You can't fool all of the people all of the time

Costs outweigh the benefits of hosting major international sporting events

Following the FIFA World Cup in South Africa there were strikes by public sector workers demanding improvements in their wages and now in Brazil there are major street protests against the government. Hundreds of thousands of protesters are on the streets of Brazil angry at corruption and high spending on next year’s World Cup.

Governments continue to be convinced that there is a public policy case for hosting these big parties of international sport where the main economic beneficences are the sporting bodies themselves – FIFA and the International Olympic Committee. Workers in Brazil and South Africa have realised that they have not benefited and taken to the streets to hold their governments to account.

The impact of the London Olympics will doubtless be debated for years.

Oxford Economics in a report for Lloyds Banking Group published in July 2012 concludes

Although evidence from most major events sampled indicates there is only a
small, or no, legacy impact from hosting a major event, the experiences of
Australia and Germany both show a positive impact post-event. The FIFA
World Cup in Germany, in particular, has been argued to have “opened up
Germany to new groups of customers”.

“There is a moderate increase in the level of domestic business tourism in the
build up to the event as companies seek to win and undertake contracts to
deliver the 2012 Games, peaking in the year of the event.”
“International tourist arrivals decline in the year prior to the event as people
postpone visits to coincide with the event, or avoid the host city due to
perceptions about disruption caused by the construction of the major
infrastructure projects.”
“At the Sydney 2000 Olympic Games, the Athens 2004 Olympic Games and
the Beijing 2008 Olympic Games, visitors spent less than other tourists on
non-Games related tourism. Therefore, the average spend per night during
the Olympic period is lower than at other times.”
“There is mixed evidence of an increase in the number of domestic residents
travelling abroad during the event: residents of France and Germany reduced
their outbound travel during their World Cup years, while residents of Spain
and Greece increased travel abroad during their Olympic years. The average
impact across the major events has been found to be a 1 percentage point
increase in outbound travel.”
“Avoidance of the host city by locals and residents from other regions of the
host country increases domestic tourism in other parts of the country. Foreign
tourists also visit non-host regions in order to avoid perceived congestion and
high prices (including flights).”