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The economic importance of major sports events: a case-study of six events


Chris Gratton ; Nigel Dobson ;Simon Shibli

To cite this Article Gratton, Chris , Dobson, Nigel andShibli, Simon(2000) 'The economic importance of major sports
events: a case-study of six events', Managing Leisure, 5: 1, 17 — 28
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Managing Leisure 5, 17–28 (2000)

The economic importance of major sports


events: a case-study of six events
Chris Gratton, Nigel Dobson and Simon Shibli
Leisure Industries Research Centre, ShefŽeld Hallam University, Unit 1, ShefŽeld Science
Park, Howard Street, ShefŽeld S1 2LX Email lirc@shu.ac.uk

This paper reports the results of an economic impact assessment of six major sports events held in
the UK in 1997. Major sports events are now regarded by many cities as a signiŽ cant part of their
tourism strategy. However, staging a major sports event normally involves the host city making a
contribution to the costs. Whether such a contribution is justiŽ ed depends on the economic beneŽts
generated in the local economy. The results reported in this paper indicate the wide variability in
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such beneŽts as well as the difŽculty sometimes encountered in predicting what these beneŽts will
be prior to the staging of the event. An attempt is made to develop a typology of major sports events
in terms of their potential to generate signiŽ cant economic impact.

INTRODUCTION major World and European championships


across a wide range of sports.
Up until the 1980s, hosting major sporting This article concentrates on the economic
events such as the Olympics was thought of importance of major sports events using data
as a Žnancial and administrative burden to from six major sports events staged in Eng-
the organizing city and country. This view land and Scotland in 1997. Five of the six
was conŽrmed by the loss of £692 million events were held in Britain’s ‘National Cities
made by Montreal in the staging of the 1976 of Sport’, ShefŽeld, Birmingham and Glasgow.
summer Olympics. The previous summer The sixth, the Women’s British Open Golf
Olympics in Munich in 1972 made a loss of Championship, was held in Sunningdale.
£178 million. These six events were part of a study carried
Following these escalating losses, it out for the UK, English and Scottish Sports
seemed as if any host city would have to Councils. This article attempts to draw some
accept such a Žnancial burden if it were to general conclusions for the economic bene-
stage the Olympic Games or any other major Žts of sports events and therefore puts these
sports event. However, the 1984 Los Angeles six events in the context of other studies that
Olympics changed the economics of major have been carried out over recent years.
sports events. These games made a surplus Before we move on to consider the details of
of £215 million. The Žnancial success of the the six events, we Žrst of all review the
Los Angeles Olympics changed the way cities developing literature on major sports
and governments regarded the hosting of events.
major sports events. Partly as a result of this,
but also because there developed a greater THE ECONOMIC IMPORTANCE OF
understanding of the broader economic ben- MAJOR EVENTS
eŽts to a city and country that could result The study of hallmark events or mega-events
from the staging of a major sports event, became an important area of the tourism and
cities started to compete Žercely to host leisure literature in the 1980s. The economic
Managing Leisure
ISSN 1360-6719 print/ISSN 1466-450X online © 2000 Taylor & Francis Ltd
18 Gratton et al.

Table 1 Financial costs and economic impact of various events


Event Financial loss Impact on GSP
(A$ million ) (A$ million )
1985 Adelaide Grand Prix 2.6 23.6
1992 Adelaide Grand Prix 4.0 37.4
1991 Eastern Creek Motor Cycle Grand Prix 4.8 13.6
1994 Brisbane World Masters Games 2.8 50.6
Source: Mules and Faulkner (1996)

beneŽts of such events has been the main This Žnancial structure is common to
focus of such literature, although broader many special events, and results in the
based multidisciplinary approaches have losses alluded to above. It seems unlikely
been suggested (Hall, 1992; Getz, 1991). that private operators would be willing to
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take on the running of such events because


