Major global spectacles such as the Olympic Games cost millions to stage, but host countries can expect to harvest significant economic and political benefits after the event, as Vision finds out
As the athletics fans filed over the pedestrian bridge into the Queen Elizabeth Olympic Park in Stratford, East London, in July this year, it was almost as though the clock had been rewound to 2012.
Union Jack flags fluttered, children bounced with excitement on their fathers’ shoulders, and anticipation built. Inside the stadium, stars including sprinter Usain Bolt and heptathlete Jessica Ennis-Hill had returned to the stage where they won Olympic gold to wow the crowds at the Anniversary Games.
A mega-event, especially a World Expo, is a platform to showcase innovation and major achievements in domains that are important to the future, such as energy
And far away from the resumption of the sporting action, there is plenty of evidence of the long-term benefit to London of hosting the 2012 Olympic Games. Its success underlined the importance to other world cities of the opportunities that stem from hosting large-scale events. The UAE is competing with Izmir in Turkey, Sao Paulo in Brazil and Yekaterinburg, Russia’s fourth city, to host the World Expo in 2020, a six-month-long exhibition that celebrates cultural diversity and technological advances, and which always draws millions of international visitors.
One year on, the British government said it had seen a £9.9bn (US$15bn) trade and investment boost and cited independent research from accounting firm Grant Thornton that said the total benefit to the UK of hosting the Games could reach £41bn (US$63bn) by 2020. These government figures mark a break with the norm, and were greeted with scepticism in some quarters. Economists have generally doubted the economic benefits of hosting events such as the Olympics, saying the costs associated with new infrastructures and running the event are rarely justified by the generation of additional revenues.
However, there is mounting evidence to the contrary, suggesting that organisers go into events of this kind with their eyes wide open to the business opportunities they present. A recent report by Professors Andrew Rose and Mark Spiegel for the National Bureau of Economic Research in America suggests that host countries can see an uplift in national exports of around 30 per cent. World fairs are also a boon. Even bidders that are unsuccessful can benefit from the added publicity their campaign can generate.
“We conclude that the Olympic effect on trade is attributable to the signal a country sends when bidding to host the Games, rather than the act of actually holding a mega-event,” the report said.
It points out that there is no coincidence that in 2001, two months after Beijing was awarded the 2008 Olympics, China concluded negotiations with the World Trade Organization, formalising its commitment to the liberalisation of trade. Further back, in 1955, Rome was awarded the 1960 Games in the same year it joined the United Nations and took steps towards currency convertibility.
What makes it hard to compare and contrast the economic and social impact is that despite the rise in the importance of global, mainly sporting, events, there is no internationally recognised method to analyse the benefits of hosting them.
It is something that the Global Sports Impact Project (GSI) is trying to address. By pooling the feedback from government agencies, broadcasters, consultants and insurers, among others, it hopes to compile indices that compare the impact of the event, and how its host nation gained in stature or financially. There are three partners in GSI: sports market news and intelligence provider Sportcal, the Singapore Sports Council and UK Sport.
Deloitte has already made some progress in evaluating the impact of the Rugby World Cup. Hosted every four years, it took place in France in 2007, but because the tournament was broadcast in 238 countries, it reached a cumulative audience of four billion. Deloitte estimates the direct expenditure from visitors to a host nation, which will next be England, in 2015, is between £200m (US$310m) and £810m (US$1.3bn).
The total potential economic impact to a host nation, including an indirect ripple effect, is put at between £610m (US$944m) and Today, hosting a mega-event still presents an opportunity to bring substantive benefits, on both a regional and international scale. Dubai’s Expo bid is based upon the theme ‘Connecting Minds, Creating the Future’. The proposed masterplan site has been selected due to its strategic location, equidistant between Dubai and Abu Dhabi and adjacent to the Dubai World Central Al Maktoum International Airport and Jebel Ali Port, providing ease of access for the millions of international and local visitors expected.
A study into Dubai Expo 2020 concludes that the total economic output across the Dubai economy would amount to 28.8 billion Euros, and would create over 277,000 jobs between 2013 and 2021. Importantly, for every Expo employee, approximately 50 additional jobs will be sustained across the Middle East and North African economy.
It will look to add to all the previous success and history of Expos, most recently Shanghai in 2010, which will be followed by Milan as host city in 2015. Shanghai used the event as a catalyst to transform its heavily industrialised city centre into a more attractive, user-friendly cultural and commercial district sitting on the banks of the Huangpu river.
There is also an opportunity to rethink energy supply, with Dubai Expo 2020 pledging to meet at least 50 per cent of the site’s energy needs from renewable sources. “Operating the infrastructure required to deliver a successful mega-event – building, transport, heating and cooling – places very high energy demands. This creates tremendous opportunities to look into innovative approaches to supply energy within the confines of the event, through solutions that can later be applied to the broader city and region,” said Ivano Iannelli, Chief Executive of the Dubai Carbon Centre of Excellence, who is contributing to a State of Energy report for the Dubai Supreme Council of Energy that is due to be published in October.
As the success of recent world events has shown, long-term benefits – be they economic, social and technological – can only be reaped if organisers think long-term from the beginning. Often that means even before they have won the right to put on the show.