Mega Sports Events and Events A Cruize in the Economic Impacts April 2007 Special for Auckland NZ

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Mega Sports Events and EventsA Cruize in the
Economic ImpactsApril 2007 Special for Auckland
NZ

• Troels Troelsen
• Associate Professor at CBS (Copenhagen Business
  School)
• SMAC

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Why running for hosting MSEs /Olympic Games?

• Trustworthiness for a country and/or city.
• Experience for everybody ....body!
• Proving the ability for hosting an event no
  matter size
• Contribution to stakeholders
• Timing
• Can you stand up against any head-wind..

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The sports and economic definition of a Mega
Sports Event. (Do we need them all?)

• Must involve a considerable number of sports
  people athletes, staff, services .
• And a number of different events or a larger
  series of qualifications.
• Attract a crowd of spectators over a period of
  time.
• Attract the media and in general to be
  broadcasted / reported to a larger part of World
  or a continent.
• Result in a considerable economic turnover,
  impact on the city / region / country.
• Result in a branding effect for the area which
  can be exchanged into further activities before
  and after the MSE and as a facilitator of
  possible change of perception of the city/region.
• Involve many stakeholders with different goals

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An Event an Action-Bomb

• Planning of the bomb and the target
• The bomb often different from planning
• The effects
• 1st wave, primary effects and stakeholdersAthlete
  s, organizers, volunteers, financing and funding
• 2nd wave, secondary effects and
  stakeholdersAccommodation industry, transport,
  per diem spending.Redistribution of money or
  new money. Multiplicators.Recipients different
  from funding.
• 3rd wave Branding effects Tourism effects on
  the long run, industry and firms, self confidence
  for a region. Press coverage.
• 4th wave ValuesSocial capital,
  democratization, health, criminality et al.

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Event Economic Effects/ImpactsPre-event
Post-event phases

• Economic growth (GDP) and impact
• Targeted growth in economic relevant sectors
• Direct and indirect employment created
• Direct, indirect and induced impacts
  (Multipliers Analysis)
• Economic-social Net Present Value
• Touristy flows (visitors economy)
• Olympic legacy (stadia infra-structures)
• Globalization (Global branding exposure)

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2. Somebody must want the MSE.

• And from the beginning it is NOT the
  politicians.(Barbara Casani, London 2012, CPH.
  Aug. 28, 2006)
• But who then?

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The hosting region

• To improve the brand of the region
• To change the image of the region
• To speed up the local economy -

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• Personal icons wanting to bring the MSE to the
  region for personal or branding reasonsCNN in
  relation to Atlanta 1996Fiat / Agnelli Family
  for the Torino 2006Primo Nebiolo for the
  Rome-bids.Los Angeles,

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The sports and its organizations

• For presidents to get seats in the ISGB/ IOC
• To upgrade sport facilities
• Increasing the status for the sport
• To attract additional international events .
• To achieve an international profile.
• To involve volunteers and to upgrade personal.
• To attack sponsors.
• To develop grass root sports and activities.
• To host competitions on home soil will benefit
  the athletes of the region especially if they
  are of world class.

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The business community

• Accommodation, travel, construction, consultancy
  all benefiting from an MSE
• Business institutions wanting to show case
  cutting edge industries and competences.
• Exports wanting to position themselves by
  relating to the MSE-story. (research)
• To make money and a profit(a growing argument
  Tour de France, Atlanta, Sailing, ..)

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The political parties and politicians in a
country / region

• International political relations / reputation /
  refocuse.
• Regional versus central government issues
  (Barcelona)
• Regional rivalry (Sydney versus Melbourne,
  East-West coast USA)

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The public Opinion (who wants to stage at a
venue where you are not wanted?)