Within the area of mega-events, sports events
of their low chance of breaking even let
have attracted a signiŽcant amount of at- alone turning a proŽt. The reason why
tention. governments host such events and lose
One of the Žrst major studies in this area taxpayers’ money in the process lies in
was the study of the impact of the 1985 spillover effects or externalities.
Adelaide Grand Prix (Burns et al., 1986). This
It is not a straightforward job, however, to
was followed by an in-depth study of the 1988
establish a proŽt and loss account for a
Calgary Winter Olympics (Richie, 1984;
speciŽc event. Major sports events require
Richie and Aitken, 1984,1985; Richie and
investment in new sports facilities and often
Lyons 1987, 1990; Richie and Smith, 1991).
this is paid for in part by central government
Mules and Faulkner (1996) point out that or even international sports bodies. Thus
even with such mega-events as F1 Grand Prix some of this investment expenditure repre-
races and the Olympics, it is not always an sents a net addition to the local economy
unequivocal economic beneŽt to the cities since the money comes in from outside. Also
that host the event. They emphasize that, in such facilities remain after the event has
general, staging major sports events often Žnished acting as a platform for future activ-
results in the city authorities losing money ities that can generate additional tourist
even though the city itself beneŽts greatly in expenditure. (Mules and Faulkner, 1996).
terms of additional spending in the city. Table Increasingly, sports events are part of a
1 shows the losses made by Australian cities broader strategy aimed at raising the proŽle
hosting major sporting events, at the same of a city and therefore success cannot be
time as indicating the increase in Gross State judged simply on proŽt and loss.
Product (GSP) generated as a direct result of Often the attraction of events is linked to a
the event. Thus the 1994 Brisbane World re-imaging process, and in the case of many
Masters Games cost A$2.8 million to put on UK cities, is invariably linked to strategies of
but generated a massive A$50.6 million of urban regeneration and tourism develop-
additional economic activity in the State ment (Bianchini and Schwengel, 1991; Bram-
economy. Mules and Faulkner’s basic point is well, 1995; Loftman and Spirou, 1996; Roche,
that it normally requires the public sector to 1994). Major events, if successful, have the
be in the role of staging the event and ability to project a new image and identity for
incurring these losses in order to generate a city. The hosting of major sports events
the beneŽts to the local economy: is often justiŽed by the host city in terms
Economic importance of major sports events 19

of long-term economic and social conse- economy will lead to the creation of addi-
quences, directly or indirectly resulting from tional jobs within that economy.
the staging of the event (Mules and Faulkner, There are many different multipliers, but
1996). These effects are primarily justiŽed in the one used most commonly for studies of
economic terms, by estimating the additional events is called the proportional multiplier.
expenditure generated in the local economy The proportional income multiplier is ex-
as the result of the event, in terms of the pressed as:
beneŽts injected from tourism related activ-
Direct + Indirect + Induced Income
ity and the subsequent re-imaging of the city
following the success of the event (Roche Initial Visitor Expenditure
1992).
Cities staging major sports events have a Once the initial visitor expenditure has been
unique opportunity to market themselves to measured, economic impact in terms of
the world. Increasing competition between additional local income can be estimated by
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broadcasters to secure broadcasting rights multiplying this initial expenditure by the


to major sports events has led to a massive local multiplier.
escalation in fees for such rights, which in Direct income is the Žrst round effect of
turn means broadcasters give blanket cov- outside visitor spending. It represents addi-
erage at peak times for such events, enhanc- tional wages, salaries, and proŽts to local
ing the marketing beneŽts to the cities that residents working in businesses that were
stage them. the direct recipients of the additional visitor
expenditures. Indirect income is the income
to other businesses and individuals within
MEASURING THE ECONOMIC IMPACTOF the local economy as a result of the addi-
MAJOR SPORTS EVENTS tional expenditures of the visitors but who
The economic impact of major sports events were not the direct recipients of this visitor
is normally assessed using multiplier analy- expenditure (e.g. local suppliers to the
sis. Multiplier analysis converts the total shops, restaurants, hotels, etc., that were the
amount of additional expenditure in the host recipients of visitor expenditures). Induced
city to a net amount of income retained income is the income resulting from the re-
within the city after allowing for ‘leakages’ spending of additional income earned di-
from the local economy. As an example, the rectly or indirectly on locally produced
total amount of money spent in a hotel will goods and services.
not necessarily all be re-circulated within a In practice, the value of the local multiplier
given city. Some of the money will be spent is ‘borrowed’ from other studies in related
on wages, food suppliers, beverage suppli- cities since it is both complicated and costly
ers, etc, the recipients of which may well be to estimate the value directly. In ShefŽeld, for
outside the city. Thus the multiplier is a instance, which is the venue for one of the six
device which converts total additional ex- events in this study, a local proportional
penditure into the amount of local income multiplier of 0.2 (meaning that only 20% of
retained within the local economy. the additional visitor expenditure is retained
The ultimate purpose of multiplier calcula- in the city as additional local income) has
tions is that they can be used as the basis for been used for several previous economic
further economic analysis such as making impact studies. The larger the city, the less
estimates of job creation attributable to a the leakages, and, in general, the higher the
given inow of income into a local economy. value of the multiplier. For the six events
Sustained additional income into a local speciŽcally referred to in this article, a
20 Gratton et al.

