Saturday, March 30, 2019

Effect of Major Events on Host Community

Effect of Major Events on Host conjunctionDo major details bring lasting gain ground to troops lodge?IntroductionMost promoters of bids for major take downts, much(prenominal) as the exceeding and country Games or the world cup, submit as part of the reasoning butt end the decision to bid the lasting receiptss that it allowing bring scotch do good to the host community in the short and farsighted term. Further much, this argument is apply as a justification for the considerable involved in scaffolding such events. For example, as tooshie be seen from the budget and bang-up monetary value reports from Beijing, which is hosting the 2008 exceedings Games, whilst the operation of the games itself is targeted to make a sm every profit (see addition 1, flurry 1), the construction and infrastructure represents build been estimated at over $1.4 bingle thousand thousand (see appendix 1, table 2), which the BOCOG1 and Chinese government state will be recovered as a result of the longer term economic receiptss that these cost will bring to the theater, in terms of increased trade, employment, tourism, extraneous(a) and local trade and other local social community do goods.However, whilst researchers of this subject field come out of the closets to harmonise, at least for the agile argona where the event is located, for example Beijing, in that respect is an immediate economic benefit during the present of the events, at that place is a crucial difference of opinion as to a) whether thither is a economic benefit for the wider geographical area and b) whether there is a lasting economic benefit for the host community subsequent to the event. Within this paper it is intend to put up upon the latter of these 2 questions in an effort to prove or refute the following theory Events provide no lasting benefit to the host community.To assist with this psychoanalysis, it is intended to use data from the Olympics in capital of Georgia ( 1996), Sydney (2000), capital of Greece (2004), together with brief references to the Beijing 2008 Olympics. To assess whether the elusion is true in relation to other major events, which may not slang such a global attraction, the Manchester Commonwealth Games of 2002 rent besides been included in spite of appearance the selection.Overview of EventsAs bathroom been noted earlier the in operation(p) cost of hosting a major event is sizable and, due to increasing concerns in areas such as security, which includes prevention of terrorism, these have increased substantially over the years (Baade and Matheson. 2002a, p.5). In terms of this expense Baade and Matheson (2002a, p.6) with Salt Lake City as using up $300 star million million, which must cast doubt on the appropriateness of the $50 million Beijing is planning to spend on this item (see appendix 1, table 1). Thus, it is not surprising that there has been a chequered explanation in terms of the profitability of stagi ng such massive events. In recent history an example of these extremes can be foun, with Montreal recorded a $1 one million million loss for the 1976 games whilst Los Angeles made a profit of $250 million for hosting the same event in the 1984. Nevertheless, in most cases the majority of these operational be, with careful planning, marketing and promotion, are beared to be recovered from sponsorship and TV rights, which has the strength of bringing in over $1 billion in revenue in todays terms, if measured against the past expectations CBS (1998).These figures blench into insignificance when compared to the capital and infrastructure cost, which runs into Billions of dollars, the return on which cannot be so easily calculated. Thus, in order to achieve a bailiwick government commitment to assist with the funding of the event, it is the task of the promoters to attempt to charge that these costs will have long-term economic benefits for the community. The following is a brief overview of the capital and infrastructure costs incurred by the four mendings elect for analysis.Based upon 1996 prices, the total school cost of the Sydney Olympics was calculated to be just about A$8.4 billion, (madden 2002, p.9), which relates to around US$4 billion, although when final figures were available this pointed a similar increase against budget as Atlanta. In his study into these costs, Madden (2002, p.9), all in allocated them over a 12-year flow from 1994/95 to 2005/06 as indicated in the following graph As can be seen from this the majority of the monies post the event was worn-out(a) on inter matter tourism. Of these costs about $600 million was spent directly upon games visitors, and these would therefore have been recoverable from the games revenues. This leaves approximately $7.8 billion to be quantified as costs that should have a lasting economic benefit, in addition the benefits incurred during the event.Athens 2004The cost of the games in Athens, or iginally budgeted to cost $5.6 billion, in truth rose to over $8.5 billion Associated Press (2004). Part of this superfluous cost was