No full-text available
To read the full-text of this research,
you can request a copy directly from the authors.
The Impact of Formula One on Regional Economies in Europe
Abstract
The tangible effects of hosting major sporting events have been thoroughly examined in recent years. The consensus among scholars is that the effects on tourism, inbound foreign investments and gross domestic product (GDP) from hosting, for example, the Olympic Games or the football World Cup are absent. Further, only a few studies have been conducted on one of the most commercially successful (major) sporting events: Formula 1 motor racing. This paper applies regression models to test the effects on GDP, employment and tourism in European regions that have hosted Formula 1 grand prix from 1991 to 2017. The output from the models suggests that hosting Formula 1 races does not produce positive effects.
... Similarly, Storm et al. (2019) cannot find evidence that hosting a Formula 1 race has positive effects on annual employment or GDP in European regional economies. On the contrary, their estimations even suggest a lagged negative effect on both measures. ...
... However, rentals decrease the four days following the event, and almost 90% of the increases in room revenue during the period can be ascribed to higher room rates. Storm et al. (2019) do not find any significant effect of hosting a Formula 1 race on annual overnight stays in tourist accommodation at the regional level. (2011) ...
... Inspired by the approach of Storm et al. (2019) in their study of Formula 1, we examine the effect of hosting Tour de France stages on the overall economy and employment in related sectors, applying dynamic panel regressions to regional data from 2004 to2018. ...
The consensus among economists is that tangible effects associated with hosting major sporting events are close to non-existent. Costs associated with these events are usually covered by public funds, creating opportunity costs that outweigh the associated benefits. However, existing research has mainly focused on major international sporting events that require large-scale (public) investments to build the necessary facilities to host them. This paper focuses on the world's most prominent professional cycling event, the Tour de France, which does not require large-scale infrastructural investments. Deploying appropriate regression modeling to regional level data, we find that hosting the Tour de France does not seem to have a significant impact on the annual gross domestic product (GDP) or employment in related sectors. (JEL Z23, L83, H41)
... Motor racing events are notorious in creating controversy. They are said to promote a destination's image and boost tourism, yet this claim has proved difficult to measure (Storm, Jakobsen, and Nielson 2020). Host cities claim to use these events strategically for competitive advantage (Hall 2006), urban (re)development (Lowes 2002(Lowes , 2004, city re-branding, marketing power (Black and Van der Westhuizen 2010), and a number of other functions (Getz 2012). ...
... Significant public funds are used to support a city's 'festive ambitions … through creating F1 urban spaces' (Tranter and Keefe 2001;Smith 2015). However event researchers have drawn attention to the promoters' elusive claims (Tranter and Keefe 2001;Lowes 2002Lowes , 2004Henderson et al. 2010;Smith 2015;Gogishvili 2017;Storm, Jakobsen, and Nielson 2020) finding that many of the promotional benefits fail to be supported by evidence, and independent economic evaluations have consistently shown their estimated economic benefits have been inflated. ...
... Cost benefit analyses carried out in government audit offices in Australia and New Zealand have publicly exposed repeated budget blowouts, largely because governments receive inadequate advice and fail to follow proper procedure in investing public funds (ACT 2002;Achterstraat 2010;Audit New Zealand 2012). The value of their tourism legacy has also been disputed by researchers (Abelson 2011;Tranter and Lowes 2009;Storm, Jakobsen, and Nielson 2020), while issues concerning the priority given to development growth over human welfare have been raised (Hall 2006). Serious concerns have arisen about the role of host governments in staging events where benefits are disproportionally shared within governance frameworks that push democratic procedures aside to ensure benefits privilege corporate interests. ...
Using an investigative research method, this paper explores the neo-liberal paradigm of governance used to stage high-octane urban motor racing events. The discussion details the tactics used by Supercars Australia to anticipate and manage resistance from the impacted community through a process we term the ‘juggernaut effect’. This study of the Newcastle 500 Supercar race in Newcastle, NSW found information tightly controlled by a Public/Private Partnership, which swept aside due democratic process to privilege the interests of a private corporation over community. The ‘juggernaut effect’ shows how power was manifested through boosterism, brinkmanship and secrecy. This paper investigates ‘why’ and ‘how’ due process is so frequently absent in event contexts. In so doing, it questions broader assumptions about the touted benefits of these events and challenges the ethics of entrepreneurial governance where government agencies may employ a marketing mandate to corrupt ethical considerations and the public’s expectations of due process.
... Our findings contribute to the literature on the interplay between sports culture or investment and local economic outcomes (e.g., Baade et al., 2011;Coates and Humphreys, 1999;Storm et al., 2020). We also add to discussion about the economic ramifications of places hosting major sporting events (e.g., Baade and Matheson, 2016;Feddersen and Maennig, 2012). ...
... Our findings contribute to the literature on the interplay between sports culture or investment and local economic outcomes (e.g., Baade et al., 2011;Coates and Humphreys, 1999;Storm et al., 2020). We also add to discussion about the economic ramifications of places hosting major sporting events (e.g., Baade and Matheson, 2016;Feddersen and Maennig, 2012). ...
Anecdotal evidence suggests that co-location with an English Premier League (EPL) football team can boost university recruitment. But when a town or city loses its EPL team, it also loses some of the world’s attention. We test whether the EPL limelight does in fact affect university recruitment in England and Wales. We exploit the sharp annual cutoff between survival and relegation from the EPL, comparing the admissions outcomes of universities that have clear name association either side of that discontinuity. On average, losing association with an EPL team, for just one year after its relegation, significantly reduces a university's undergraduate year-to-year admissions growth by 4-8 percent. These findings suggest not only that the EPL generates local externalities but also that university executives should support their local teams.
... The deprivation amplification model argues that residents in wealthier areas have better access to sports infrastructure than those in deprived areas (Hillsdon et al., 2007;Hoekman et al., 2016;Macintyre, 2007). Sports infrastructure development, particularly commercial sports facilities, can promote urban regeneration, boost tourism, stimulate the sports industry and improve the positive image of a city (Huang et al., 2014;Jones, 2001;Storm et al., 2020;Xue & Mason, 2019). As such, investment in sports facilities and infrastructure has been recognized as a catalyst of urban economic development and city redevelopment in developed countries (Chapin, 2004;Jakar et al., 2021). ...
