How Much Are Global Sporting Events Worth?

Britain has done well recently in securing global sporting events and is bidding for the World Cup in 2018. But how much they are really worth? The government view is that they give a boost to the economy, but some sports economists are not so sure. An article in Urban Studies last year noted, ‘There is now a considerable accumulation of evidence that the direct economic benefits of hosting sporting events are limited.’ Admittedly, the Euro 96 football tournament attracted as many as 280,000 overseas visitors to the UK, while tourism and travel spending rose by 3 per cent in the second quarter of the year. Such effects are typically short lived, however, as tourism lasts only as long as the event and may even deter other holidaymakers. The 2006 football World Cup in Germany was estimated to have provided a £3bn boost to the German economy, but only a month after the tournament the Bundesbank said the ‘one-off’ effects were already disappearing.

One also has to take account of what economists call ‘opportunity costs’ or foregone alternatives. Most tourists will be from the home country, which means that leisure spending is simply diverted from one activity to another. One of Britain’s leading sports economists, Stefan Szymanski, told the Financial Times ‘The gain in sport is a loss on spending in cinemas.’ Even so, economists can underestimate intangibles – those things that are difficult to quantify. The world cups staged in Germany, Korea and Japan boosted the image of those countries. The new paradigm of behavioural economics emphasises the importance of psychology and there is an emerging literature on well-being. To put it another way, if people are happy, they may be more productive and healthier. If we got some better weather, and we won The Ashes, people might even stop worrying about swine ‘flu.