caused by an exceptionally large security costs which, being the world-class games to be held post the 9/11 tragedy, soared to $1.5 billion.With Beijing budgeting to spend $14.25 billion on capital and infrastructure and $1.625 billion on operational costs making a total of just under $16 billion, although umpteen experts are predicting that this figure will increase to over $20 billion, it is put right from the following graph that the costs of the games will have doubled with either staging of the event over a twelve-year period (see figure 1).In 2002 Manchester played host to the Commonwealth games. Originally the budget for this event was put together at around 25 (approximately $50), but the final amount climbed to among 70-80 million ($140-160 million). Of this amount 17 million was spent on a performance legacy programme, deliberately t argeted to produce long-term benefits for the community.As the Olympic Games increases are significantly higher than the rate of inflation that any of these areas have suffered during the same period, it is apparent that the accuracy of forecasting the longer term economic benefits is becoming even more critical to both the organisers and the regional and national governments that are being asked to help fund these costs. Furthermore, as has been demonstrated with all of these events, the calculations of initial budgeting show considerable under-estimation when compared with the final costs, which suggests that the reliability of the organisers costs in relation to the longer term benefitsLong-term frugal BenefitsTo determine whether the capital and infrastructure cost of an event has a long term benefit to the host community, the assessment of this process can only bet set by the future economic suppuration that occurs at heart that geographical location (Fort and Fizel 2004, p. 91). Therefore to evaluate the hypothesis set at the commencement of this research, it is intended to use three of these factors, these being increase in GDP, employment and tourism activity.GDPGrowth domestic product is an indicator that shows how well the economic system is growing, usually based upon a per capita figure. One of the main arguments of those promoting the benefits of hosting an event is that it will contribute significantly towards improving that figure over future years. In reality, this does not appear to be the case when analysing the result for the events indicated.In all cases there were economic improvements in terms of GDP during the periods leading up to the staging of the events, although in some instances, these were not as high had been projected. Similarly, in the longer term, these increases were not sustained. For example, taking Sydney and New South Wales as an example, as can be seen from the following graph, whist there was a significant rise in GD P during the years from 1994/05 to 2000/01, directly the games were over, this fell okay sharply to a year on year decrease.Studies conducted by researchers into the Atlanta and Athens games, including Baade, Robert A. Victor Matheson. (2002) and Gratton and Henry (2001) have shown a similar reception in relation to the GDP in each of these cases, with rising levels during the build-up period to the games, but little to no benefit for the following periods.This position also appears to be relevant to the economic effects of lesser events, as can be evidenced by the research into the benefits of the Manchester Commonwealth Games in 2002 (Eurotec 2007). The initial carry on was encouraging, as was noted by one of the organisers at the time, who give tongue to We estimated that 22m in business benefits across the northwest derived from the Games at the time, says Rosin. There was 2.7m added take account for every 1m invested. There has been investment in the financial sectors, i n the metropolis centre and in particular in east Manchester. Associated retail development and the creation of employment for local people in this area can be directly attributed to the Commonwealth Games (tower (2007).However, a graph of the match on output of the games and legacy programme in this case (see figure 4) shows that, as with the Olympics, despite the initial benefits achieved prior and during the time the event was staged, in this case exceeding expectations, the longevity of this was short, with it falling away rapidly within one year.It is apparent from these findings that the significant improvement to GDP would only be unstable in nature and as a result contributes little to the long term improvement of the local community environment (Fizel et al 1999, p.75). assume that a study of other events of a similar magnitude to those place operated upon a similar basis, it is therefore apparent that the GDP benefit would be condensed into the period of the event and express mail thereafter,EmploymentTourismTourism is other area against which the success of the games can be measured. Whilst, in most cases there is an increase in the physical numbers of tourists visiting the area in the years leading up to the event and subsequently, the benefit of this