multiplier value of 0.2 was used for the events International Sports Events’ provided a
held in ShefŽeld, Glasgow and Birmingham, framework for a co-ordinated approach to
and 0.1 for the golf championships in Sun- attracting events. The report indicated that
ningdale, as the leakages from the local the UK had started to fall behind other
economy in this case of a rural economy countries in its approach to attracting major
would be substantial. sports events and that the UK had lacked a
By dividing additional local income by an consistent approach for bidding for events.
average annual full-time wage for the sector One of the principal objectives in setting up
where the income is received (e.g. hotel and the UK Sports Council was to rationalize the
catering), then the additional jobs created system. The UK Sports Council has since
can be obtained and this is expressed in full- adopted a Policy and Strategy for Major
time equivalent job years. One full-time Events and funding is now available from the
equivalent job year is the employment equiv- National Lottery to support major sports
alent of one full-time job for one year. In events.
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reality, few, if any, full-time jobs lasting as The National Heritage Committee (1995)
long as one year are generated by any single, report stated:
one-off, sports event. Most of the employ-
It is clear that bids to stage major sporting
ment effect is normally seen in short-term
events . . . can operate as a catalyst to
and part-time employment. The average an- stimulate economic regeneration even if
nual income Žgure that is used in such they do not ultimately prove successful.
calculations, therefore, is normally lower
than the national average wage to reect this The report used the case of ShefŽeld and
employment structure. In the UK studies Manchester to highlight the regenerative
referred to below, a Žgure of £12 500 was impact of sports events in the UK:
used. . . . once the initial redevelopment has
Although this is the formal multiplier study taken place, the existence of high quality
approach to the calculation of economic facilities means that the cities concerned
impact, for comparison across the six events are able to attract other sports events. The
in this study it is useful to compare the impact however does not stop there. Many
additional expenditure generated in the host of the facilities are suitable for other uses
city by the event and the source of that such as conferences and concerts. In addi-
additional expenditure. This will be the ap- tion the favourable publicity which can
proach taken when discussing the results. follow from a successful event may in-
crease the attractiveness of a city, raise its
proŽle overseas, and enable it to attract an
MAJOR SPORTS EVENTS IN THE UK increasing number of tourists.
In the UK there has been a recent acknow- The economic importance of major sports
ledgement of the economic and social bene- events became an increasingly important
Žts that major events can have upon the host issue in Britain following the economic suc-
city, region or country. The setting up of the cess of the Euro 96 football championships,
Major Events Support Group, now the Major which attracted 280 000 overseas visiting
Events Steering Group (MESG), in 1994, by supporters, spending around £120 million in
the Sports Council was an attempt to assist the eight host cities and surrounding regions
governing bodies and local authorities in (Dobson et al., 1997). If we include the impact
bidding for, and staging, major sports events. of spending by domestic visitors not resident
A report by the former National Heritage in the host cities, the total economic impact
Committee (1995) entitled ‘Bids to Stage generated in the host cities by all spectators
Economic importance of major sports events 21

