Monday, June 25, 2012

A sporting economy?

Money. It's changed football. It's in the process of ruining one of Scotland's biggest clubs. Our sport has both a complex relationship with cash and an insatiable desire for more dosh. It's not always a healthy relationship.

Maybe we should ask not what money can do for sport but what sport can do for the economy. Guest blogger Drew Griffiths has done just that:

With record levels of unemployment, an record breaking recession and the general deterioration of moral within the UK; will this summer’s sporting events give us Brits anything  to smile about?

Looking at things objectively, what we need is a boost to the economy if possible (although being entertained by world class athletes is also nice). Can sport play its part in helping dig the UK, or any other European country, out of this proverbial economic hole?

Holding a major sporting event is a chance for the host country to enhance its ‘brand’. The most obvious advantage of being a host city (or country), is the boost in tourism. Immediately - during the event and potentially for years afterwards.  This is usually the case, but does depend on what kind of image the host city manages to portray to the rest of the world. If for example, there was a huge security breach or act of terrorism during an event it is unlikely that people will want to visit with their families the following summer.

The impact on tourism will also depend on the baseline tourism statistics for the host.  During the 1998 World Cup in France, several financial experts suggested that the World Cup had very little impact on tourism.  People who would normally visit for the traditional French attractions such as wine, art or culture stayed away because of the football, and the football fans.  The Rugby World Cup in 2011, increased New Zealand's revenue from tourism by 3% whilst the FIFA World Cup in South Africa had a much larger impact on tourism statistics but also highlighted another dimension of economic consequences – immigration.

Official reports state that the 2010 World Cup had 400,000 visitors from abroad, however the official ticket sales did not correlate with this increase in tourism.  It has not been estimated (from what I could find) how many illegal migrants remained in the country after the tournament.

On a more positive note sporting events also help to improve mood and morale in the work place; if the national team win at least!  Research does in fact conclude that of winning teams or athletes can improve self-esteem via association.  That’s great but what about the real financial boost that sport provides?

Looking at some statistics; according to Sport England:
The sport economy’s annual contribution has reached £16.668 billion - up 140% in real terms between 1985 and 2008.
In a 2010 report Sport England also found that the number of people in sports related jobs has also grown to 441,000, representing nearly 2% of all employment in England and only 13% of the 441,000 work in the public sector. 

England’s national sport of football, has also been in the news recently with the Premier League selling TV rights for £3 billion.   According to a report by The Guardian, this equates to at least £14 million more per year for each football club, with each televised match now costing £6.6 million.

This could have several consequences.  Firstly the player’s wages are likely to increase. Disgusting I know, but just think about the extra super-tax they’ll be paying.  However with many teams making losses in recent years and, of course, the continued fallout from the financial crisis at Rangers, it is hoped that the money will be invested in sustainable growth in terms of player talent development and also creating a profitable business structure for the clubs.  This could in turn help local economies with employing more staff and even looking to further develop their brand on a global scale.

Sport will always be embedded in the economy, as it is with other sociological spheres such as politics.  Hopefully this summer’s sporting events will be successful and help boost the UK’s economy and sense of national pride.

Drew Griffiths has a 1st Class Honours Degree in Sport Science from Loughborough University and a Master’s Degree in Exercise & Nutrition from Liverpool University. He currently works for MoneySupermarket.com as a writer and an SEO Associate.