• Open for spin from pros et cons
• Its difficult to move the public opinion
• First opinion extremely important

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Percentage of residents in favour of hosting the
event by period
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Do you agree with the project of hosting the
Games in Torino and the Alp valleys ?
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Are you proud that Torino won the bidding
competition for the 2006 Winter Games ?
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Positive effects of the 2006 Games (surveys
before)
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of interviewed people confident that the
positive effects of the Games will be long
lasting after the Winter OG
(results of the surveys 2002-2006)
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Are you confident that the 2006 Winter Games
will be an opportunity for promoting Torino ?
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According to some people, Torino should work to
change its traditional image of industrial city
into a tourist and cultural city image. Do
you agree?
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Are you confident that Torino should promote a
new cultural and tourist image, changing and
overpassing its traditional model (industrial
city) ?
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In your opinion, will the tourism arrivals
increase in Torino also after the Games ended ? 
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Do you think that Torino will overcome its
difficulties (Fiat Company crises) and
develop new opportunities for its future ?
(answer yes)
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• SWOT analyses
• on aspects of hosting a sports event.

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The stakeholders wanting the MSE process are
important for success

• Montreal 1976 ?
• Los Angeles 1984 the business society
• Seoul 1988 the Government
• Barcelona 1992 Catalonia/Sararanch
• Atlanta 1996 - CNN
• Sydney 2000 the city-rivalry
• Athens 2004 the VIPs /people
• Beijing 2008 the party
• London 2012 the LOC and City Counsil

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3. The importance of formulating a vision and a
mission for a MSE.

• Political correct for the time of the decision.
• What is that?

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  General goals of (Sport) Mega Events (the
Olympics show a wide differentiation of cases)

• Political legitimization and recognition Seoul
  summer 1988 (western choice)
• Political Nationalism, and success in the world
  arena Chamonix winter 1924
• Catalyst of urban regeneration Barcelona summer
  1992 , Sydney 2000 (some failures Atlanta
  summer 1996, Calgary winter 1988, Sapporo winter
  1972)
• Promotion of a district through the increased
  tourism Albertville winter 1992 besides
  Barcelona (summer) the Savoy ski district is a
  positive case of global-total tourism venue
• Economic promotion of an area (city marketing)
  Atlanta summer 1996 Atlanta is a case of
  success considering the economic balance (Los
  Angeles 1984 too), but Atlanta is also a failure
  in other fields (transportation system, recovery
  of Downtown) but Atlanta and Georgia improved
  their position in the USA ranking of attractive
  areas for companies from the other States and
  abroad, and used the Games in a successfull
  citymarketing strategy
• Promotion of a Nation through the fame of a small
  area Lillehammer winter 1994 Norway, a nation
  visited by a small number of tourists, made
  itself well known through the fame of a small
  village Lillehammer case is known as
  intermezzo symdrome because after the Games
  Lillehammer came back to the previous situation
  (no critical mass no development!)
• Message of reconciliation between cultures
  Sydney summer 2000, FIFA WC 2002
• Modernization of infrastructures, and governance
  Athens 2004 good surprise
• Modernization, political symbolic success,
  legitimization Bejing 2008

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Often 15 years lead time

• New York appointed to host the S-OG in 2016
  (tentative guess).
• Appointed in 2009 in their second run to host the
  S-OG
• Bidding in 2005 in their first run to host the
  S-OG
• Turning in their official request to be a bidding
  city to IOC in 2003
• Producing a complete feasibility study and
  pre-bid from 2001-2003
• Having the political discussion and funding of
  the bidding organization and the funding of the
  S-OG, if NY might be appointed 1999-2001
• Started by a stakeholder sincerely wanting to
  bring the S-OG to NY in 1998.

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Copenhagens vision? (by Troels Troelsen)

• The story of solidarity from the Nordic
  Countries,The sports model, the management
  style, the stable democracy, the solidarity with
  the world shown demonstrated by the Nordic
  Countries.
• Freedom is nothing left to do. Sport as a world
  cure for lifestyle deceases such as obesity,
  cardio deceases, stress.
• Enough is too much, Sport against poverty ala
  Bono from U2. Focus on sports as a universal
  activity, simple living and anti consumerism.
• The Danish model

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5. Timing of applying for a MSE.

• Some logics
• New and old players(Africa, South America,..)
• Some political wheeling and dealing(the logics
  of votes and voting)
• And ----------------- WDIK

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6. Understanding the composition of the decision
making ISGB.

• What is democracy.
• Ambassadors
• Lobbyism
• Agents

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7. Different stages and management teams of
organizing the MSE.