and media/ofŽcials to Euro 96 was £195 1996 over their level in June 1995 (Greene
million. BelŽeld-Smith, 1996). In Manchester, there
Euro 96 was estimated to have increased was a 57% increase in room yield and room
Britain’s net earnings from travel and tourism occupancy directly attributable to Euro 96.
in the second quarter of 1996 by 3% and However, the displacement of business and
generated an extra 0.25% of UK exports of conference trade did dampen the impact in
goods and services. The impact on the whole some areas of the country.
economy was estimated at an added 0.1% on Euro 96 was the largest sports event to be
British Gross Domestic Product (GDP), in the held in Britain since the 1966 World Cup. The
period from April to June, a quarter of the evidence discussed above shows that it was
total growth of 0.4%. The tourist boom during an economic success story for the host cities
the championships helped push Britain’s and the British tourism industry. It has also
trade balance into its Žrst surplus since the led to an increased demand for more major
beginning of 1995. sports events to be staged in Britain in the
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According to estimates from Deloitte and future, most notably the bids to stage the
Touche the government also experienced £64 2006 soccer World Cup Finals and the 2012
million gains as a result of England hosting Olympic Games. The UK also hosted the 1999
the tournament: £40m from the tournament Rugby Union and Cricket World Cups, and
through VAT on ticket sales, merchandising, will host the 2002 Commonwealth Games.
corporate hospitality and other Euro 96
However, every year in the UK there is a
spending; £5 million from betting tax from the
rolling programme of major sports events,
£80 million wagers on Euro 96 matches; £3
some of which are of global signiŽcance. The
million from taxation on the incomes of
Sports Council’s Calendar of Major Sporting
competition organizers; and £16 million from
Events lists 291 major sports events that
companies paying corporation tax on com-
took place in Great Britain in 1997. Out of the
mercial proŽt (Investors Chronicle, 1996).
291 events listed, 46 would attract major
The government received this revenue boost
television coverage outside, as well as inside,
while contributing only relatively small
amounts through National Heritage Depart- Britain. These would include the Six Nations
ment grants. The costs of organizing, promot- Rugby Tournament, Wimbledon, the Open
ing, and policing the tournament and Golf Championship, the FA Cup Final, the
associated cultural events were borne by Boat Race, and the Grand National. Britain
local authorities, private companies and the probably has the broadest portfolio of annual
Football Association. major sports events in relation to its popula-
The tournament itself made a record proŽt tion size of any country in the world. This
of £69 million for UEFA (Europe’s governing gives an expertise and experience that repre-
body of football), £49 million of which was sents a competitive advantage in this rapidly
given as prize money to the competing growing global market. It also signals a need
countries. Although the FA made an operat- to more fully understand how sports events
ing loss of £1.7 million on the tournament, a can generate beneŽts to the cities that host
£2.5 million overall surplus was made after them.
taking account of England’s prize money as a In the UK, three cities, ShefŽeld, Glasgow
result of reaching the semi-Žnals. and Birmingham, have adopted an economic
Euro 96 had a signiŽcant impact on the UK strategy based on attracting major sports
hotel industry. Outside London average events to their area as a catalyst to stimulate
room occupancies and average room rates economic regeneration. These three cities
were up by 14 and 22% respectively in June have been designated ‘National Cities of
22 Gratton et al.

Sport’ and two of these, ShefŽeld and Bir- 4 29 June International


mingham, were also host cities in Euro 96. Amateur Athletics
Five of the six events that are the focus of this Federation Grand
study took place in these ‘National Cities of Prix, ShefŽeld
5 31 July – 3 August European Junior
Sport’.
Swimming
The economic importance of major sports Championships,
events: a study of six events Glasgow
6 14–17 August Weetabix Women’s
This section reports the results of a study of British Open Golf
six major sports events held in the United Championship,
Kingdom between May and August 1997. The Sunningdale
research was carried out on behalf of the UK,
This study showed the wide variety in the
English and Scottish Sports Councils by the
economic impact generated by the six
Leisure Industries Research Centre. The
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events. The two junior events (boxing and


