In November, it was revealed that the UK economy had unexpectedly grown by 0.1% during the previous four weeks, with this helping the region to avoid entering a technical recession.
Interestingly, one of the key drivers of this growth was football fans, who increased their food and alcohol spending during the 2022 FIFA World Cup in Qatar.
Pubs and restaurants also saw increased turnover and growth as fans flocked to watch live broadcasts, offering a brief and isolated insight into how major and international sporting events and boost national economies.
In this post, we’re going to explore this concept in a little more detail, while asking if the economic benefits of hosting sporting events are worth the initial costs?
A Brief Look at the 2022 FIFA World Cup
In the build-up to the 2022 Qatar FIFA World Cup, it was forecast that hosting the tournament would inject approximately $17 billion into the local economy.
We have yet to see whether such predictions are accurate (although FIFA alone drew in $7.5 billion in revenue through the tournament), but even if the figure proves to be a little conservative, it’s unlikely to make a dent in the $300 billion spent by the Arab state in the 12 years since the bidding rights were awarded.
Of course, this was an unusual World Cup finals, and not only because it took place during the winter rather than the summer.
Additionally, Qatar had to make a larger than usual investment in its infrastructure ahead of the World Cup, including the construction of seven brand-new stadiums from scratch. This alone cost around $6.5 billion, while new hotels and a brand-new metro system was built to accommodate approximately 1.5 million visitors from across the globe.
While this isn’t unusual by itself (tourist hotspot Rio de Janeiro had to build 15,000 additional hotel rooms prior to staging the 2016 Summer Olympic Games), the scale of the investment was significant and made it hard for Qatar to achieve a short-term return.
London 2012 – A Template for Economic Success
Despite this, the Qatari government clearly understands the long-term benefits of hosting a major international tournament.
Certainly, history has shown that this can lead to long-term and sustainable increases in tourism and local economic growth, whether through direct spending at hotels and their retailers or indirectly through the procurement of diverse goods and services.
To provide some context, let’s take a look at the sustained impact of hosting the Summer Olympics in London in 2012.
Within a year of the closing ceremony, the British government revealed that the UK economy had already seen a £9.9 billion trade and investment boost, while Games’ related projects helped to generate thousands of jobs in the wake of the 2008 financial crisis.
This trend has largely continued over the course of numerous programs, initiatives and associated redevelopment projects, creating a significant return on an event that cost approximately £9.3 billion.
What About the 2023 Rugby World Cup?
While the Rugby World Cup (which will see its 10th iteration hosted later in 2023) is not considered to be as lucrative of well-attended as the FIFA World Cup or Summer Olympics, it’s still capable of providing significant economic benefits to host nations.
Of course, the 1995 tournament also had a profound political impact on host nation South Africa.
This event, which was eventually won by the Boks following an emotional run to the final, was leveraged to create a shared sense of national pride in the country and proved to be incredibly unifying in the wake of Apartheid being abolished.
In October 2020, an independent report by MI Associates also revealed the true, averageeconomic value of hosting the RWC. It found that the men’s RWC can generate up to £2.9 billion in total economic impact, while direct visitor expenditure into the economy can reach £1.1 billion.
These figures don’t include the inflated sums that are subsequently invested into local communities and the development of the sport within the host country, which can be significant depending on the country in question and its governing body.
The Last Word
Ultimately, it’s largely unheard of for countries to reap a short-term profit when hosting international tournaments, even in developed countries that benefit from an expansive and existing infrastructure that reduces their initial costs.
However, hosting events such as the FIFA or Rugby World Cup does deliver short-term GDP growth and boosts the consumer spending, which usually benefits businesses across the length-and-breath of the host nation.
It can also deliver significant long-term economic gains, especially in the form of increased tourism revenues, job creation and sustained trade and investment boosts.
As a result, hosting international sporting events should be considered as a long-term investment product, and one that can have a far-reaching impact on the wider national economy.
