In the business world, sports may be best recognized for the many benefits they offer to individual businesses such as sponsorships, brand building, venues for advertisement, and marketing opportunities. However, sports also have major impacts on economies all around the world. It’s no surprise that international sporting events like the World Cup and the Olympics greatly affect the economies of host countries. These economic effects can be positive or negative and can have implications not only on a regional level but a global level as well.
With much debate regarding the financial crisis in Greece, some may wonder exactly what triggered this major economic fallout. One proposition is that the 2004 Summer Olympics in Athens sparked problems in Greece that may have led to the financial issues Greece is experiencing today. The 2004 Athens Olympics cost nearly $11 billion which was two times what the initial budget called for. This figure does not include the large infrastructure projects that were rushed to completion at inflated costs. Additionally, being the first major international event after September 11 caused security costs to be extremely high, totaling to more than $1.2 billion.
Many of the venues that were constructed for the Olympics are now vacant, fenced off, and barely used. The unused venues are a large problem as the maintenance and operating costs continue to impose a burden on Athens. Others argue that Greece is still reaping the economic benefits from the infrastructure and transportation system overhaul of the Olympic Games. Whatever the case may be, Greece’s financial crisis has caused major problems for the country and corresponds with problems on an international level as the European Union also finds itself in a debt crisis.
While the 2004 Summer Olympics may have had a negative impact on its host country’s economy, other global sports events have had quite the opposite effect. International sporting events offer many potential benefits including the modernization of infrastructure, increased foreign commerce, and heightened global prestige. Last year’s FIFA World Cup in South Africa is a great example as investments from the event helped alleviate the country’s infrastructural deficiencies that have hindered economic potential.
South Africa also experienced a boost in foreign trade, foreign direct investment, and tourism. In the short-term, South African industries such as retail and transportation profited greatly from the World Cup. Economists agree that improved public relations are the leading long-term benefits from hosting international sporting events. While these impacts may be hard to quantify, these immeasurable effects may lead to increased commerce and foreign investment.
Other global sports events have had similar results to South Africa such as the 2011 Rugby World Cup in New Zealand which generated over $1.5 billion. International sporting events may be known for bringing teams and athletes from all around the world together, but perhaps more importantly these events bring business and tourists to new countries allowing potential for economic growth and global visibility.