University of Oxford

Economic Benefits Of Hosting The Olympic Games

Introduction

Hosting the Olympic Games can bring a lot of benefits for the host country. These benefits can be divided into either long term or short term ones. The short term economic benefits include fresh cash flows from the visitors who will come to the host country, officials, athletes, training activities, media activities, cultural events linked to the Olympics and the formation of an Olympic committee. These investments will be done within the City that hosts the event and many other surrounding areas in the respective country. (Carros et al, 2001)

Long term economic benefits of hosting the Olympics fall in three major categories. The first is the creation of infrastructure that reaches worldwide standards. The second category is the benefit of receiving international attention through media coverage. The last long term economic benefit is related to the community; there will be formation of educational and youth programs, there will also be formation of jobs for a number of individuals in the country. Some local volunteer programs will also be formed. Thereafter, there will be formation of community development programs. All the details of both the short term and long term benefits will be examined in the subsequent portions of the essay. (Segrave, 1998)

Short term economic benefits

Short term economic benefits may be defined as the total changes that will occur in terms of employment, revenue and total national output through outside investments. The first economic impact will result form the fact that the host country will be required to produce more goods and services to cater for the additional numbers. The consumers of those gods are most likely going to be the athletes themselves and their officials. There will also be international spectators and national spectators that will need to consume additional industrial products. It is a matter of fact that the event will need to be covered by media personalities both nationally and internationally. These groups will need to consume goods made by the host country. The Olympics themselves have representatives in the host country and they will need to consume commodities. Lastly, there will be numerous sponsors attending the event and they will also be required to purchase commodities. The total sum of additional revenue that will come from the sale of commodities produced by the host country’s industries to the above mentioned groups will make up a huge chunk of the direct economic benefits coming form hosting the Olympics.

There may be some visitors that will still be interested in seeing the host country’s sites during the Olympic Games and after. There can be huge amounts of revenue received from those visits. Research conducted in this area has indicated that a host country can earn up to 823 million dollars out of the visitors who may come to visit the host country within the first twenty days prior to the event and twenty days after the event. This is also topped up by some new businesses that may be created as direct result of the Olympics and this can bring about a total of 1.1 billion dollars. (Reinberger, 1988)

Employment is another great economic benefit that will come as a result of hosting the event. One cannot underestimate the level of job creation that an event of such magnitude can bring to the host country. The employment opportunities may either be part time or full time. An economic estimate in Atlanta, Georgia (a State that held the Olympics) found that about seventy seven thousand new jobs were created. Forty seven percent of this figure came from the direct spending made by visitors in the host nation. There are certain industries that will benefit more than others in this regard. The lodging and hotel industry will take up the largest portion of those new jobs. The second most important industry is the food industry, it should also be noted that bars or other facilities offering drinks also fall in that category. The third category of industries that will also benefit from new jobs will be the retail sector and the business service sector. Additionally, there will also be jobs in the construction sector since there will be a need to make additional infrastructures like building. In relation to this industry, there will be the renovation of certain infrastructures like roads and bridges. (Barney, 2003)

Long term economic benefits

The long term economic benefits that will come from hosting the Olympics can be considered as a legacy to the host nation. This is because they will be remembered for decades o come. The first legacy will be seen in terms of the facilities built specifically for the Olympics. These facilities will continue in operation years after the event is over. A host country will need top build a Stadium meeting international standards. In the year 1996, Georgia was hosting the Olympics. It was estimated that their stadium cost them about 189 million US dollars which is quite a good investment since the returns outweighed the investments by far. Other facilities that sprung up from those Olympics include;

  • An international Horse Park (1440 Acres large)
  • A shooting range complex (worth seventeen million)
  • Tennis facilities
  • A rowing Centre at Lake Lanier (worth ten million dollars) (Bacon, 1993)

Additionally there may also be other renovation, repairs and improvements that can result form holding the Olympics. First of all, some universities and higher education facilities may need to be improved. For example, their dormitories might be increased. A country may choose to this because they feel the need to provide cheaper alternatives for certain guests’ accommodation. On the other hand, this may be done to boost the host country’s image. A host country may need to improve some of their memorial facilities and museums or it may choose to invest in other sporting facilities like boxing and swimming. These improvements may be done to make the host City more attractive but the overall effect is that they will boost tourism decades after the Olympics are over.

It should be noted that certain facilities may be improved not just for the sake of the Olympics. It is quite likely that certain projects are always on the draft table but they lack the good will and funds to be implemented. Consequently, the Olympics provide a platform for their completion. Some of these facilities include renovation of airport terminals and improvement of all the surrounding restaurants and pubs in those airports. (Hall, 1972)

Another important economic aspect of hosting the Olympics is the fact that there will be excessive media exposure for the host country. The City hosting the Olympics will be seen by the rest of the World. Most of their strong points will be reflected in their marketing endeavours and this will greatly boost their tourism industry years ahead. Additionally, there will also be exposure in the business aspects. Investors may be wooed to come and invest in the host country. Even expansion programs for international companies may cover a host country. There is overwhelming evidence that media coverage enhances a country’s image from the media. After the City of Atlanta hosted the Olympics, they earned recognition form top magazines like World Trade. The latter magazine listed Atlanta City as one of the top ten Cities in the World to conduct business with. Besides that, a host country can have a reputation as a sporting complex. Cities containing those sporting facilities can use this to their advantage by hosting numerous games and this can promote sports in a respective country. In the latter mentioned City, surveys conducted after hosting the event indicated that there was a thirty five percent increase in the travel and tourism sector afterwards. This can only be attributed to the media exposure. Some people have estimated that exposure to the international world can lead to about Eight million dollars in tourism. (Aaade and Matheson, 2002)

Another long term economic impact that will come from the Olympics is the formation of various community related groups. It should be noted that there will be certain new initiatives that can come from this sort of arrangement. National agencies will be created for this purpose. In line with that there may be numerous volunteer groups that will come out of such an initiative. These community groups may be formed in order to encourage betterment of the community and may continue years after the Olympics themselves are over.