The improvement of well-being of residents is the core of the people-centred urbanization. Inhabitants’ emphasis on healthy lifestyle draws attention to the provision of sports infrastructure. However, the spatial pattern of sport infrastructure development and in particular the driving forces from urbanization across China have not been examined yet in the literature. This paper aims to explore how the national sports infrastructure in mainland China is driven and scaled by urbanization, using data from the sixth National Sports Venues Census and a multi-scale geographically weighted regression approach. The results revealed strong regional inequality in the development of sports infrastructure in the stage of accelerating urbanization in China, with better provision of sports infrastructure in eastern than in western regions. The three dimensions of urbanization (urban population, public financial expenditure and built-up area) significantly explained the spatial disparity between 289 cities at prefecture-city level. There should be a feedback loop between the accumulative developments of urbanization and sports infrastructure. The contributing driving forces and subsequent regional heterogeneity suggest that sports space theory, the inequality amplification model, and hysteresis effect are comparatively suitable for explaining the spatial inequality characteristics of sports infrastructure development in China. A Sport Inequality Alert was conceptualized as a policy instrument for monitoring regional inequality and governing the development of sports infrastructure. It is argued that sports infrastructure development should be integrated into the national strategy for sustainable New-type Urbanization.
... Ähnlich ernüchternde Schlussfolgerungen wie für -aus Sicht der Veranstalter -einmalige Ereignisse wie Olympische Spiele und große Fußballturniere lassen sich auch für wiederkehrende Großveranstaltungen ziehen. So fanden etwa Storm et al. (2020) für Formel-1-Rennen keinerlei positive Effekte auf BIP, Beschäftigung oder den Tourismus in den europäischen Austragungsregionen. Damit bestätigten sie weitgehend eine frühere Studie von Dwyer et al. (2005) für den Formel-1-Grand-Prix in Australien. Für große Tennis-, Golf-und Formel-1-Events in Australien, dem Vereinigten Königreich und Kanada errechneten Ramasamy et al. (2022) zumindest teilweise positive Auswirkungen auf die internationalen Ankünfte, wobei die Ergebnisse zwischen den drei Ländern beträchtlich schwanken. ...
... Therefore, they conclude that stakeholders should turn to other arguments for hosting, primarily the value it produces for locals. Yet, Storm et al. (2020) argue that the intangible effects of sporting events should not be used as an argument to host events without reliable evidence of their existence and magnitude. ...
This paper uses the contingent valuation method to estimate the willingness to pay for hosting the Tour de France start 2022 in Denmark. Using a dichotomous choice format with a one-off tax payment, we estimate a total economic value between €12.8–26.0 million for the 2.788 million Danish households, with €14.7 as our preferred estimate. Spike models reveal that the likelihood of voting in favor of an earmarked tax to retain the Tour de France in Denmark decreases with the physical distance from the route. Moreover, we find a negative effect of living in one of the host municipalities (start or finish of a stage), ceteris paribus. This indicates that if non-use values are higher for residents living in a host municipality, they are offset by the negative externalities associated with hosting.
... Since 1968, sponsors have become part of F1 races, forming a strong connection between the sport and commercial operations. Unlike the sports in the Olympic Games, F1 embodies an economic event, distinguished by a well-regulated commercial enterprise [30]. Specifically, The primary revenue source of each team is its sponsorship, where leading teams usually get much support from famous automobile companies. ...
This letter is the first report from a series of IEEE TIV's Decentralized and Hybrid Workshops (DHWs) on Intelligent Vehicles for Education (IV4E). The role of intelligent vehicles in promoting education for all ages through autonomous racing was discussed during a recent DHW. Over the past decade, autonomous racing has emerged due to advancements in self-driving technologies. While still focused on extreme speed, autonomous racing differs from conventional automobile racing in its development philosophy, as human drivers are no longer involved. The absence of human drivers should be regarded as a new chance to increase competitiveness and entertainment value. This letter discusses opportunities to promote education-oriented autonomous racing. Recall that the flagship car race is Formula 1, where “formula” denotes technical restrictions that should be satisfied strictly. We name the new race series Autonomous 1 or A1, leveraging the power of autonomous intelligence in education. The achievements made in Formula 1 and typical autonomous races are reviewed, followed by discussions about A1's future perspectives. Specifically, A1 needs to maintain race consistency, update rules, and provide personalized commentary to support all-age education.
... National legitimacy concerns related to these investments have led to a variety of discourses that underscore expected outcomes (Gratton & Preuss, 2008;Tomlinson, 2014). For example, stakeholders and tourism organizations urge public authorities to fund largescale sporting events because they believe it will generate more public revenue from tourism in the cities in which the events are hosted (Storm et al., 2020). ...
It is a common expectation among politicians, civil servants and sport managers that hosting a major sporting event or achieving international elite sport success yields a variety of positive externalities grounded in the “Virtuous Circle of Elite Sport and Events” model. However, over the years various studies have shown that this model is not necessarily an accurate depiction of reality. This paper adds to existing research by testing whether elite sport success or hosting a major sport event can have any positive effects on citizens’ health.
By employing multilevel regression models to nine rounds of the European Social Survey – consisting of individual-level data from 2002 to 2019, covering 37 countries, 219 country-survey-years, and almost 400,000 respondents – we test whether health-related impacts of elite sport success and hosting major sport events can be identified.
The model output from our regressions does not indicate that sporting success or hosting major sport events contributes to better health.
The results question the “Virtuous Circle of Elite Sport and Events” model and stipulate that politicians, practitioners, and sports managers should be aware of overestimating potential positive externalities from elite sport.
... For motorsport in particular, events seem to have brought more negatives than positives. A group of researchers found no effects on GDP, employment and tourism in the European regions hosting a Formula 1 Grand Prix from 1991 to 2017 (Storm et al., 2020), whereas others argue that these events bring huge economic benefits to specific events such as the F1 Korea Grand Prix (Choe et al., 2017). For various reasons, politicians and the like still favour the perspective that events like these add value beyond the numbers. ...
