The economic impact of sports events
Warm-up Starter
1. On this world map, use dots to label the location of the following sports events:
a. London 2012 Olympics
b. Rio de Janeiro 2016 Olympics
c. Durban and Johannesburg in South Africa which hosted matches in the 2010 FIFA
World Cup
d. Sochi 2014 Winter Olympics
e. Sydney 2000 Olympics
f. 2022 Qatar FIFA World Cup
g. 2015 Beijing World Athletics Championships
2. Working in pairs, suggest 5 advantages and 5 disadvantages to a city hosting a major
sporting event and note down your answers in the space below:
Disadvantages
Advantages
The economic impact of sports events
Task One – assessing the impact of the 2010 FIFA World Cup in South Africa
When the 2014 World Cup started in Brazil, many South Africans reflected on their own hosting of the World Cup
in 2010 and regarded it as a poisoned chalice. Whilst the event certainly created a sense of pride and patriotism
amongst South Africans, little is now left of that optimism.
The monuments to the World Cup still stand – 5 shiny new stadia, upgraded airports, new roads and a highspeed rail network – but at a cost of nearly $4bn ($1.3bn of which was on stadia), which equates to around
$13,000 per visitor to the World Cup itself. Many of those living in poverty in the South African townships feel
aggrieved that the money was spent on shiny, and now under-used, sports and transport infrastructure rather
than on much-needed schools and hospitals. The benefits of hosting the World Cup accrued mainly to the
already-rich, rather than the perennial poor. Whilst many remain in poverty in South Africa, football’s governing
body made a huge $3bn profit from the event through ticket sales and advertising, despite visitor numbers being
lower than expected.
Johan Fourie, an economics professor at Stellenbosch University in South Africa, thinks that the cost was too
high. However, he also says that without the deadline on construction imposed by the need to be ready in time
to host an event, large-scale infrastructure projects would take too long. Furthermore, the pressing construction
deadline led to improvements in the labour market, with 6000 new construction jobs being created and nearly
40,000 more police officers trained.
Before the World Cup in South Africa, many South Africans hoped that the World Cup would help to “rebrand”
their economy as a tourist destination. Tourism from Europe in particular has continued to increase, at a rate of
around 7% per year since 2010. Whether this will continue, however, is debatable. One unexpected benefits to
South Africa of hosting the World Cup has been the improvement in racial ties, as cross-community support for
football grew. This is particularly important in a country that is still unequal, despite the end of apartheid two
decades ago.
Sources:
https://www.enca.com/south-africa-still-counting-cost-2010-world-cup
http://money.cnn.com/2014/06/09/investing/world-cup-south-africa-brazil/
http://www.southafrica.info/travel/tourists-290514.htm#.Vo7HSPmLTrc
http://www.bbc.co.uk/news/10507663
Based on the short case study above, decide whether the governments of Middle Income
Countries should be encouraged to bid to host major sporting events such as the World Cup.
Explain your answer.
The economic impact of sports events
Task two – the legacy of London 2012
You will need to have access to the following article: The Economic Impact of London 2012, Oxford
Economics and Lloyds Banking Group
1. The boxes below indicate some of the benefits to London and the wider UK of hosting the
2012 Olympics. Before reading the article, estimate the value of each of the benefits.
(Solutions are also provided overleaf)
Total impact on GDP
Proportion of total benefits
accruing to London
Total “number of years of
employment” supported by
the Games
Total spending on
construction
Total increase in number of
tourists
Total spending by additional
tourists
The estimated value of the
“increase in happiness” for
each UK citizen
The total amount spent on
training workers for the
Games
The number of new affordable
homes subsequently built on
the Olympic Park
2. Now take a look at these two articles, and decide whether London should ever bid again to
host a major sporting event:
a. Zimabalist, A. (2010) Is it worth it? IMF, Finance and Development, Vol 47:1 http://www.imf.org/external/pubs/ft/fandd/2010/03/zimbalist.htm
b. Jericho, G. (2013) Big Sporting Events don’t always translate into Big Economic Benefits
The Guardian http://www.theguardian.com/business/grogonomics/2013/jul/26/sporting-eventseconomic-benefits
The economic impact of sports events
Solution:
Total impact on GDP
£16.5bn
Proportion of total benefits
accruing to London
41%
Total “number of years of
employment” supported by
the Games
354,000
Total spending on
construction
£13.5bn
Total increase in number of
tourists
10.8m
Total spending by additional
tourists
£2bn
The estimated value of the
“increase in happiness” for
each UK citizen
£165
The total amount spent on
training workers for the
Games
£504m
The number of new affordable
homes subsequently built on
the Olympic Park
3850