study aimed to evaluate the economic impact
swimming) generated a relatively small eco-
of these events on the local economies of
nomic impact on the host city given that one
host cities and towns as well as to investigate
(boxing) lasted nine days and the other
the complicated economics of staging major
(swimming) for four. Athletics also generated
sports events.
a small impact, but this event lasted less than
In total, 4306 questionnaires were com-
Žve hours. Cricket generated by far the high-
pleted by visitors to the six events. In
est level (£4.6 million) of additional expendi-
addition to the social survey information,
ture in the host city, and also attracted the
additional information was collected from
highest number of spectators. Badminton
local authorities in the host cities, governing
and golf generated a similar level of addi-
bodies involved in staging the event, and
tional expenditure but badminton lasted for
hotels in the host cities. The sample survey
14 days and golf for four days.
information, together with ticket sales data,
Table 2 compares the overall additional
was used to provide estimates of additional
visitor spending, additional local income,
expenditure by visitors from outside the
and additional employment generated by
local economy. Estimates of additional local
each of the six events and breaks down the
income generated and additional jobs cre-
total additional expenditure in the host city
ated were provided using a proportional
by the source of this spending. The table
income multiplier approach. A summary of
shows that the events differ in the relative
results, on an event by event basis, is
share of total additional spending generated
provided below.
by visiting spectators on the one hand, and
The six events studied were:
competitors, ofŽcials, and media representa-
1 19 May – 1 June World Badminton tives on the other. The cricket and golf stand
Championships and out as spectator-driven in the economic
Sudirman Cup, impact with 91% and 90% respectively of the
Glasgow additional expenditure generated by visiting
2 31 May – 8 June European Junior
spectators. Athletics is also spectator-driven
Boxing
Championships, with 75% of total additional expenditure
Birmingham generated by visiting spectators. In the case
3 5–9 June 1st Cornhill Test of athletics, most of the spectators were day
Match England / visitors, whereas the much smaller number
Australia, Edgbaston of competitors and ofŽcials had a higher
Economic importance of major sports events 23

Table 2 Source of additional visitor spending in host city


Badminton Boxing Cricket Athletics Swimming Golf

Visiting 31 65 91 75 8 90
Spectators (%)
OfŽcials, 69 35 9 25 92 10
competitors, and
media (%)
Total additional 1 926 692 244 374 4 571 225 150 936 257 802 1 645 244
spend (£)
Additional local 385 338 48 875 914 245 30 187 51 560 164 524
income (£)
Additional local 31 4 73 2 4 13
employment (in full
time equivalents
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(FTEs))

Fig. 1 The spectrum from competitor-driven to spectator-driven

proportion of them staying overnight, and Overall then if we consider a spectrum


spending considerably more in the host city. from spectator-driven to competitor-driven
Consequently, the percentage contributed by then cricket and golf are at the spectator-
spectators is less than in the cricket and golf driven end of this, and swimming at the
events. other, competitor-driven end. The other
At the other extreme, at the swimming in three events lie in between with athletics and
Glasgow, 92% of the additional expenditure boxing on the spectator-driven side and
generated resulted from the spending of badminton on the competitor-driven side (as
competitors, ofŽcials, and media representa- in Fig. 1).
tives. For badminton around one-third of the The level of additional expenditure gen-
additional spending was due to spectators, erated by competitors, ofŽcials, and media
with most of the other two-thirds due to should be relatively easy to forecast in
competitors, ofŽcials and media representa- advance since it depends on the numbers of
tives. For boxing, the proportions were re- competitors and ofŽcials visiting and the
versed with around two-thirds of the number of event days. Hence, forecasting
additional spend being due to visiting spec- the economic impact of competitor-driven
tators. events is not a major problem. In Glasgow, it
24 Gratton et al.

Table 3 Predicted and actual spectator attendance


Sport Predicted total Actual total
attendance attendance
Badminton 35 000 – 40 000 21 642
Boxing 35 000 – 40 000 1 690
Cricket 63 000 – 70 000 72 693
Athletics 25 000 16 025
Swimming 1 500 – 2 000 990
Golf 63 000 – 40 000 50 000

was possible to build up a proŽle of expendi- considerably reducing the economic impact.
ture on the main items of accommodation In the case of the golf championships, very
and food by investigating the terms offered good weather in August increased attend-
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by the hotels to the visiting teams and ances above expectations.