In this chapter we focus on how the organizational thinking behind the way in which Formula E has evolved as a business model from 2012 until today. In order to exemplify how Formula E has enhanced its organizational capacity for innovation and how entrepreneurial facilitation is practised, particular emphasis is laid on its integrational collaboration with partners when it comes to car manufacturers and events. The latter is discussed in a critical perspective as Formula E events have been the subject of both criticism and praise.
... In return, they calculated the economic benefits that would come with it as well as using the event as a tool to generate 'soft power' in world politics and improve tourism. In 2008, Mohamad said: 'we have done very well and I think Malaysia has benefited much from F1 in terms of tourism.' 1 Though research in the European context has questioned these assumptions by revealing low effects on GDP, employment, and tourism in European regions that have hosted Formula 1 Grand Prix' from 1991 to 2017 (Storm, Jakobsen, & Nielsen, 2019), F1 nevertheless engaged with new hosts for marketing purposes. ...
When Jean Todt became Fédération Internationale de l’Automobile (FIA) president in 2009, he made good use of the Mosley legacy. At the same time, he engineered a series of new reforms that would mark the greatest difference between the old and the new FIA. This chapter explores a selection of organisational innovations during Todt’s three presidential periods (2009–2021). This selection includes two presidential elections in 2009 and 2013 which had a hitherto unrivalled emphasis on good governance, a political debacle (the F1 Bahrain Grand Prix), a structural revamp (the establishing the FIA Statutes Review), the introduction of an external audit (aided by consulting firm, Deloitte), and a proactive media strategy to comprehend a media logic (by publishing AUTO magazine from 2012 onwards). Together, this combination of substantive and symbolic actions represents the FIA’s desire to renew its legitimacy among its members, motorists, and other stakeholders.
... The same applies to Värja (2016), who finds no evidence of a positive effect of professional football and ice hockey teams on the local tax base in Sweden. Storm et al. (2019) contribute to this discussion by showing that there is no effect of Formula 1 races on the regional economy in Europe. Coates and Humphreys (1999) even found consistently negative effects of the presence of professional sports franchises belonging to the US National Football League (NFL) (i.e., American football), Major League Baseball (MLB) or National Basketball Association (NBA) on individual incomes in their host regions. ...
The locational pattern of clubs in four professional football leagues in Europe is used to test the causal effect of relegations on short-run regional development. The study relies on the relegation mode of the classical round-robin tournament in the European model of sport to develop a regression-discontinuity design. The results indicate small and significant negative short-term effects on regional employment and output in the sports-related economic sector. In addition, small negative effects on overall regional employment growth are found. Total regional gross value added remains unaffected.
... Megaeventos esportivos, como os Grandes Prêmios de Fórmula 1, possuem grande apelo comercial, acarretando interesse de consumidores e públicos, criando possibilidades de benefícios e impactos econômicos para suas sedes (Gogishvili, 2018;Preuss, 2015;Storm, Jakobsen, & Nielsen, 2019). Impactos econômicos podem ser definidos como as alterações econômicas líquidas nas cidades ou países sedes, gerados pela receita ou despesas provenientes dos megaeventos (Crompton, 1995). ...
Objetivo: Explorar quais foram os impactos gerados pelo GP Brasil de Fórmula 1 para a cidade de São Paulo no período de 2015 a 2019.Metodologia/abordagem: Qualitativa e exploratória. Analisamos documentos como relatórios publicados pela Prefeitura de São Paulo e pela empresa promotora do evento, bem como informações divulgadas em veículos de comunicação. Também conduzimos entrevistas com os seguintes interlocutores: a vice-prefeita da cidade de São Paulo na época e o diretor da empresa municipal responsável pela gestão do Autódromo de Interlagos, a CEO da empresa promotora e organizadora do evento no Brasil, um jornalista esportivo e um morador do bairro de Interlagos, região onde se localiza o Autódromo.Originalidade/Relevância: Os Grande Prêmios de Fórmula 1 são utilizados por governantes como instrumentos de desenvolvimento e de promoção da imagem de suas sedes em nível internacional. Entretanto, ainda são incipientes os estudos acadêmicos sobre os impactos deste tipo de megaevento para suas cidades sedes.Principais resultados: O GP Brasil gerou os seguintes impactos para a cidade: econômicos (recursos públicos investidos, geração de empregos temporários, melhora na venda de alguns serviços como hospedagem e alimentação e oportunidades para negócios entre empresas), físicos (modificações na estrutura de trânsito e manutenção de vias de acesso ao Autódromo) e socioculturais (sensação de orgulho dos moradores e aumento de insegurança na região do Autódromo).Contribuições teóricas/metodológicas: Os resultados desta pesquisa sugerem que a realização de megaeventos pode ter impactos positivos quando ocorrem na mesma cidade ao longo dos anos, pois geram a possibilidade de reutilizar recursos pré-existentes e desenvolver conhecimentos e habilidades por parte de governantes e seus organizadores.
... Cups (Baade and Matheson, 2004;Pfeifer et al., 2018), annually recurring events such as Formula 1 (Storm et al., 2019), or professional league sports (Siegfried and Zimbalist, 2000;Coates and Humphreys, 2003). Pfeifer et al. (2018) evaluate the infrastructure investment for the 2010 FIFA World Cup in South Africa at a highly disaggregated spatial scale using satellite images. ...
This paper studies the effects of hosting Olympic Games on the regional economy in the short- and long-run. For identification, runners-up in the Olympic bidding process are used to construct the counterfactual for Olympic host regions. In the short-run, hosting Summer Olympics boosts regional GDP per capita by about 3 to 4 percentage points relative to the national level in the year of the event and the year before. There is also evidence for positive long-run effects, but results on the latter are not statistically robust. In contrast, Winter Olympics do not have a positive impact on host regions. If anything, they lead to a temporal decline in regional GDP per capita in the years around the event.
This chapter explores the integration of sustainable finance mechanisms, such as green bonds and impact investments, within the Formula 1 as a strategic approach to facilitate the realization of its goal to become a carbon-neutral sport by 2030. In the context of a rapidly evolving global landscape characterized by heightened environmental consciousness and sustainable finance paradigms, this study investigates how Formula 1, a high-profile motorsport, can leverage innovative financial tools to drive meaningful environmental change while ensuring its long-term growth and relevance. This research delineates a pathway for harnessing sustainable financial mechanisms to support and advance the sport's sustainability agenda.
