Economic impacts of sports events on the local and national levels can be significant, including through increased tourism, job creation, infrastructure development, enhanced city or country branding, the stimulation of local businesses, and more. Beyond the scope of sports event management and organisation, the concept of economic impact of sports events is highly relevant in the broader context of sport sustainability.
Numerous studies have analyzed the economic impacts of sports events, including various editions of mega events such as the Olympic and Paralympic Games, employing different methodologies and yielding diverse findings. However, many of these studies have faced criticism from experts for relying on biased assumptions and methods. Therefore, there is a need to standardize the way we assess the impact of sports events, and that’s where science and AISTS as the academic link to the sports industry have a role to play.
How AISTS’ methodology is different from others?
When assessing the economic impact of a sports event, it is crucial to approach the task with both caution and transparency. Caution is necessary for making assumptions in ex-ante analyses and determining the elements used in calculating economic impact. Transparency is essential for clearly communicating the methodology and assumptions. Therefore, a very cautious methodology with conservative assumptions is required for measuring the economic impact.
AISTS proposes the two following methodologies as optimal for the assessment of economic impacts of sports events. Estimating the economic impact using the National Income Accounting (NIA) provides a baseline calculation of the direct contribution of sports events to the local economy. Additionally, the Keynesian model, which relies on multiplier effects, is recommended. Unlike other methods (such as Input-Output methods and cost-benefit analyses), the NIA framework is the most conservative approach found in the literature. The Keynesian method is also noted for its simplicity and transparency, utilizing readily available macroeconomic data. A tangible economic impact is defined as the product of a net injection and a multiplier. The spending by an economic actor, such as an event rights owner within a specific area, is referred to as an injection. This method involves estimating the direct, indirect, and induced effects of a sports event.
The Importance of Sports Events’ Economic Impacts for Host Cities
For host cities, the economic impact of a sporting event is a crucial factor to consider for several reasons:
- Public Funds Utilization: Hosting a major sporting event often involves significant investments from public authorities, in the form of infrastructure construction, subsidies, and other expenses. It is therefore essential for host cities to justify these expenditures to politicians and the population by demonstrating the expected positive economic benefits.
- Accountability to the Population: Citizens have the right to know how their money is being spent, and they expect sporting events to generate tangible benefits for their community. The economic impact, in terms of jobs created, revenue generated, and stimulation of local economic activity, is a compelling argument to justify hosting such an event.
- Economic Development: Sporting events can be powerful engines of economic development for host cities. They can boost tourism, attract foreign investment, and create new jobs. An accurate assessment of the economic impact allows cities to maximize these positive benefits.
The Negotiation Power of a Sports Event Rights Owner
Since sports events can have significantly favourable economic impact on host cities and countries, canditates are often willing to offer significant subsidies and financial guarantees to sports event rights owners in order to be selected as the preferred location. Therefore, of a sporting event rights owners hold considerable bargaining power when it comes to choosing host cities for their events. They can play on the competition between candidate cities to obtain advantageous conditions, particularly in terms of public funding, knowing their potential economic impact of their sports event on the city, the region and the national level. Indeed, host cities are often reluctant to lose a major event, as this can have significant negative economic consequences.
AISTS will assess the Paris 2024 Olympics’ economic impact
In the current Olympic year, Paris is set to host the next Summer Olympic and Paralympic Games. As the event continues to grow in scale with each edition, there is increasing scrutiny of the economic impacts and returns at local, regional, and national levels. For the 2024 edition, Paris will employ the National Income Accounting methodology to assess these economic effects. This methodology will help in measuring the overall economic activity generated by the Games, including factors such as GDP growth, employment creation, and investment inflows. To ensure accuracy and adherence to this methodology, the Academy of Sport Science and Technology (AISTS) has been tasked with overseeing its implementation. Our role will include verifying that the principles and processes of the National Income Accounting methodology are properly followed, thereby providing a reliable analysis of the economic benefits and costs associated with hosting the Paris 2024 Olympic and Paralympic Games.
AISTS economic impact study service
Over the last 15 years, the International Academy of Sport Science and Technology (AISTS) has gained considerable expertise in this field through conducting multiple economic impacts studies including the assessment of the total contribution of the International Olympic Committee (IOC) and other international sports organisations to the local economy (i.e. the region of Lausanne, the Canton of Vaud, and the whole Swiss Confederation). Should you be interested in having more information about our sports events economic impacts studies and their findings, please fill out this contact form. We would be delighted to speak with you.
