The Economic Impact of Major Sports Events: a Review of Ten Events in the Uk

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The economic impact of major sports events: a review of ten events in the UK

Chris Gratton, Simon Shibli, and Richard Coleman

Introduction
Over recent years there has been a marked contrast between the discussions around the economic impact of major sports events in North America on the one hand and most of the rest of the world on the other. In the USA the sports strategies of cities in the USA have largely been based on infrastructure (stadium) investment for professional team sports, in particular, American football, baseball, basketball, and ice hockey. Over the last decade cities have offered greater and greater incentives for these professional teams to move from their existing host cities by offering to build a new stadium to house them. The teams sit back and let the host and competing cities bid up the price. They either move to the city offering the best deal or they accept the counter offer invariably put to them by their existing hosts. This normally involves the host city building a brand new stadium to replace the existing one which may only be ten or fifteen years old. The result is that at the end of the 1990s there were thirty major stadium construction projects in progress, around one-third of the total professional sports infrastructure, but over half of all professional teams in the USA have expressed dissatisfaction with their current facilities. Baade (2003) argues that since 1987 approximately 80 per cent of the professional sports facilities in the United States will have been replaced or have undergone major renovation with the new facilities costing more than $19 billion in total, and the public providing $13.6 billion, or 71 per cent, of that amount. The use of taxpayers money to subsidize profit-making professional sports teams is justified on the basis that such investment of public money is a worthwhile investment since it is clearly outweighed by the stream of economic activity that is generated by having a professional sports team resident in the city. Such justifications are often backed up by economic impact studies that show that the spending of sports tourists in the host city more than justifies such a public subsidy. Crompton (1995, 2001) has illustrated that such studies have often been seriously methodologically flawed, and the real economic benefit of such visitor spending is often well below that specified in such studies. This is © The Editorial Board of the Sociological Review 2006. Published by Blackwell Publishing Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA

Chris Gratton, Simon Shibli, and Richard Coleman

particularly the case given the need for such huge infrastructure investment needed to attract the professional teams. In Europe, however, city sport strategies have concentrated more on attracting a series of major sports events, such as World or European Championships, again justified on the economic impact generated through hosting such events. Whereas many American sports economists (eg, Baade, 1996; Noll & Zimbalist, 1997; Coates & Humphreys, 1999) now consistently agree that studies show no significant direct economic impact on the host cities from the recent stadium developments, it is not so evident that European style hosting of major sports events is not economically beneficial to the host cities. This chapter looks at ten major sports events, all World or European Championships hosted by UK cities over recent years, all of which have been studied by the current authors. The difference from the North American situation is that these events move around from city to city in response to bids from potential host cities and in all ten cases did not require specific capital infrastructure investment to be staged but rather were staged in existing facilities. Before we look at these events, however, we briefly review the literature on the economic importance of major sports events. The biggest by far of such events is the summer...
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