The literature on the impact of sport events continues to grow. However, existing systematic reviews have often focused on a specific typology of impact and/or specific events. In this article, we highlight the current state of sport events impact literature through a systematic review using the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) method. Following predefined criteria, the authors reviewed 172 review and research articles published in indexed journals between 2010 and 2022 that were collected from four databases. Given the limited consensus around the conceptualisation of legacy in the academic literature, it was agreed to limit the keywords for this study to ‘sports’, ‘event’, and ‘impacts’. The term ‘impacts’ seems more precise as it is inclusive in nature, incorporating both ‘legacies’ and intended ‘outcomes’. Results show that five countries, led by the United States, dominate in terms of publications, focusing more on economic impact assessment, particularly of large and single sport events. While studies still focus on mega-events, new research is increasingly turning to small and medium-sized sporting events, and more intangible impacts are attracting the interest of researchers. In particular, studies of consumer behaviour and destination image, as well as planning and evaluation strategies, are gaining momentum, while there is a lack of studies on the health and educational impacts of sports events, as well as the impact of the development of sports infrastructure built around the events.
International mega sports events commanding massive public spending are expected to stimulate the economic development of the host country. This study aims to examine the impact of the 2018 Asian Games Jakarta-Palembang on local businesses, captured through the perspectives of micro, small and medium-sized enterprises (MSMEs) and official partners of the event. Primary data were collected through face-to-face survey administered using questionnaire during and after the event, yielding usable responses from 284 stallholders in Jakarta and Palembang venues and 19 official partners. The results show that the respondents hired additional workers during the event and they also generated additional sales, profit of which was partly used to scale up their businesses. However, future event can generate greater impact to local businesses with more effective socialization, simpler registration, and better stalls arrangements including more strategic location, better electricity and water supplies, and easier loading access to the venues.
Unemployment is one of the most important issues in every country. Tourism industry is a dynamic sector which is labor augmented and can create jobs, increase consumption expenditures and offer employment opportunities. In the analysis of this work, the empirical literature on this issue is presented, which indicates that tourism can play a vital and beneficial role to increase employment. This paper uses meta-analysis techniques to investigate the effect of tourism on employment, and finds that the vast majority of the studies reveal a positive relationship. The mean effect of the 36 studies of the meta-sample, using Partial Correlations, is 0.129. This effect is similar to the regression results which is around 0.9, which is positive and statistically significant, clearly indicating that tourism is effective in the creation of jobs and offers employment opportunities. Moreover, evidence of selection bias in the literature in favor of studies which produce positive estimates is found, and once this bias is corrected the true effect is 0.85-0.97.
Background
Formula 1 is the world’s fastest auto racing circuit and one that is among the most-watched of all televised sports. With its international flair and glamor and the glitz it brings to viewers and spectators, it is no surprise that fans, commentators, and media covering the races enjoy ranking the most successful teams and especially the most successful drivers of all time. Yet, there are few empirical studies that have developed and/or applied rigorous methodological techniques to examine which drivers are the most successful within the recent turbo-hybrid era.
Objective
This study uses novel group-based trajectory methods to rank the most successful drivers within the turbo area, 2014-2019.
Methods
Group-based trajectory methods are used to identify distinct groups of drivers according to accumulated points.
Results
Using total points accumulated during each respective season as our measure of success, results showed that the 45 drivers who competed during this time period could be classified into three groups, with the top-performing group of drivers being Lewis Hamilton and Nico Rosberg. A second better-performing group of six drivers followed and included Bottas, LeClerc, Räikkönen, Ricciardo, Verstappen, and Vettel. The remaining 37 drivers were classified into a third low-performing group, a great number of which scored zero points during the time period.
Conclusion
The most successful Formula 1 drivers during the turbo era were able to be identified using group-based trajectory modeling, with Lewis Hamilton and Nico Rosberg identified as the best drivers based on accumulated points.
Allocating mega-sporting events through an auction like process triggers a winner's curse for host countries or cities. This is exemplified by cost overruns at the Olympic Games and drives to some suggestions about how hedge against the winner's curse
- At an average cost overrun of 156% in real terms, the Olympics have the highest cost overrun of any type of megaproject in the world.
- The Games are the only type of megaproject where delivery has never been on budget.
- Nearly half (47%) of all Games exceed their budget by more than 100%.
- The average sports-related cost of hosting the Games over the past decade has been $8.9 billion.
- The most expensive Summer Games to date was London 2012 at $15 billion; the most expensive Winter Games was Sochi 2014 at $22 billion.
- Host governments and the IOC have not been transparent about the true cost and cost overrun of the Games. For example, the UK government claimed that the London Games came in under budget, but the real cost overrun for London was 76% or $6.5 billion.
- The Rio 2016 Games, at a cost of USD 4.6 billion, appear to be on track to reverse the high expenditures of London 2012 and Sochi 2014 and deliver a Summer Games at the median cost for such Games. The cost overrun for Rio – at 51 percent in real terms, or USD 1.6 billion – is the same as the median cost overrun for other Games since 1999.
In this paper, we explore the costs and benefits of hosting the Olympic Games. On the cost side, there are three major categories: general infrastructure such as transportation and housing to accommodate athletes and fans; specific sports infrastructure required for competition venues; and operational costs, including general administration as well as the opening and closing ceremony and security. Three major categories of benefits also exist: the short-run benefits of tourist spending during the Games; the long-run benefits or the "Olympic legacy" which might include improvements in infrastructure and increased trade, foreign investment, or tourism after the Games; and intangible benefits such as the "feel-good effect" or civic pride. Each of these costs and benefits will be addressed in turn, but the overwhelming conclusion is that in most cases the Olympics are a money-losing proposition for host cities; they result in positive net benefits only under very specific and unusual circumstances. Furthermore, the cost–benefit proposition is worse for cities in developing countries than for those in the industrialized world. In closing, we discuss why what looks like an increasingly poor investment decision on the part of cities still receives significant bidding interest and whether changes in the bidding process of the International Olympic Committee (IOC) will improve outcomes for potential hosts.