• First stage spinning the public opinion and
  convincing the key players.
• Second stage writing the application founded on
  detailed planning of the MSE.
• Third stage - the real job, to be ready at time.
• Forth Stage the pre and post MSE activities and
  the supplementing aspects.

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Problem Definition

• The Olympic Games as the Worlds most important
  mega sports eventClosely followed by FIFAs WC.
• As an economic and social project
• Make its adequate economic analysis
• Measure their economic effects/impacts on the
  hosting regions, states or countries

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Long Maturation Process

• Pre-Games phase
• From the inicial idea to bid until the launching
  of the Games a period of 10 or more years of
  preparation and multiple investments occur
• Post-Games phase
• From the end of the Games another period of more
  5 to 10 years of economic impacts have to be
  considered

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Main Methods of Economic Analysis of the Games

• (1)- Macroeconomic Impacts Studies
• Input-Output Matrixes Multipliers
• Econometric/Computable General Equilibrium (CGE
  Framework)
• (2)- Cost-Benefit Analysis
• Net Present Values Discounted Cash Flows

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Main Postures of Economic Analysis of the Games

• Ex-ante Studies
• Based on forecasts and/or scenarios
• Ex-post Studies
• Based on real and validated data

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Analysis Methods (examples)

• Macroeconomic Impacts Studies
• - Salt Lake City (USA), Lillehammer (Norway),
  
• Vancouver (Canada 2010)
• - Atlanta (USA), Barcelona (Spain),
• Sydney (Australia)
• Cost-Benefit Studies
• - Vancouver (Canada 2010)
• - London (UK 2012)

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What we get from?
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Main advantages of Cost-Benefit Analysis

• Gives the socio-economic rentability of the
  Games Project
• The calculus of its net present value
• Makes possible to compare results obtained with
  other societys alternative projects
• Has real advantages over traditional
  macroeconomic impacts methodology
• Has more accounting accuracy
• Its findings can serve as a comparator for the
  scrutiny of the host country public policies
  efficiencies

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Costs of Hosting the Games(Source A London
Olympic Bid for 2012, House of Commons, 3rd
Report 2002/2003)
N.B. Aproximate comparisons. Some of the cities
include infrastrutures others not. Beijing and
Barcelona include urbanization development costs.
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Key Economic Benefits and Costs of the Games
(Source PricewaterhouseCoopers European
Economic Outlook June 2004)
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Economic Impact Studies of Past Games
(Source PricewaterhouseCoopers European Economic
Outlook June 2004)
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Impact analysis vs. CBA

• Appetizers Olympic Games figures
• Sydney 2000
• Foreign tourism turnover during the OG estimated
  430m US DOLLARS (130,000 foreign OG-tourists)
• - Between 1997-2004 an extra 1.6 mio. foreign
  visitorsspending 3.5bn US DOLLARS in Australia
• Sydneys Convention/Visitor Bureau hosted 210
  eventsbetween 1993 (the year they were appointed
  OG2000hosts) and 2000. Between 1993-96 78 !

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Impact analysis vs. CBA

• Appetizers Olympic Games figures
• Sydney 2000
• Brand Australia promoted heavily (reduced
  brandknowledge process by estimated 10 year)
• Media coverage of Australia 11 times higher
  thannormally (media value 2bn US DOLLARS)
• 6,7 mio. tickets sold, 30bn TV-viewers
• 6 months after OG2000 the Australian Government
  announced that the Games had cost 4.2bn USDOLL

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The Life Cycle of Impacts
Economic Impacts
-11 -9 -7 -3 0
5 10
Time Horizon of the Games Project
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A case story A new aim for Sport In England

To change the culture of sport and physical
activity in England in order to increase
participation across all social groups leading to
improvements in health and other social and
economic benefits and providing the basis for
progression into higher levels of performance
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Active and Successful Sporting Nation
Active for health, economic, social benefits
Liam Donaldson - Chief Medical Officer
The evidence is compelling. Cost of physical
inactivity in England estimated at 8.2 billion
per year Obesity costs an additional 2.5 billion
per year
At least five a week DH 2004
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A Market Segmentation Approach