Mega sporting events
Cash counts

Only those countries have managed to benefit from the massive economic fallout of hosting mega sports events that planned and prepared well for them. Others have lost money by the bushel. Which way is India going?

By V Krishnaswamy

That sport can have a huge impact on the economy of a country or host city is (almost) indisputable. But whether it is positive or negative is something that depends on how well-planned the officials, the organisers, and the hosts are.

To illustrate all this, take what happened recently with regard to the hosts of major sports events—Delhi’s lost bid on the 2014 Asian Games, the World Cup of Cricket in the West Indies, and the Ryder Cup golf tournament in Ireland in 2006. They present a striking picture: each case is so intrinsically different, yet the results could all have been positive if they had only been planned carefully.

Cities, even entire countries, have transformed themselves after major events. Los Angeles, Sydney and, more recently, Melbourne made handsome profits and placed themselves prominently on the tourist map, benefiting from the potential influx of holidaymakers.

In contrast, Athens gained very little leverage from its hosting of the 2004 Olympic Games because it left planning to the last stages. The infrastructure and the quality of preparation left a lot to be desired. And visitors found the city too pricey for their liking.

But cities like Kuala Lumpur, the host of the 1998 Commonwealth Games; Bangkok, which last hosted the 1998 Asian Games; and New Delhi, when it hosted the Asian Games way back in 1982, benefited hugely from the infrastructure that was created in the run-up to the events. Bangkok and Delhi, at least, would have been unliveable but for the mega events they hosted.
Delhi is poised to move to the next plane of metropolitan existence, with the 2010 Commonwealth Games triggering off a fresh algebra of infrastructural improvements that will range from the Metro, a new airport, highways and much else besides.

But the opportunity to gain from the fallout of the 2010 Commonwealth Games—by securing the 2014 Asian Games, too— was squandered by bickering in the corridors of sports power, with Minister of Youth Affairs and Sport Mani Shankar Aiyar cavilling about India’s effort to host the Games, which eventually went to Incheon in South Korea. Prior to the voting that decided which contender would bag the Asian Games, Indian sports officials seemed to have got medium-range planning right: the infrastructure of the 2010 Commonwealth Games would have carried over to 2014, killing two birds with one stone, so to speak. It would have paved the way for future mega sporting events, which invariably spur sports and consequent opportunities to create platforms to further boost the national economy.

Whatever personal views or reasons the sports minister may have had—sure, as he said, South Korea might have been better prepared— what cannot be ignored is that his untimely comments went a long way in helping Incheon win the bid.

Until India’s unexpectedly early exit, the World Cup of cricket was the biggest spectacle for Indian marketing managers, the public, and cricket tourists. In the next few months, we will hear about
the economic success—or failure, as the case may be—of this quadrennial event.

Early-bird reports from the West Indies suggest that the hosts hardly benefited from the World Cup—the empty stands stand testimony to a bum run. The expected rush of tourists never happened, and the early departures of India and Pakistan—which together bring in the largest clump of cricket tourists and sponsors—combined with the tragic demise of Pakistan coach Bob Woolmer, contributed to West Indies’ inability to capitalise. The Caribbean media reports that locals have lost a great deal of money. They had pumped in barrows full of cash and tonnes of effort in promotions, and spent a total of US$ 750 million in building or upgrading new stadia. But iffy planning saw to it that the crowds kept away.

It also remains unclear as to how the profits—which the International Cricket Council will surely make as a result of US$ 550 million worth of TV deals—will be shared between the hosts and the International Cricket Council. Nor is there a guarantee that profits from gate takings will be shared with the host country.

The Caribbean media also reported that because the hosts and the ICC had anticipated a massive shortfall in accommodation during the World Cup, many peripheral islands and towns were encouraged to put up visitors. This resulted in homeowners borrowing against their mortgages and extending or rebuilding their homes to pull in visitors. With the anticipated influx dead in the water, the homeowners are today left holding huge losses and mortgage shortfalls.

Rhythm and music are the Caribbean way of life, but silence reigned here during the World Cup: high ticket prices and regulations banning musical instruments at the grounds resulted in a bland and tame atmosphere.

The precipitous Indian exit obviously put paid to many of the plans of Indian corporates, but the quantum of a disaster more than 15,000 km on the other side of the planet remains to be calculated. It will be a year before the blindside’s impact is felt at home.

I recently received a report on the impact the 2006 Ryder Cup golf had on the Irish economy. This event between Europe and the US last only three days, but its venues are decided as much as six to eight years in advance. Host cities prepare meticulously for it.

A new report by Deloitte & Touche, jointly commissioned by Ryder Cup Europe and Fáilte Ireland (the Irish Tourism Development Authority) shows that a record €143 million was injected into the Irish economy by the 2006 Ryder Cup in Ireland. This Total Direct Economic Impact figure exceeded predictions of €130 million. It represented a 32 per cent increase on the impact that the 2002 Ryder Cup in England had, and an 80 per cent increase on the impact of the 1997 Ryder Cup in Spain.

The bulk of the impact came from event organisers, and from spectators who each spent an average of €350 per day; at the 2006 Ryder Cup, overseas spectators spent the most, at €526 per day. In the corporate sector, the average guest spent €500 a day; those from the US spent an average of €600 per day.

Deloitte & Touche point out that total spectator spending was up 60 per cent compared to The Belfry in 2002, mostly due to the increased week-long attendance of 260,000 in 2006 compared to 147,000 in 2002. Ireland also benefited from a more than 50 per cent increase in spending by spectators outside the event, compared to 2002.

Interestingly enough, Deloitte’s report says this is a conservative calculation: they excluded any expenditure that would have occurred anyway had the Ryder Cup not been on.

Irish Minister for Arts, Sport and Tourism John O’Donoghue is reported to have said that the challenge now is to build on this positive outcome and to ensure that the legacy of the Ryder Cup 2006 is secured for the benefit of Irish tourism.

The report says that in addition to spending three days at the Ryder Cup, American visitors stayed in Ireland for an average of a further 4.7 days, while other overseas visitors stayed for an additional three days. An additional 90,000 overseas visitors went to Ireland in September 2006 compared to the same month the previous year, with a significant proportion of this influx being related to the Ryder Cup. This is the way we have to look at the impact of mega sports events in India. We underplay this economic impact at our own peril.