This paper examines the economic impact of major multi-sport event on affected people. Their spending increases the economic benefit for the city and region staging the event. Therefore a theoretical differentiation of movements of persons affected by the event was done. A model was worked out to detect the regional primary economic impact through these people. This primary impact can be used in any model of economic impact analysis, such as input--output frameworks or multiplier theory. The complexities in considering the right persons and their spending are analysed and described in detail. A special focus is placed on the evaluation of opportunity costs on people that get crowded out as a result of hosting the event. Conclusions highlight the value of the right evaluation of the consumption of anyone affected by the major multi-sport event. Furthermore interesting findings on the consideration of "time switchers" and people avoiding the host city were made. Bidding for major sport events creates high levels of competitions between cities. As a result, event visitors, which are the main source of benefits, gain importance for the decision-making processes in whether to bid or not. Verf.-Referat
While the literature on the economic impacts of major sports events has grown considerably over the years, the question of utilisation of venues built for these events after the party is over has received little attention. This article fills some of the gaps in the literature. By means of a Stadium Utilisation Index, it measures the post-event utilisation of venues that were constructed of significantly refurbished to host major sports events in the period from 1996 to 2010. It reveals some of the challenges facing the utilisation of the venues once ‘the circus has left town’. The regressions identify that private owned stadiums have a higher rate of utilisation than publicly built venues. The stadiums with the highest capacity tend to have higher utilisation. Last, but not least in terms of importance, stadiums in nations with a high degree of corruption had the lowest utilisation.
A mega sport event involves huge investments in city infrastructure. After the event, the structures that remain may be an asset to the stakeholders, or they may be a burden. Faced with high costs, the taxpayer demands that the event-related social, economic and ecological changes will in the end have improved living conditions for the host city. But it is not easy to identify sport event legacies in their entirety, because event-related changes may be confused with non-event-related development, and because a wide variety of areas and stakeholders are affected. This paper looks at how to identify legacies, who is affected by the legacies, how long they last, and how to judge whether a legacy creates or destroys value. It stresses that legacies affect stakeholders differently - positively for some and negatively for others. It considers how to maximise positive legacies and suggests that these can best be controlled by governmental organisations. It notes that legacies gain and lose power over time and that often a legacy will be activated only if environmental changes offer opportunities.
This study assesses the economic impact of three major sport events – the Formula One Grand Prix (F1), the ATP World Tour Masters 1000 (ATP), and the Shanghai International Marathon (SIM) – on the host city in China. To that end, the authors estimate the amount of different
types of attendees at the events, calculate the total expenditures generated by attendees, assess the new money inflow into the host economy and conduct an economic impact assessment via an input–output model using computer software. The results of this study confirm the notion that
major sport events can be used as tools to increase the economic activities of the hosts. Furthermore, the study proposes a useful method of assessing the economic impact of sport events in non-consumer-driven economies, such as China.
We estimate Canadians’ willingness to pay (WTP) for success by Team Canada in the 2010 Winter Olympic Games. The Canadian government subsidized elite athletes in the run up to the 2010 Games through the Own the Podium program, which was designed to increase Canada’s medal count. WTP estimates from a contingent valuation method study using data from nationally representative surveys before and after the Vancouver Games suggest that Own the Podium generated intangible benefits equal to 2 to 4 times its cost. The aggregate value of the intangible benefits generated by the program was between $251 million and $3.4 billion.
Whether or not a city or a country should bid to host the Olympics or one of the big international football tournaments is often the source of heated debates. One question that is always raised is whether hosting such an event yields positive economic benefits. Using data from the period 1970–2009 we investigate whether there is a link between hosting a major sport event and the amount of foreign direct investment (FDI) a country receives. We employ time-series cross-section data for countries that have hosted either the Summer Olympics, the Winter Olympics, the FIFA World Cup or the UEFA European Championship in that period. While our overall results, on balance, offer support to the ‘pessimistic’ side of the debate about the economic effects of hosting mega events, our findings also indicate that some FDI benefits might still accrue to the host. Results are not unambiguous, however. More detailed analysis suggests that staging the Olympics has virtually no effect on FDI inflows, whereas hosting a major, nationwide football tournament might have a small positive impact on foreign investment, particularly in the years leading up to the event. These latter results seem to be driven by smaller nations.
Major League Baseball has rewarded cities that build new baseball stadiums with the chance to host the All-Star Game. Although the league asserts a significant boost to metropolitan economies due to the game, are these economic impact estimates published by the league credible? In two separate economic impact models, the authors find that All-Star Games since 1973 are actually associated with worse than expected economic performance in host cities.
This paper empirically illustrates the difference between a standard economic impact analysis (EIA) and a cost-benefit analysis (CBA). The EIA was conducted using an existing (input-output) I-O model (STEAM). The benefit side of the CBA included non-local visitor spending, the revenue of the local organizing committee (LOC), the consumer surplus, and public good value of the sport event for the local residents. The cost side of the CBA was estimated based on the opportunity costs related to the construction of the stadium (including labor costs and the cost of borrowing), imports, and ticket sales to locals. The EIA indicated that the 2005 Pan-American Junior Athletic Championships generated a net increase in economic activity in the city of $5.6 million. The CBA showed a negative net benefit of $2.4 million. Both methods presented challenges and limitations, but CBA has the distinct advantage that it identifies the net benefits associated with hosting a sport event.
This case highlights issues associated with the Formula One (F1) Australian Grand Prix held in the city of Melbourne, Victoria. The event receives substantial government funding and therefore the worth of the event receives consistent public scrutiny. Jim Kranger, CEO of the Victorian Major Events Corporation, is put in charge of assessing the value of the event to the State of Victoria. The results of Kranger's report will determine whether the government will continue to financially support the event. Kranger realizes that he must consider economic, social, political, and environmental issues. The case highlights the challenges that Major Events Corporations, and by extension, the government face in providing public funding to a sport event. The case also highlights the problems with economic impact studies and the need to focus on the triple bottom line approach by examining the economic, social, and environmental issues associated with the event. Further, the case highlights issues relating to the use of secondary data sources to make decisions. The case encourages students to consider the theoretical and practical issues at the cross-section of sport event, destination, and stakeholder management.
