Major sports events –
Profitable for whom?
Harry Arne Solberg
Trondheim Business School
1994 Lillehammer Winter Olymics – The conclusions
(Spilling,1998):
• Looking beyond the intermezzo, which is the main mechanism of an event,
it turns out quite clearly that the long-term industral impacts are very
marginal and in no way justify the huge costs of hosting the events.
• If the main argument for hosting a mega-event like the Winter Olympics is
the long-term economic impacts it will generate, the Lillehammer
experience quite clearly points to the concusion that it is a waist of money.
• However, this does not mean that there are no other arguments for hosting
a mega-event. The Lillehammer Olympics was a great experience, although
not in economic terms.
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Have the world moved forward?
Recent patterns/headlines:
• Cost overruns
• Olympic Games, FIFA World Cup, World Skiing Championship
• The capacity utilization (next page)
• Benefits not defending the investments
• Economic, Health, Tourism….
• BUT people still welcome the events (Preuss & Solberg, 2007)
• 2022 Winter Olympics with 5 applicants withdrawing their (planned)
application the exception
Post-event utilization of stadiums:
• 2002 FIFA World Cup, Korea
• 2010 FIFA World Cup, Sør-Afrika
• 2004 UEFA Euro, Portugal
• 2014 FIFA World Cup Brazil
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• 2006 FIFA World Cup, Tyskland
• 1994 FIFA World Cup, USA
• 1998 FIFA World Cup, Frankrike
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Olympic TV rights - distribution
1948 – 1968
1972 – 1980
1984 – 1992
1996 – 2004
2006 – 2008
2010/2012 – including all
Marketing revenues
IOC
1-4%
10%
33%
40%
51%
LOOC
99-96%
90%
67%
60%
49%
68%
32%
FIFA-reserves
US-100 million
2003:
76
2004:
208
2005:
350
2006:
617
2007:
643
2008:
902
2009:
1061
2010:
1280
Research issues:
• How to make the events more beneficial for the local organisers and
the host region/nation?
• Distribution of revenues and costs between the international sport
governing bodies and the local organisers (next pages)
• Avoiding costoverruns / white elephants / other dark sides of the
sports (events)
• Identifying the dynamic forces behind the problems
How to approach the issues from a scientific
perspective?
Starting point: Identifying the key stakeholders and their objectives
Stakeholders involved in major sports events
Juridical
owner
Media/
National
government
sponsors
Consultants
Local
organizing
committee
National/
regional sport
governing
bodies
Local public
sector
Other local
stakeholders
Some key words:
• The rat race between sport governing bodies
• The role of the media
• Principal-agent relations
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National government as principal / the others as agents
Free-riding motives / Events a short cut to subsidies in democracies
Unrealistic expectations
Fixed deadlines
Corruption
The distribution of market power – an illustration
UEFA TV rights - Distribution
Local organizer
UEFA
Champions League:
75%
25%
European Championship
national teams:
10%
90%
Why so different?