ofŽcials. Since this was a junior event, there This illustrates a principal danger of stag-
was little expenditure in addition to that on ing special ‘one-off’ events. Projected attend-
accommodation and food. In such circum- ances have a high error margin, which can
stances it is possible to build up a very have a dramatic effect on the Žnal budget
accurate forecast of the economic impact of out-turn as well as on the economic impact of
the event prior to bidding for the event by the event in the local economy.
investigating the number of competitors, Table 2 shows that, overall, the cricket
ofŽcials and media present at previous stag- generated the highest level of economic
ings of the same championships and the impact followed by badminton and golf.
number of days for which the championships However, the impact of the badminton was to
ran. a large extent due to the fact it was by far the
Predicting the impact of spectators is longest event with 14 event days. Table 4
much more difŽcult. Table 3 shows the shows average additional spend per day.
predicted attendance at each of the events as Cricket has by far the highest visitor expendi-
estimated at the beginning of the study and ture per day, over twice the level of the next
prior to the events, and the actual total highest spend, golf, and 42 times the spend
spectator attendance at the events. per day of the lowest, boxing. Badminton
The boxing and badminton estimates of slips to fourth out of the six on this measure
the likely attendances were considerable behind cricket, golf and athletics. The table
overestimates of the actual attendances. The shows more clearly the distinction between
athletics event in ShefŽeld also attracted
many fewer than expected, even after tickets Table 4 Average additional visitor expenditure per
were distributed to ShefŽeld residents and event day
schools at a heavily discounted price. Only in
Sport Average additional expenditure
the case of the two main spectator events,
(£) per day
cricket and golf, were the forecasts of attend-
ances relatively close to the actuals. Both Badminton 137 621
these events are annual events, and therefore Boxing 27 153
easier to predict. However, both are suscep- Cricket 1 142 806
tible to the weather, and in the case of Athletics 176 937
Swimming 64 451
cricket, the way the match develops. Test
Golf 411 311
matches sometimes Žnish in three days,
Economic importance of major sports events 25

Table 5 Percentage expenditure on various items of expenditure


Item Badminton Boxing Cricket Athletics Swimming Golf

Accommodation 52 31 25 21 82 55
Food and drink 21 26 35 24 7 23
Entertainment 5 7 15 5 2 2
Programmes and 1 3 7 12 1 6
merchandise
Shopping and 11 19 5 18 6 7
souvenirs
Travel 6 8 8 14 1 4
Other 3 6 4 7 1 2
Total 100% 100% 100% 100% 100% 100%
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those events that generate signiŽcant eco- Athletics showed the smallest percentage
nomic impacts and those that generate spend on accommodation due to the high
little. proportion of day-visiting spectators. Cricket
Table 5 shows the distribution of addi- showed by far the highest percentage spend
tional expenditure due to the event over the on food and drink, again not surprising given
different items of expenditure. Swimming has the nature of the event. Overall, Table 5
by far the highest proportionate expenditure shows a large degree of variability in the
on accommodation. This is not surprising percentage breakdown of expenditure but is
since additional expenditure due to this broadly consistent in that most events have
event is almost totally generated by com- more than 60% of total expenditure on ac-
petitors and ofŽcials staying in full-board commodation and food and drink, the main
accommodation for the duration of the com- exception being athletics where pro-
petition. In general, the more competitor- grammes, shopping and travel took up a
driven the event is, the higher the proportion higher than normal proportion of total
of expenditure that will go on accommoda- spend.
tion. Thus, we see that badminton also has a
high proportion of total expenditure on ac- Implications for the economic importance
commodation. The exception is golf, which is of sports events in the UK
a spectator-driven event but has a high Of the six events studied in this project, two
proportion of expenditure on accommoda- were part of the normal annual cycle of
tion. This is because a higher proportion of sports events in Great Britain and three were
spectators stayed overnight than in the other special ‘one-off’ or irregular events that
spectator-driven events. Also, there was a would not normally take place in Britain, and
large absolute number of competitors, ofŽ- the Žnal one (the athletics Grand Prix)
cials, and media representatives staying for normally takes place in Britain, but not in
relatively long periods even though this ShefŽeld. If we add to this the extent to which
number was small in relation to the total the event is capable of generating signiŽcant
number of spectators. A Žnal factor pushing economic impact (either on a per day basis
up accommodation expenditure was the rela- or overall), then it is possible to consider
tively high cost of accommodation in the the following typology for major sports
Sunningdale area. events:
26 Gratton et al.