Olympic Games may have impacts on income and employment in the host city, but no ex-post study has been carried out for European Olympic host cities to date. The present study closes this gap by using the 1972 Munich Summer Olympic Games. The data period examined in this study allows for analysis of long-term effects. In addition, the methodology avoids overestimating the significance of the effects. Finally, results are reported for all possible combinations of pre- and post-Olympic periods. The results were that income in Olympic regions grew significantly faster than in other German regions but, in contrast, no employment effects were identified.
College football and men’s basketball are the largest revenue generators in college athletics. Studies funded by athletic boosters tout the economic benefits of a college athletic program as an incentive for host cities to construct new stadiums or arenas at considerable public expense. Our analysis of the economic impact of home football and men’s basketball games on Tallahassee (home of Florida State University) and Gainesville (home of the University of Florida) between 1980 to early-2007 fails to support these claims. Men’s basketball games at these universities have no statistically significant impact on taxable sales, while football yields a modest gain of $2 to $3 million per home game. While this positive finding is one of the first in the academic literature of the impact of sports, these gains pale in comparison to the figures in many of the studies funded by athletic boosters.
Using a panel of international student test scores 1980 – 2000 (PISA and TIMSS), panel fixed effects estimates suggest that government spending decentralization is conducive to student performance. The effect does not appear to be mediated through levels of educational spending.
Clear, intuitive and written with the social science student in mind, this book represents the ideal combination of statistical theory and practice. It focuses on questions that can be answered using statistics and addresses common themes and problems in a straightforward, easy-to-follow manner. The book carefully combines the conceptual aspects of statistics with detailed technical advice providing both the ‘why’ of statistics and the ‘how’.
Built upon a variety of engaging examples from across the social sciences it provides a rich collection of statistical methods and models. Students are encouraged to see the impact of theory whilst simultaneously learning how to manipulate software to meet their needs. The book also provides: Original case studies and data sets, Practical guidance on how to run and test models in Stata, Downloadable Stata programmes created to work alongside chapters, A wide range of detailed applications using Stata, Step-by-step notes on writing the relevant code. This excellent text will give anyone doing statistical research in the social sciences the theoretical, technical and applied knowledge needed to succeed.
The difference and system generalized method-of-moments estimators, developed by Holtz-Eakin, Newey, and Rosen (1988, Econometrica 56: 1371–1395); Arellano and Bond (1991, Review of Economic Studies 58: 277–297); Arellano and Bover (1995, Journal of Econometrics 68: 29–51); and Blundell and Bond (1998, Journal of Econometrics 87: 115–143), are increasingly popular. Both are general estimators designed for situations with “small T, large N″ panels, meaning few time periods and many individuals; independent variables that are not strictly exogenous, meaning they are correlated with past and possibly current realizations of the error; fixed effects; and heteroskedasticity and autocorrelation within individuals. This pedagogic article first introduces linear generalized method of moments. Then it describes how limited time span and potential for fixed effects and endogenous regressors drive the design of the estimators of interest, offering Stata-based examples along the way. Next it describes how to apply these estimators with xtabond2. It also explains how to perform the Arellano–Bond test for autocorrelation in a panel after other Stata commands, using abar. The article concludes with some tips for proper use.
This book, the first study of its kind, examines the economics behind motorsports, in particular Formula One. Chapters discuss the costs involved in Formula racing and how they are borne by teams, promoters and racers. The book also looks at how society, the public and the private sectors stand to benefit economically from the motorsport industry. Other issues like the economics of TV rights, sponsorship and sustainability are also addressed, again for the first time in an economics book.
Moving beyond the economics of what happens off the track, the book also undertakes a serious examination of what goes in to making a winning team and what having a winning racer can do for a team’s fortunes. Mourão’s highly relevant and contemporary book also looks at how motorsport teams confront the challenges of the modern sporting world, including the changing dynamics of sports media and considers the future of Formula 1 as motorsports evolve.
It is a common argument in Denmark that municipal involvement in professional team sports can be justified on the grounds of local impact. The use of public funds to directly or indirectly subsidise local professional team sports clubs (PTSCs) is often seen as warranted due to the PTSCs’ positive effects on local economic growth or (inbound) municipal migration. However, can PTSCs be associated with tangible effects at all? This question has never been answered properly in a European context. Based on data covering the 2008–2013 period, and using spatial panel regression models, this article examines this issue in relation to three dominant professional sports in Denmark: football (soccer), handball and ice hockey. The study finds effects for only one of the sports examined, with Danish handball clubs exercising a marginal effect on average income. Ice hockey’s effect is negative and football remains insignificant in all models deployed. Concerning migration, negative effects are found in relation to female handball clubs. These findings are consistent with previous research and have implications for local sport policies and managers. Municipal politicians, public authorities or sport managers should no longer rationalise the use of public funds for local PTSCs on the assumption of (tangible) economic effects or population growth, as it appears to be an inefficient use of public money. If policy makers want to increase municipal income or inbound migration, they should engage themselves in developing more appropriate strategies.
This study was examined the new money generated from Formula One Grand Prix (F1) and the economic impacts of this new money on the host economy using input–output analysis. We find that the impact of the new money from non-local attendees or international attendees is more pronounced compared to that from local attendees. Also, F1 event appears to influence on sports-related industry as well as other industries such as manufacturing industry. Our findings suggest that the host cities should focus on increasing the non-local and international attendees in order to enhance the economic impacts of a sport event.
An economic impact assessment alone cannot justify public support for hosting mega-sporting events. A cost-benefit analysis in order to measure the net social utility for the population is also relevant. Nevertheless, if there is always a high demand of economic impact studies by public authorities before hosting an event, the cost-benefit studies are never made, so there is a high risk to make decisions that are not rational. In this paper, to take into account simultaneously the economic impact and the social utility of mega-sporting events, we propose a legitimacy test we illustrate with the example of the Rugby World Cup 2007 in France.
