Olympics and Sporting Events Quiz

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Questions and Answers

When did an Eastern European country first host the Winter Olympics?

1984 (correct)

1956

1980

1968

Which of the following criteria was used by the International Olympic Committee (IOC) when awarding hosting rights before the 1960s?

The host city should be in South America.

The host city should be in Eastern Europe.

The host city should be in a developing country.

The host city should be in a wealthy, industrialized nation. (correct)

In the years following 2000, which of the following is true regarding Summer Games bids?

Over half of the bids came from Western Europe, Japan, Australia, Canada, and the US.

Less than half of the bids came from outside of Western Europe, Japan, Australia, Canada, and the US.

The percentage of bids submitted from outside of Western Europe, Japan, Australia, Canada, and the US remained at 20 percent.

Over half of the bids came from outside of Western Europe, Japan, Australia, Canada, and the US. (correct)

Which year did the first official FIFA match take place?

1904 Signup and view all the answers

What was the main reason why FIFA decided to create the World Cup?

To provide a separate platform for international football competitions outside of the Olympics. Signup and view all the answers

Which of the following is NOT an organization mentioned in the passage?

UEFA Signup and view all the answers

Why would a country or city want to host a mega-event?

To gain international recognition. Signup and view all the answers

What is a common justification used by consultants to support hosting mega-events?

The event will boost the host economy by attracting tourists. Signup and view all the answers

What is the main argument presented by the economists regarding the short-run economic impact of sporting events?

Sporting events have little-to-no significant short-run economic impact on local economies. Signup and view all the answers

Which of the following revenue streams are NOT typically controlled by the sanctioning body of a sporting event?

Domestic sponsorships Signup and view all the answers

How much revenue did the IOC earn from television rights and sponsorships for the 2015-2018 Olympics cycle, and what percentage was shared with the local organizers?

$4.1 billion, 50% Signup and view all the answers

What is the primary source of economic benefits for host cities from mega-events, according to the text?

Indirect expenditures by tourists visiting the event Signup and view all the answers

What is a major problem associated with ex ante economic impact studies, as discussed in the text?

Overestimation of the number of visitors and their spending potential Signup and view all the answers

What was the predicted economic impact of the 2014 Super Bowl, held outside New York City, and why was this prediction likely inaccurate?

Over half a billion dollars, due to overestimated visitor numbers and spending Signup and view all the answers

What are two potential ways a mega-event can leave a positive long-term economic impact on a host city?

Improved infrastructure and increased tourism in the future Signup and view all the answers

What is a potential consequence of overestimating the economic impact of a mega-event?

Insufficient funds for infrastructure improvements Signup and view all the answers

What is the impact of mega-events on tourism?

Mega-events increase tourism numbers, but can also lead to a decline in other types of tourism. Signup and view all the answers

Which of the following is NOT a reason why mega-events can lead to a decline in tourism?

Lack of interest in the event among potential tourists. Signup and view all the answers

What is the main argument against the use of multipliers to estimate the economic impact of mega-events?

Multipliers overestimate the economic impact of mega-events because they fail to account for leakages. Signup and view all the answers

Which of the following is an example of an economic cost associated with hosting a mega-event?

Business closures due to road closures and transportation difficulties. Signup and view all the answers

What is the term used to describe the phenomenon of mega-events displacing other tourists?

Crowding out Signup and view all the answers

What is a key difference between the economic impact of a mega-event and a recurring sporting event?

Mega-events are more likely to lead to leakages of economic benefits. Signup and view all the answers

Why are economic impact studies of mega-events often criticized?

They often exaggerate the true economic impact of the event. Signup and view all the answers

What is the main argument presented against using a multiplier to measure the economic impact of a mega-event?

Multipliers overestimate the economic impact of mega-events. Signup and view all the answers

What is a potential non-economic reason for a city to bid for mega-events?

To enhance civic pride Signup and view all the answers

Which event was highlighted as a demonstration of China's emergence as a global leader?

2008 Summer Olympics in Beijing Signup and view all the answers

In which context is the political display of power mentioned in relation to mega-events?

Exhibiting political power during the 2014 Winter Olympics Signup and view all the answers

What was a primary finding regarding the impact of the 2006 World Cup in Germany?

Increased self-reported happiness among citizens Signup and view all the answers

Which group of countries is represented in the term BRICS?

Brazil, Russia, India, China, South Africa Signup and view all the answers

What factor might discourage relatively poor countries from hosting mega-events?

High operational costs Signup and view all the answers

How do local transportation providers benefit from hosting mega-events?

Through increased demand due to higher occupancy rates Signup and view all the answers

What was the financial cost associated with the hosting of the 2014 Winter Olympics in Sochi?

$51 billion Signup and view all the answers

What is the primary reason the International Olympic Committee (IOC) can compel a city to host more events?