The Olympics can make many companies come out to train the public on their jobs. These job training development programs may be aimed at people who can provide services in construction or the like. Those training programs will be quite beneficial to individuals who partake of them and also to the overall community because they may always have a means to improve their work force. Those kinds of efforts may be directed towards the economically disadvantaged members of society. This could also refer to some marginalized groups. It should be noted that there may be some community training programs formed to offer knowledge and skills to those marginalized groups. Examples include women, ethnic communities and the physically handicapped.

Hosting the Olympics also helps numerous projects in terms of revenue. The State and other private organizations may be motivated to invest in their community through provision of grants. Cities hosting the Olympics will be given the greatest precedence in terms of funding and this will empower their communities. Besides that, there may be creation of youth programs and cultural programs. This will be instrumental in development of communities and will also be useful in the tourism sector. (Daka and Hess, 2002)

The Olympics are also quite instrumental in the process of creating national unity. Sporting activities have always been seen as contributory factors to national cohesion. For example, there may be overwhelming support for the host country to do well within those Olympics and also to market the country positively to outsiders. Hosting the Olympics will create a feel good factor among members of that organisation and this will go long way in enhancing national pride. For example France is trying to win the bid to host the 2012 Olympics and it used the image of well known player ‘Zinadine’ to inform the world that sports unite French men of all kinds. This national unity can then be translated economically be cooperation during execution of tasks. When a country’s social fabric has been strengthened, most of their workers end up being very productive economically since they have minimal reservations about each other. (Barney, 2000)

Another underlying factor that must be considered is that fcat that hosting the Olympics allows for country to demonstrate their integrity. Some critics have claimed that countries use corrupt methods to win bids for hosting Olympics. However, this argument is not valid because The Olympics committee has gone out of its way to establish mechanisms that ensure transparency and eliminate cases of corruption during the process of bidding. This means that countries that win bids are the rightful ones and most transparent ones.

There are also certain underlying factors that encourage the economic benefits indirectly. Hosting the Olympics facilitates creation of numerous leisure and sporting spots like sailing, rowing, shooting, tennis and many more. What this does is that it encourages the host nation’s citizens to enjoy sports in general. This will go a long way in encouraging sports companies and businesses in the future since more and more people will have interest in them. Such businesses will have market in the host nation. Other places that can receive attention are training camps. This will be a source of revenue for the host country years later since its citizen are now interested in the sport. (Access Economics, 1994)

All in all, the following were found to be the major economic benefits that come from hosting the Olympics as conducted by COMPAS polls. They created a scale of one to seven. Those who were given a score of 1 believe that the costs emanating from hosting the Olympics outweigh the benefits. On the other hand, those who scored 7 believe that the benefits of the Olympics are greater than the costs.

Mean

Increased tourism

5.7

Increased pride in

the City

5.5

Investments in

public infrastructure

5.3

Renovations like roads

5.5

New housing

4.1

Source;

As it can be seen from the survey, majority of the respondents thought that the benefits of hosting the Olympics outweigh the costs. A mean of greater than half the scale (3.5) was recorded by all the respondents.

Conclusion

Hosting the Olympics can have numerous economic benefits the host country. The short terms benefits include job creation to the tune of 77 thousand new jobs. On the other hand, there may also be increased cases revenue through the visitors that will come from other countries. In addition, a host country may have numerous facilities that will provide benefits to the host country decades after the Olympics. The Olympics will encourage host countries to expand some of their facilities and also inspire improvements of some of the infrastructural facilities. This will go along way in ensuring that the host country projects a good image of itself. Besides that, a host country gets the opportunity to market itself to the world as at op tourism and business location. This will go long way in boosting their revenues in those respective areas. One can therefore say that the Olympics can increase foreign investments in the host country. Lastly, there are numerous community programs and groups that will come from such an event. (Caimbridge, 1998)

Reference:

Access Economics (1994): Report on Tourist Forecasts – Sydney Olympics 2000

Aaade, R. and Matheson, A. (2002): Bidding for the Olympics: Fool’s gold? Oxford University Press

Bacon, W. (1993): Watchdog’s bark muffled; Reportage: Newsletter of the

Australian Centre 1993

Barney, R.  (2000): Mr. Samaranch goes to Washington: protecting IOC stakes in the American corporate world; University of Indianapolis Press

Barney, R. (2003): The Olympic legacy of wealth: a double-edged sword; Routledge Publishers

Carros, M. et al (2001): Transatlantic Sport: The Comparative Economics of North American and European Sports; Cheltenham, UK: University of Oxford Publishers

Caimbridge, M. (1998): Outcome uncertainty in sporting competition: the Olympic games; Applied Economics Letters, 5,3, 161-164

Daka, R., and Hess, R. (2002): An analysis of recent Australian success at the Winter Olympic Games; McGraw Hill Publishers, pp. 107-116

Hall, D. (1972): Olympic Games competition: structural correlates of

National success; International Journal of Comparative Sociology, 13, 8, 186-200

Reinberger, R. (1988): The Olympic Games: past, present and future; McGraw Hill Publishers

Segrave J. (1998): The Olympic Games in Transition; Champaign, Ill.: Human Kinetics, pp. 419-426

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