Mega‐sporting Events in Developing Nations: Playing the Way to Prosperity?

Abstract

ABSTRACT:Supporters of mega-sporting events such as the World Cup and Olympics claim that these events attract hoards of wealthy visitors and lead to lasting economic benefits for the host regions. For this reason, cities and countries compete vigorously for the right to stage these spectacles. Recently, developing countries have become increasingly vocal in demanding that they get the right to share in the economic benefits of these international games. China, for example, has been awarded the 2008Summer Olympics, and an African nation seems destined to host the 2010 World Cup. The specialized infrastructure and operating expenses required to host these events, however, can be extremely costly, and it is not at all clear that either the long or short-term benefits of the games are anywhere nearly large enough to cover these costs. This paper reviews other researchers' as well as our own previous work on mega-sporting events such as the Super Bowl and World Series as well as international events like the World Cup and Olympics. Independent researchers nearly unanimously find that boosters' projections of the economic impact of sporting events exaggerate the true economic impact of these competitions by a wide margin.In particular, in this paper we focus on the particular circumstances that face developing countries hosting these games. Our research suggests that in most cases mega-sporting events are an even worse investment for developing countries than for industrialized countries.

Mega-events as a Response to Poverty Reduction: The 2010 FIFA World Cup and its Urban Development Implications

“…The Montreal Olympics had highly problematic long-term economic outcomes for the city. An analysis of the more recent 1994 World Cup in the United States of America revealed that opposed to the expected $4 billion gain, host cities experienced losses ranging between $5.5-$9.3 billion Matheson and Baade 2004). Non-host cities can also experience reductions in their revenue which may be long-lasting.…”

“…In addition to these experiences, as Matheson and Baade (2004) suggest, displacement of public funds is a key area of complaint. Public spending on projects and maintenance often means that budget cuts are made in other areasa problem which becomes exacerbated if costs escalate.…”

“…The international literature reveals a growing scepticism over the extent to which hosting mega-events potentially results in economic growth or significant developmental impacts (Humphreys and Prokopowicz 2007;Whitson and Horne 2006;Owen 2005;Black and van der Westhuizen 2004;Baade and Matheson 2004;Horne andManzenreiter 2004, 2006;Matheson and Baade 2004;Whitson 2004;Burbank et al 2002;Emery 2001;Jones 2001;Higham 1999). A host of scholars conclude that while there are some positive economic and legacy impacts (Lee and Taylor 2005;Ritchie 2000), the urban economic impact is variable, intangible and ambiguous at best (Andranovich et al 2001;Gratton et al 2000Gratton et al , 2001Gratton et al , 2006.…”

“…However, "claims that sports mega-events provide a substantial boost to the economy of the host city, region, and country have been strongly criticised" (Matheson andBaade 2004:1089). Reviewing the consequences of mega-events in the periphery, Matheson and Baade (2004) point out that spending on infrastructure is considerably higher in developing countries. Yet evidence suggests that the construction of stadiums in Japan, associated with the 2002 co-hosted World Cup with Korea, may rather have been "steroids, bloating rather than strengthening the economy" (McCormack, cited in Horne 2004:1242.…”

“…It is important to assess whether local residents will benefit from earnings associated with the mega-event and whether these earnings will remain after the conclusion of the event. The literature indicates that claims of job creation associated with mega-events need to be treated cautiously (Horne and Manzenreiter 2006;Matheson and Baade 2004).…”