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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
To link to this Article: DOI: 10.1080/136067100375713
URL: http://dx.doi.org/10.1080/136067100375713
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Managing Leisure 5, 17–28 (2000)
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 signi 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 justi ed depends on the economic benets
generated in the local economy. The results reported in this paper indicate the wide variability in
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such benets as well as the difculty sometimes encountered in predicting what these benets 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 signi cant economic impact.
benets of such events has been the main This nancial 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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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 justied 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:
benets 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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multiplier value of 0.2 was used for the events International Sports Events’ provided a
held in Shefeld, 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 gure that is used in such they do not ultimately prove successful.
calculations, therefore, is normally lower
than the national average wage to reect this The report used the case of Shefeld and
employment structure. In the UK studies Manchester to highlight the regenerative
referred to below, a gure 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
prole 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
ts 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/ofcials to Euro 96 was £195 1996 over their level in June 1995 (Greene
million. Beleld-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 rst 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 signicance. 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 prot (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 prot 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 benets 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, Shefeld, Glasgow
result of reaching the semi-nals. and Birmingham, have adopted an economic
Euro 96 had a signicant 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.
Visiting 31 65 91 75 8 90
Spectators (%)
Ofcials, 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))
was possible to build up a prole 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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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 signicant 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 ofcials 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, of- the nal 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 Shefeld. If we add to this the extent to which
number was small in relation to the total the event is capable of generating signicant
number of spectators. A nal 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 signicant 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 signicant 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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