Economic Impact of Mega-Events

The first modern Olympic Games were held in Athens in 1896, with a small number of participating nations and athletes.

The event was seen as immensely successful due to the large crowds that attended.

Athletes are now paid professionals in many Olympic sports, a shift from the original amateur-only requirement.

The International Olympic Committee (IOC) selects the host city through a long process involving bids and evaluations.

The IOC initially favored awarding the Olympics to big, wealthy cities.

The Games have grown significantly in scale, with many more athletes, events, and participating countries.

The Winter Olympics, established in 1924, feature a different set of sports and athletes.

Jim Thorpe's medals were revoked due to his past participation in semi-professional baseball, highlighting the early emphasis on amateurism.

When spending shifts from one part of the economy to another without creating new economic activity. Think of tourists spending money at a mega-event instead of at other local businesses.

When a sporting event reduces business activity for other businesses in the area, leading to lost revenue. This can happen due to road closures, increased congestion, and general disruption.

Money that leaves the local economy after an event, for example, when a visitor spends money on goods or services outside the host city. This reduces the overall economic impact of the event.

The study of the potential economic benefits of a sporting event before it takes place.

The difference between projected economic benefits and the actual economic benefits of an event, often due to factors like the substitution effect, crowding out, and leakages.

The chance that a tourist who was planning to visit a city at a later date may come earlier to attend the event. This can lead to a smaller net economic impact.

The idea that hosting a sporting event might not bring in a significant amount of new spending into a city, since many attendees are local and simply shift their spending from one place to another.

The percentage of Super Bowl tickets allocated to the host team, which reflects the smaller substitution effect of mega-events.

This effect refers to the situation where visitors coming for a specific event (like a marathon) overshadow regular tourists, leading to a decline in overall tourism.

These financial losses are associated with the money leaving the local economy due to mega-events, such as event organizers hiring outside staff or hotels sending profits to their corporate headquarters.

A good economic impact study considers the number of attendees who come specifically for the event, subtracting those who would have visited regardless.

A multiplier, used to estimate the total economic impact of an event, can be inaccurate if it doesn't account for leakages or inflated prices.

The short-term benefits of hosting mega-events, like increased tourism and spending, should be carefully weighed against the economic drawbacks, such as transportation disruptions and potential loss of regular business.

Mega-events often bring about inflated prices for services like hotels, which might benefit businesses outside of the local area, not local residents or businesses.

Economic impact studies often rely on the assumption that the economy is stable during mega-events, which may not be the case due to the influx of visitors and temporary changes in market conditions.

Mega-events often require cities to hire temporary workers who leave after the event, taking their earnings with them, thus impacting the local economy negatively.

The practice of using government funds for a project that could have been spent on another project with higher returns. An example is spending on the Sydney Olympics instead of on infrastructure upgrades.

When a government spends money on a mega-event, it may discourage other investors because the event's success is temporary, making private investment less enticing.

The tendency for the gains from a mega-event to leak out of the host economy to other regions. This occurs as event-related spending goes towards imported goods and services.

An event can increase a city's visibility and attract tourists and investment, leading to economic growth. For example, Barcelona's Olympics in 1992 boosted its international profile.

The potential for mega-events to generate political momentum to complete needed infrastructure projects.

Spending on general infrastructure projects, like roads and transportation, can have long-term economic benefits that benefit the region after the event.

The idea that an event's success can boost local businesses and create jobs.

The potential for mega-events to not only bring short-term gains but to also leave a lasting positive impact on the host city's infrastructure and economy.

The potential benefits of an event that are estimated before the event occurs.

The tendency for people to shift their spending from one place to another, instead of creating new economic activity.

The potential negative impact when a sporting event reduces business activity for other businesses in the area.

The money that leaves the local economy after an event, like when visitors spend money outside the host city.

Countries that wish to show their growing political or economic power by hosting mega-events.

The tendency for a tourist planning to visit later to come earlier due to the event.

The benefit to the host city's residents, beyond financial gains.

The increase in happiness reported by Germans after the 2006 World Cup, even with minimal tourism and income changes.

The large-scale nature of the events, requiring numerous facilities and infrastructure investments, makes it challenging for cities to reduce costs or alter the planning once the contract is signed, especially given the long lead time involved.

Denver's decision to withdraw from hosting the 1976 Olympics serves as a significant example of the difficulty and political ramifications associated with backing out of an event contract, especially with established deadlines and expectations.

Hosting requirements involve specific details regarding the type and quality of arenas, like the number of stadiums, their capacity, and proximity to airports, making it challenging for cities to deviate from these preordained specifications.

FIFA and IOC, the governing bodies responsible for organizing these events, place significant demands regarding infrastructure, hospitality, and operational aspects, focusing on maximizing their revenue generation.

The organizers, typically local committees, manage operational aspects, while the financial burden of infrastructure development falls on the host city or country, highlighting an uneven financial distribution of costs.

The all-or-nothing choice presented by the IOC and FIFA grants them a powerful position, allowing them to dictate both the price and the quantity (of events) they offer, similar to monopolists who exploit their market dominance.

The IOC and FIFA utilize their monopoly power by offering the hosting of the entire Games or World Cup to a select number of eager cities, who are then forced to accept all the associated costs and requirements.

The large quantities imposed by organizations like the IOC and FIFA to gain maximum revenue by selling more than consumers need, like foot-long hot dogs at a stadium, even though it's likely more than individuals want, forcing an all-or-nothing choice.