe that the extent to which this is true depends on the nature of the event. Large scale events such as an Olympic games will require a much larger investment than a world championship in a specific sport. They will require a wider range of sporting facilities and are likely to attract a broader range of spectators, requiring greater provision of spectator facilities.

* I have also concluded that many of these events have lasting benefits not just for the people who benefit directly from the facilities but the general population of the area who receive the financial and social benefits.

* Events which do not act as a focus for inward investment are those which do not require permanent facilities, or in the case of the BUPA Great North Run any facilities. The potential audience size can also be a limiting factor as shown by the example of the Embassy World Snooker Championship.

As you can see from my conclusion, the question asked in this report is of a complex nature and has no simple answer. I used case studies covering a range of scales and locations in order to make as accurate a judgement as possible. However I could only use a limited number due to the length of time I had to carry out my research and compile this report. To fully investigate the issue I would need to carry out my research on a much larger scale, covering a greater time period and range of events.

Bibliography

Websites

* Athens 2004

www.athens.olympic.org Official site for the Summer Olympics, Athens 2004. Contains information on the preparations being made ahead of the games, the events that will take place during the games, and regularly updated press releases.

* Embassy World Snooker Championship

www.embassysnooker.com Official site of the major sponsor of world snooker, Embassy tobacco company. Contains information on all the major world snooker events and venues, the latest news from the world of snooker, and its history as a major sport.

* Great North Run

www.greatnorthrunjustgiving.homestead.com Website containing information on the history of the Great North Run, and how sponsorship can be raised and collected. People wishing to take part have to sign up here.

www.onrunning.com Website run by BUPA (The British United Provident Association), a leading UK private medical insurance organisation. Contains the latest information on the Great North Run and other charity races which they sponsor.

* Silverstone

www.grandprix.com A website dedicated to Formula One. Contains up-to-date news articles as well as circuit, driver and team profiles.

www.octagonmotorsports.com Website belonging to Octagon Motor sports, a US marketing group which owns the rights to the British Grand Prix. Contains information on their role within the motor sports industry, press releases, and profile of the circuits which they have connections with (including Silverstone, Brands Hatch and Oulton Park).

* World Cup 2002

www.fifaworldcup.yahoo.com Official site of the FIFA World Cup 2002, containing news articles, competition results, and venue information.

* World Student Games, 1991

www.sivltd.com/donvalley Official site for the Don Valley Stadium, owned by Sheffield International Venues Ltd. Contains information on the history of the stadium, its facilities and an up-to-date calendar of events.

* Other websites

www.culture.gov.uk/sport The DCMS (Department for Culture, Media and Sports) website.

www.sportengland.org Website of Sport England, the largest distributor of lottery and exchequer funding for sport in England.

www.uksport.gov.uk Website of UK Sport who co-ordinate overall sports policy, the support of elite sport at the UK level as well as UK-wide programmes such as anti-doping and major events.

Books

* Economics, A New Approach by A.G. Anderton A contemporary A Level text; fully updated and revised to take account of recent economic developments.

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