The city values consuming more events over consuming none. Signup and view all the answers

What does the winner's curse in the context of bidding for mega-events suggest?

Bidders may overestimate the value of the prize. Signup and view all the answers

Why might Rio have won the bid to host the 2016 Summer Olympics?

It was able to host a more profitable Olympics than competitors. Signup and view all the answers

What is a consequence of hosting more sports events than a city can financially support?

A loss that aligns with the surplus. Signup and view all the answers

How does the number of bidders affect the likelihood of a winning bid being overvalued?

It increases the likelihood of overbidding. Signup and view all the answers

What may happen even if the net benefits of hosting a mega-event are negative?

Some sectors of the economy may still gain. Signup and view all the answers

What is a common misconception about the economic outcome of hosting mega-events?

All hosting cities achieve positive economic impacts. Signup and view all the answers

Which factor does NOT contribute to a city's decision to continue bidding for mega-events?

Assurance that events will cover all costs. Signup and view all the answers

Which of these is NOT a reason why an economic impact study might overestimate the true economic impact of a sporting event?

The Consumption Effect Signup and view all the answers

What happens when a sporting event attracts spending that would otherwise be spent at another location within the same economy?

The Substitution Effect Signup and view all the answers

What are the main factors that could lead to an overestimation of the true economic impact of a sporting event?

Crowding out, the substitution effect, leakage Signup and view all the answers

How does the Super Bowl demonstrate a smaller substitution effect compared to typical local sporting events?

The Super Bowl attracts more fans from a wider geographical area. Signup and view all the answers

What is the potential consequence of tourists attending a sporting event, but later visiting the same city at a different time?

The Time-Switching Effect Signup and view all the answers

What is "crowding out" in relation to sporting events?

When an event causes a decrease in spending on other activities due to congestion and disruption. Signup and view all the answers

How does the Boston Marathon demonstrate the concept of 'crowding out'?

The large number of runners and spectators make the streets very crowded, hindering other activities. Signup and view all the answers

What is a potential negative impact that the Boston Marathon's heavy crowds might have on the local economy?

A reduction in business revenue due to the disruption of traffic and services. Signup and view all the answers

Study Notes

Economics of Sports Mega-Events

Mega-events are characterized by several factors differentiating them from other sporting contests
- They occur irregularly or infrequently.
- They command a high level of public interest and media attention, especially at the national or international level.
- They attract participants or spectators from outside the local region.
Size is not the sole factor determining whether a sporting contest qualifies as a mega-event
- The annual Honolulu Marathon attracts about 30,000 runners, roughly half traveling from Japan.
- It's considered a mega-event despite being smaller than a typical NFL game.
Some mega-events change locations regularly
- Summer and Winter Olympic Games
- World Cups in various sports, such as football, rugby, and cricket.
- Champions League Final
- American events (Super Bowl, All-Star games, the US Open golf tournament, and NCAA championships)

Brief History of Mega-Events

Other mega-events include the World Series, Stanley Cup, and NBA Finals
- These change locations based on the participating teams.
Other mega-events always take place in the same location annually
- Grand Slam tennis tournaments
- College Bowl games (e.g., Rose Bowl)
- Major marathons (e.g., Boston, New York, Chicago)
- Auto races (e.g., Daytona 500, Monaco Grand Prix)
- Horse races (e.g., Kentucky Derby)
The Olympic Games were one of four sets of Greek athletic contests
- The other three were the Pythian, Nemean, and Isthmian Games.
- The Olympics were first held in 776 B.C. and continued every four years for over a millennium to honor the Greek god Zeus.
The Modern Olympic Games
- The first modern Olympic Games in Athens (1896) were small-scale, with only 14 nations and fewer than 250 athletes.
- Winners were given silver medals, runners-up received copper medals.
- In 2024 (Paris), over 10,000 athletes representing 204 countries participated in 329 individual events across 32 sports.
- The Winter Olympics have been held since 1924
  - In Beijing (2022), nearly 3,000 athletes from 91 countries competed in 109 events, 15 disciplines, and 7 sports.
Initially, only amateurs were allowed to participate
- Jim Thorpe, a significant US athlete, was stripped of his gold medal in 1912 for playing semi-professional baseball before the Olympics.
By the 1980s, professional leagues became prominent
- Fans sought to watch talented professionals participate at the Olympics.
- Russian hockey team's participation in the 1980 Winter Olympics highlighted the challenge of differentiating amateurs from professionals.