The numbers are staggering: China spent $40 billion to host the 2008 Summer Olympic Games in Beijing and Russia spent $50 billion for the 2014 Sochi Winter Games. Brazil’s total expenditures are thought to have been as much as $20 billion for the World Cup this summer and Qatar, which will be the site of the 2022 World Cup, is estimating that it will spend $200 billion. How did we get here? And is it worth it? Those are among the questions noted sports economist Andrew Zimbalist answers in Circus Maximus: The Economic Gamble Behind Hosting the Olympics and the World Cup. Both the Olympics and the World Cup are touted as major economic boons for the countries that host them, and the competition is fierce to win hosting rights. Developing countries especially see the events as a chance to stand in the world’s spotlight. Circus Maximus traces the path of the Olympic Games and the World Cup from noble sporting events to exhibits of excess. It exposes the hollowness of the claims made by their private industry boosters and government supporters, all illustrated through a series of case studies ripping open the experiences of Barcelona, Sochi, Rio, and London. Zimbalist finds no net economic gains for the countries that have played host to the Olympics or the World Cup. While the wealthy may profit, those in the middle and lower income brackets do not, and Zimbalist predicts more outbursts of political anger like that seen in Brazil surrounding the 2014 World Cup.
Transportation projects and systems serve many different and sometimes competing objectives, including safety, mobility, environmental protection, livability, and asset management. Transportation accounted for 70 percent of the US petroleum consumption in 2010 and nearly a third of the Nation's greenhouse gas emissions. Light duty vehicles and heavy trucks are the greatest petroleum users in the transportation sector. Transportation systems also impact the Nation's economy and society. Efforts featured in the report range from projects to mitigate climate change, to initiatives that promote sustainable pavements and improve safety, to developing tools to better assess the benefits and costs of transportation investments.
Many sports events, facilities, and franchises are subsidized either directly or indirectly by investments from public sector funds. The scarcity of tax dollars has led to growing public scrutiny of their allocation; in this environment there is likely to be an increased use of economic impact analysis to support public subsidy of these events. Many of these analyses report inaccurate results. In this paper, 11 major contributors to the inaccuracy are presented and discussed. They include the following: using sales instead of household income multipliers; misrepresenting employment multipliers; using incremental instead of normal multiplier coefficients; failing to accurately define the impacted-area; including local spectators; failing to exclude “time-switchers” and “casuals;” using “fudged” multiplier coefficients; claiming total instead of marginal economic benefits; confusing turnover and multiplier; omitting opportunity costs; and measuring only benefits while omitting costs.
This study shows that fans and people living in the region of 28 Football Bundesliga teams from all three divisions are willing to support their team financially. Survey respondents were asked for their willingness-to-pay to avoid a negative outcome (e.g., relegation) and to achieve a positive outcome (e.g., promotion). Fan bonds are applied as an alternative payment vehicle within the contingent valuation method. The results show that different factors affect the decision to support the team and the actual amount of willingness-to-pay—for attendees and nonattendees. Public goods are particularly relevant for reporting a positive willingness-to-pay. (JEL Z23, L83, H41)
This paper examines the economic impact of major multi-sport event on affected people. Their spending increases the economic benefit for the city and region staging the event. Therefore a theoretical differentiation of movements of persons affected by the event was done. A model was worked out to detect the regional primary economic impact through these people. This primary impact can be used in any model of economic impact analysis, such as input–output frameworks or multiplier theory. The complexities in considering the right persons and their spending are analysed and described in detail. A special focus is placed on the evaluation of opportunity costs on people that get crowded out as a result of hosting the event. Conclusions highlight the value of the right evaluation of the consumption of anyone affected by the major multi-sport event. Furthermore interesting findings on the consideration of “time switchers” and people avoiding the host city were made. Bidding for major sport events create
Can you imagine your organisation as a Ferrari or a McLaren, a Toyota or a Force India? Your management team as a pit crew? Your sales force as the race team and your marketing and research department as the design studio creating a Formula 1 car? Formula 1 has an estimated turnover of $4bn, employs 50,000 people in more than 30 countries and has a foothold in every major and developing economy. With performance as the central focus of every organization, Performance at the Limit uses the case of Formula 1 motorsport as an example of how business can achieve optimal performance in highly competitive environments where dealing with change effectively is paramount. This second edition builds on the success of the first and contains a wealth of new material, including many more interviews with Formula 1 drivers and other key executives active in the sport.
Cambridge Core - Strategic Management - Performance at the Limit - by Mark Jenkins
The legacy created in pursuit of a mega-event, like the Olympic Games, FIFA World Cup, World’s Fair or the Hajj, can provide tremendous opportunities for the host to advance urban development. The challenge faced by cities is how to direct the public and private spending on desired legacies to support their pre-bid urban agendas. To provide guidance for scholars and event planners interested in using events to further urban development agendas, we present a framework for cataloguing the outcomes associated with mega-event planning.
About one century ago, professional sports became prominent in American public life. During its early years, the business of sports was primarily a private undertaking, financed with private money and played in private stadiums and arenas. But state and local government subsidies to professional sports businesses have proliferated over the past few decades, and economic arguments have been crafted to justify the subsidies, These arguments typically rest on the assertion that professional sports is a significant, even unique, catalyst for economic growth. By this reckoning, stadiums and teams are "cash cows" that expand the economy and enable further public investment in other critical areas. Public funds are increasingly scarce. We must test the argument that professional sports offer an important return on government subsidies. The purpose of this paper is to use economic theory and empirical techniques to assess the contribution of professional sports to metropolitan area economic development in the United States. The study consists of five parts. Part 1 briefly reviews the economic literature on professional sports and urban development. Part 2 discusses the ways professional sports can have an economic impact on an area and explores the challenges inherent in measuring this effect through "expenditure" and "multiplier" analysis.
Special events are typically regarded as major generators of economic activity and jobs. Despite its continued use in event assessment, Input-Output (I-O) analysis has been rejected in other areas of economic impact evaluation in favor of more rigorous evaluation techniques that recognize resource constraints in the economy and interindustry effects of demand shocks. This article discusses traditional and alternative perspectives on event assessment and the assumptions on which each approach are based. Illustrative results are then provided from a study that contrasted the economic impacts from a selected event analyzed by use of a traditional I-O approach, with estimates provided through the use of a more comprehensive computable general equilibrium (CGE) model. Issues involved in the wider use of CGE models for event assessment are discussed together with the need for further development in event evaluation techniques.