Type A: Irregular, one-off, major and the governing bodies have long-term
international spectator events experience of putting on such events.
generating signiŽcant economic Type C however, are special events that
activity and media interest (e.g. take place on a one-off or irregular basis.
Olympics, Football World Cup,
Even if they take place regularly, from any
European Football
Championship) one country’s point of view they will be
Type B: Major spectator events, irregular since they move from country to
generating signiŽcant economic country. Such events have to be planned and
activity, media interest and part managed from scratch, and potentially pose
of an annual domestic cycle of a major organizational problem for the gov-
sports events (e.g. FA Cup Final, erning bodies and the cities in which they
Six Nations Rugby Union take place, since they will not have had the
Internationals, Test Match experience in hosting that particular event.
Cricket, Open Golf, Wimbledon)
Mega-events such as the Olympics and the
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Type C: Irregular, one-off, major


international spectator/ World Cup, which also pose a similar prob-
competitor events generating lem, have proved that the costs of staging
limited economic activity (e.g. such events are easily matched by the eco-
European Junior Boxing nomic beneŽts generated. However, for
Championships, European smaller events such as the World Badminton
Junior Swimming Championships the true costs of the organi-
Championships, World zation and staging of the event are probably
Badminton Championships,
greater than or equivalent to the economic
IAAF Grand Prix)
Type D: Major competitor events
beneŽts. In addition, it is very difŽcult to
generating limited economic predict the level of spectator interest in such
activity and part of an annual an event. Whereas the World Badminton
cycle of sports events (e.g. Championships attract huge interest in Asia,
National Championships in it would have been difŽcult to forecast the
most sports) level of spectator demand in Glasgow. The
Use of the word ‘major’ in each of these more competitor-driven the event then the
categories is to signify the importance of easier it is to forecast the economic impact,
sporting outcomes of such events (e.g. na- but also the less the impact is likely to be.
tional, European, or World Championships) For Type D events, the beneŽts do not
rather than the economic importance. The cover the costs in economic terms and the
typology is relevant to indicate that not all rationale for bidding for such events must lie
events that are ‘major’ in sporting terms are outside the purely economic domain.
important in economic terms. Type A and B events will generate the
The majority of sports events in any one largest economic beneŽts to the cities that
year are of Types C and D, and this balance is host them. This is already well known for
also reected in the six case studies of this Type A events, hence the Žerce competition
project. However, in terms of economic im- between cities to host them. The majority of
pact it is the Type A and B events that Type B events either do not move venues
dominate the contribution to economic im- from year to year (e.g. Wimbledon) or if they
pact in any one year. do, cities are not able to bid to host them.
Type D events, though of limited economic What is not generally realized, however, is
signiŽcance, also have limited additional that Britain is unusual in having a very high
costs of staging, since they are annual events number of such events. This means that the
Economic importance of major sports events 27

sports event business is a signiŽcant in- CONCLUSIONS


dustry in Britain and Britain has a com-
Major sports events are now a signiŽcant
petitive advantage over most other nations in
part of Britain’s tourism industry. Britain has,
having considerable expertise and experi-
partly by historical accident rather than by
ence in staging major sports events.
design, become the global market leader in
Type B events are a low-risk investment for
the staging of major sports events because
any hosting city since spectator demand is
many of our annual domestic sporting com-
relatively easy to predict. However, for cities
petitions such as the FA Cup Final and
trying to follow an event-led tourism strategy,
Wimbledon attract a large number of over-
such events are not normally ‘on the market’.
seas visitors and a global television audi-
The result is that cities compete to stage
ence. Major sports events held in Britain are
Type C events, which is the most uncertain
a crucial ingredient in the creation of the
category in terms of economic impact. The
tourist image of Britain. The evidence pre-
results of this study, together with previous
sented indicates that some major sports
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event impact studies, allow us to make


events also have the potential to generate
certain generalizations about Type C
signiŽcant economic impact. This is most
events:
recognized in the USA and Australia, but has
(1) the economic impact of competitor- been less so in Britain. The Australian Tourist
driven events is relatively easy to Commission estimates that major events
forecast in advance; contribute 5% of Australia’s total tourism
(2) in general, junior competitor-driven income each year.
events generate small impacts; This article has shown that there is a wide
(3) the more senior the event and the variation across sports events in their ability
longer the event, then the larger the to generate economic impact in the host city.
economic impact, with World Masters Just because the event is a World or Euro-
events, in particular, generating sig- pean Championship does not guarantee that
niŽcant impacts as large numbers of it will be important in economic terms. We
relatively afuent competitors stay in are only just beginning to understand the
the host city for several weeks; parameters of the economics of staging
(4) spectator forecasts for Type C events major sports events. We hope that the evi-
are subject to large error margins and dence presented in this article enhances that
there is a tendency to make highly understanding.
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