Location

The IOC selects the host city through a six-year timeframe before the event
Historically, the IOC favored large cities within the world's richer countries
- Between 1896 and 1952, every Summer and Winter Games occurred in either Western Europe or the U.S.
- From 1956 with Melbourne (Australia), the IOC expanded locations to communities within industrialized nations.
- In 1968, Mexico City became the first developing-world IOC host.
- Eastern European nations started hosting in the 1980s Summer Games (Moscow) and the 1984 Winter Games (Sarajevo, Yugoslavia).
- Beijing hosted the 2008 Summer Games and the 2022 Winter Olympics.
- 2016 Olympics - Rio de Janeiro, South America
More recent bids have come from outside Western Europe, Japan, Australia, Canada, and the U.S.

FIFA and World Cup

The FIFA World Cup is the world's other major international mega-sporting event
Football's first governing body (English Football Association) was formed in 1863. International matches between Scotland and England began in 1872.
50 years past this, an international football organizing body (FIFA) was formed in 1904.

Short-Run Benefits of Hosting Mega-Events

Expected revenue from the event and tourists
Economic benefit studies claim large boosts for the host economy.
- The consensus is that sporting events typically demonstrate little significant short-term effects,
  - Revenue streams are similar to teams' revenue (ticket sales, media rights, venue-related, and sponsorships).
  - Organizing bodies, (IOC, FIFA, NFL, etc.), typically retain the majority of revenues.
- The 2015-2018 Olympics cycle (Rio and PyeongChang) showed IOC earnings of $4.1 billion from television rights and sponsorships.
Host cities may retain ticket revenue, domestic sponsorships, and licensing money.
This revenue, however, is often insufficient to cover hosting costs.

Problems with Ex Ante Economic Impact Studies

Unrealistic projections for visitor numbers and spending lead to poor estimations.
Examples, like the 2005 NBA All-Star Game in Denver or the 2014 Super Bowl outside New York City, demonstrate the gap between predicted and actual impacts.
Short-term benefits may be lessened by substitution effects (shifting spending from other activities)
Crowding out (displacing other activities) also diminishes benefits.
Leakages reducing the overall multiplier impact

Substitution Effect

Spending diverted to the mega-event from other local economic activities
Mega-events generally draw fans from outside the region, thus having smaller substitution effects
Super Bowl, only 5% of tickets were sold to the host team, and 70% to other teams in the league.

Crowding Out

Congestion and high attendance numbers for mega-events may reduce the impact on other economic activities.
Boston Marathon: Traffic and other economic activity limitations to spectators during the events.

Leakages

Factors that reduce the economic benefits to the host community (e.g., using outside labor to meet demands during the event, that leaves the area after the event)
These factors diminish the multiplier effect of the event.

Event Analyses

Recent studies of the economic impact of mega-events use event analysis.
Studies observe if stock market indexes rise upon announcing that a country will host the Olympics; if they rise, then it's assumed that hosting the Olympics has a positive effect on the economy.

Long-Run Benefits of Hosting Mega-Events

Positive legacy of infrastructure improvements is a benefit from hosting major events
Sports facilities and infrastructure development (i.e., new or remodelled stadiums) are usually a primary benefit.
Hosting creates a demand for new infrastructure, this political will could aid in infrastructure development.
The Olympics and associated events (e.g., facilities, transportation) may have limited long-term utility beyond the Games' duration.

Advertising and Branding

Positive publicity could increase a city's profile as a top tourism destination.
Hosting mega-events (e.g., Olympics, World Cup) can showcase a city/nation on a broader scale, with boosted local tourist numbers.
Example of Barcelona (following 1992 Games), whose tourist numbers rose quickly.

Costs of Hosting Mega-Events

Costs of mega-events tend to exceed initial budgets.
Olympics events usually cost much more than initially predicted.
Post-events, cities are left with costly infrastructure that may lack demand.
The costs to host events (e.g., construction) may be higher than other comparable mega-events.
Bidding process is commonly expensive making the event more costly.

Why Do Cities Continue to Bid?

Despite the evident problems associated with event hosting, cities proceed with bidding, largely for the following reasons:
- Institutional reasons (political and economic motivations) drive cities to bid, such as enhancing their image on a national or international scale (e.g., 2000 Olympics in Sydney, 2014 Games in Sochi, Russia).
- The allure of hosting mega-events (eg. Olympics) can foster local pride and civic engagement, fostering positive connotations associated with the hosting city
The "all-or-nothing" demand curve concept illustrates how the IOC sets prices and demanded quantities making bidding cities more sensitive to costs while also generating higher amounts of revenue from a given location.

Winner's Curse

Cities in competitive bidding situations may overbid when they lack absolute certainty about the event's true value, which also means, they may overpay
The likelihood of cities committing to a substantial expense overestimates their benefit.

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Test your knowledge on the history of the Olympics and mega-events with this engaging quiz. Explore topics such as hosting rights, FIFA events, and economic impacts of sports. Challenge yourself to see how well you understand the world of international competitions.