Events like the Olympics, FIFA World Cup, and Super Bowl have immense potential for economic gain by host cities and countries. To the host country and the city itself, such events bring attention from millions of eyes in terms of attendants, global media, and tourism sponsorship and revenue generated through broadcasting rights. The economic gains of such events, however, are mostly associated with problems and controversies in terms of related high costs of infrastructure investments and long-term sustainability.
Revenue Generation From Tourism and Hospitality
Tourism inflows are the most significant direct economic benefits for the host country of major sporting events. Touring fans travel en masse to the host cities for the events and spend money on accommodation, food, transport systems, and entertainment. The revenues within the tourism and hospitality sectors increase dynamically in demand and create employment.
For instance, the attracted over 3 million visitors to its various venues within Russia and, in the process, helped those local hotels, restaurants, and businesses to generate copious amounts of revenue. Similarly, the Olympics do considerably boost tourism in any area: both London (2012) and Rio de Janeiro (2016) saw a hike in foreign arrivals before the occurrence of their respective Games.
Media Exposure and Brand Promotion
The unparalleled brand publicity and exposure for the host country or city is an added advantage in major sporting events. Global broadcasting and extensive media coverage of host locations educate the world on hosts as tourist destinations concerning their cultural and economic potentials, hence creating an exposure that will serve long-term benefits by attracting future tourists, investors, and business opportunities.
Simply billions of dollars are sold for broadcasting rights to such major events as the Olympics and FIFA World Cup, with revenues distributed to organizing committees, sports federations, and host countries. Sponsorship deals with global brands also put a great deal into the overall revenue and financially support the organization of events and infrastructure development.
Infrastructure Development and Urban Renewal
Hosting most major sport events is normally characterized by substantial investments in event infrastructure, meaning new sport facilities, transport systems, and accommodation. In the process of undertaking those projects, cities see urban renewal and modernization through an increased quality of life for their people and put them on the world map.
For example, the 2008 Beijing Olympics yielded colossal infrastructure development, new stadiums, airports, and public transport. These investments contributed manifold and with long-term benefits to the city’s economy and development. However, they are also highly contentious, involving large public funding, and often result in displacements or environmental concerns.
Large-scale sports events provide jobs and stimulate economies of host cities. The construction and preparatory phases generate employment in such sectors as construction, hospitality, retail, and event management. Moreover, the jobs which are temporary by nature are created during the very event, thus contributing to the short-term economic gains.
However, the long-term economic impact of these jobs is often debated. While some point out that an influx of temporary jobs may have a general boosting effect on the local economy, many indicate that these jobs are relatively lowly paid and estrapolate long-term employment. Being able to ensure that the economic gains of major events are carried forward beyond the event period is a challenge most host cities face.
As promising as there might be opportunities for economic gains, hosting mega events also constitutes significant financial commitments and associated risks. The organization of mega events is notorious for being enormously expensive because of the cost of creating infrastructure, security concerns, and other operating expenditures. Most host cities have become familiar with this phenomenon, as budgets balloon well beyond what was previously envisaged, and financial strains arrive with public criticism, and in some cases debates have been initiated regarding the `cost-benefit’ balancing act.
For example, the 2004 Athens Olympic Games plunged Greece into a financial crisis and contributed in part to the nation’s economic meltdown. Also in a similar vein, the expense involved in hosting the 2016 Rio Olympic Games was well beyond initial predictions, and such use of taxpayer monies is highly debated against the backdrop of all the economic struggles Brazil is facing.
Legacy and Sustainability Thoughts
More recently, the notion of legacy and sustainability is an intrinsic part of the long-term economic impact related to major sporting events. Host cities are becoming progressively more concerned with the development of positive and lasting effects that will benefit local communities far beyond the conclusion of the event. This reflects on the repurposing of sports infrastructure, tourism promotion, and economic development that bundles on the event exposure.
Not all events realized positive legacies, however. An example is facilities of host cities that have become financial burdens due to being underutilized or abandoned, and are known as “white elephants.” Ensuring that investment in infrastructure will be sustainable and will be of help to the community are among the serious challenges facing organizers and policymakers.
Conclusion
The economic impact of major sports events is rather a complicated and multi-faceted issue. While these events provide fantastic ways of making money through revenues earned from tourism, media representation, and infrastructure development, they also pose financial challenges and considerable risk. For host cities and countries, the potential economic impacts from these decisions have to be set against the costs and long-term sustainability to ensure assured legacies and positive impacts on the communities. As the global sports terrain continuously reshapes itself in the future, the economic dynamics of major events will definitely register great relevance in argumentation or analysis.