As cities compete for jobs and capital in the context of limited federal aid and increasing global economic competition, a new and potentially high-risk strategy for stimulating local economic growth has emerged. This strategy, called the mega-event strategy, entails the quest for a high-profile event to serve as a stimulus to, and justification for, local development. We examine how the mega-event strategy has played out in the three US cities with contemporary Olympic experience: Los Angeles (1984), Atlanta (1996), and Salt Lake City (2002). We analyze the approaches taken by these three cities to bidding for and staging an Olympic mega-event. Our comparison focuses on the decade long period that cities use to prepare to host the games. We conclude with a discussion of lessons learned and the policy implications of the mega-event strategy on urban politics.
This article examines the growing attraction of governments, North and South, to the hosting of “second order” sport mega-events (below the level of the Olympics and the FIFA World Cup) as a key dimension of their international relations. It is argued that, notwithstanding a growing body of sophisticated, critical scholarship on such events, their benefits continue to be chronically oversold and their opportunity costs minimized or overlooked. Their growing popularity therefore presents a puzzle that can be partly accounted for by the appeal and usefulness of such events as a strategic response to conditions of globalisation. Indeed, in the final analysis there are perfectly understandable reasons for the continued popularity of such event-centred strategies, and potential benefits to be derived from them. Nevertheless, both public officials and concerned citizens need to be more alert to their pitfalls, and should give more careful consideration to their opportunity costs and to alternative strategies. These arguments are illustrated with reference to Halifax, Canada's aborted bid for the 2014 Commonwealth Games.
Purpose
– The purpose of this paper is to prompt critical reflection on the relationship between international business (IB) and climate change by reference to an example at the margins of IB. The author reflects on personal experience of attending the Australian Grand Prix. Being heavily involved, with others, in research into the social, environmental and economic impacts of climate change in Australia and across Asia Pacific he has reason to be personally reflective on the environmental impacts of Formula 1 and other forms of motor sport. These impacts are both direct, in relation to the racing cars' energy consumption and emissions, and indirect, with regard to spectator, sponsor and support show contributions to carbon emissions.
Design/methodology/approach
– The study is based on personal reflection on experienced events, critical consideration of the discourse of Formula 1 emanating from the organizations involved and associated with it, and consideration of criticism of motor sport as anathema.
Findings
– Reflecting on the nature and impact of Formula 1 racing and its associated events, and on different possible responses to its negative impact on climate and environment, the paper considers internal initiatives to change the nature of its resource consumption. However, the paper also sees that these changes may be largely symbolic within a global business framework in which such moves represent mere “tinkering at the edges” of a major problem to which there is no real solution under current and foreseeable socio‐economic conditions.
Originality/value
– In considering various options for “greening” Formula 1, including current projects to reduce its resource inputs and emissions outputs to the extreme of banning it – and similar activities – outright, the paper ponders the (im)possibility of “greening” any organization that is embedded in resource consumption.
An economic impact assessment alone cannot justify public support for hosting mega-sporting events. A cost-benefit analysis in order to measure the net social utility for the population is also relevant. Nevertheless, if there is always a high demand of economic impact studies by public authorities before hosting an event, the cost-benefit studies are never made, so there is a high risk to make decisions that are not rational. In this paper, to take into account simultaneously the economic impact and the social utility of mega-sporting events, we propose a legitimacy test we illustrate with the example of the Rugby World Cup 2007 in France.
Coates and Humphreys (1999) examined the growth effects of professional sport franchises, stadia and arenas for three major professional sports in the United States (football, baseball and basketball). This paper re-examines the effects of the four major league sports in the US (as above with the addition of hockey) on their respective Standard Metropolitan Statistical Areas (SMSAs), utilising the model developed by Coates and Humphreys with a view towards answering the question: does the success of the local professional sports team(s) matter? Panel data for 57 SMSAs across a 28-year time-span (1970-1997) is utilised for this analysis. A fixed-effects pooled ordinary least squares regression model is estimated for both income and growth determination. Preliminary results do not support Coates and Humphreys' (1999) conclusions that the sports environment plays no role in determining local area economic growth. The addition of hockey-related variables yields some significant income determination results, however measures of franchise success are not found to be significant.
This paper reviews various methods for evaluating the economic impacts of major events such as World (Catholic) Youth Day and the Football World Cup. The paper recommends cost–benefit analysis, which is surprisingly rarely used for such evaluations. A computable general equilibrium (CGE) model may provide estimates of national or regional output or consumption impacts. But CGE models are not usually designed to estimate very short-term impacts on economies or welfare effects, allowing, for example, for labour opportunity costs and non-market effects. A case study based on the Australian Formula 1 Grand Prix supports these observations. The paper also discusses and dismisses various other evaluation methods such as input–output or economic impact analysis and injected export expenditure that typically exaggerate the benefits of export income (the Mercantilist Fallacy).
Promoters of major sporting events in Australia have been successful at persuading governments to provide taxpayers' funds to cover the costs of staging such events. Until recently, the justification for such use of taxpayers' money has been in terms of the potential of the events to attract visitors and their associated expenditure. However, this has led to bidding wars between state governments in which the nation is the loser due to high payments to overseas event owners. Increasing attention is being focussed on the issue of returns to taxpayers/government for their outlays. This paper concludes that major sporting events do not appear to generate sufficient extra tax revenue to justify the expenditure of taxpayers' funds. It goes on to suggest that if the tourism industry is the major beneficiary of hosting such events, then more emphasis should be placed upon finding ways in which the costs are borne by the industry.
This paper explores the impact of professional sports teams and stadiums on employment and earnings in specific sectors in US cities. Previous research focused on aggregate measures of income or employment. We find that professional sports have a small positive effect on earnings per employee in one sector, amusements and recreation, and an offsetting decrease in both earnings and employment in other sectors, supporting the idea that consumer spending on professional sports and spending in other sectors are substitutes. This helps to explain the negative total economic impact of sports found in other studies.
This paper presents specification tests that are applicable after estimating a dynamic model from panel data by the generalized
method of moments (GMM), and studies the practical performance of these procedures using both generated and real data. Our
GMM estimator optimally exploits all the linear moment restrictions that follow from the assumption of no serial correlation
in the errors, in an equation which contains individual effects, lagged dependent variables and no strictly exogenous variables.
We propose a test of serial correlation based on the GMM residuals and compare this with Sargan tests of over-identifying
restrictions and Hausman specification tests.
this paper and John Ham, David Hendry and members of the econometrics group at the London School of Economics for their useful comments on an earlier draft