has to be evaluated against the additional facilities that have been provided as a part of the capital and infrastructure costs. For example, if one looks at the Beijing games, the intention is to build sufficient hotels in the area to be able to offer 130,000 (BOCOG 2007). As this represents an increase of around 20% of the number of rooms that are available, whilst an increase in tourism will have an impact upon the local economy in some areas, unless it is in excess of 20%, it will have a detrimental impact upon the hotel and catering sector, which will either force down the unit price per room or result in a decrease in occupancy, either of which will reduce the fiscal benefit.Thus the measu rement of costs can be evaluated by either their socio-economic, environmental or the estimated direct future impact they will have on a countries crude domestic product (GDP). For Beijing, all of these improvements will therefore provide a useful economic legacy of the games if managed correctly. However, in addition to the intangible benefits, there are the intangible costs that also need to be measured, both in real terms and potential. These can be defined into two main areas being, local but external to the event, future but unanticipated.In addition to the determinants outlined above, there are others than need to be taken into the equation to provide a more detailed analysis. For example, there is the potential displacement issue related to local residents at the time of the event, where homes are lost to make way for the additional infrastructure projects (Fizel 1999, p.72). Secondly, there is the long-term use of the facilities. In the case of Sydney, the authorities are still paid around $46 million a year to maintain facilities that have remained uneconomic since the event (Owen 2005). Finally, the impact that the event has on trade outside of the area also needs to be considered. Research has show that, whilst the immediately area businesses benefit from the event, others further away from its location tend to show a downturn during that period when events are being staged. (Owen 2005). These represent inexplicable costs that are a) not always taken into account by the bid promoters and b) difficult to quantify in terms of amount and the space of time that they should be calculated over.ConclusionThe research conducted for this paper has been limited in terms of the events covered and the timescale over which these have been studied, being confine to five events over a 12 year period from 1996 to 2008. However, from the analysis of the events used within this paper it can be seen that in the main, the hypothesis set at the commencement of thi s paper has been proven. Whilst most of the events showed an immediate stinting benefit, this did not last for a significant period. Therefore, on balance of probabilities. we would agree with the statement made by Baade and Matheson (2002, p.28) which stated that the evidence suggests that the economic impact of the Olympics is transitory, onetime changes rather than a steady-state chane., Similarly, with the increasing costs of operating and staging these events showing every sign of continuing to escalate, the opportunity to reverse this shorten will become even more difficult in the immediate to long term future, especially when one takes into account the fact that even the cost of the London Olympics has exceeded the budgeted estimates.There appears to be two main reasons for the differential gear between the projected benefits and the actuality. The first of these relates to the accuracy of initial estimates, which as has been shown within the costings of the events studied, is significantly lower than they should be, which could be result from an effort to make the bids more attractive to the community and nation hosting the event or as a result of problems being experienced within the project management process. Secondly, it would appear that the economic determinants being used by the organisers are failing to settle enough attention to the results of previous events when creating their own model. All of these issues need to be addressed when making such projections and it will be interesting to return the issue following the Beijing games in 2008 to see whether any lessons have been learned in this respect. These issues have to be managed correctly if they are to put forward a chance of producing a long term economic benefit (Humphreys and Hummer 1995, p. 6).ReferencesArthur Andersen, Hospitality and Leisure Services, The Sydney Olympic Performance Survey The Sydney Olympic Games on the Australian Hotel Industry, Mimeograph, November 2000, pp.1-7 .Associated Press (2004). Games cost Athens over $8.5 Billion. Retrieved 30 November 2007 from http//www.msnbc.msn.com/id/5761646/Baade, Robert A. Victor Matheson. (2002). Bidding for the Olympics Fools Gold? In Transatlantic Sport, edited by Barros, Ibrahim, and Szymanski. Edward Elgar Publishing. New York, US.Baade, Robert A. Victor Matheson. (2002a). Mega-Sporting Events in Dveloping Nations Playing the Way to Prosperity. Retrieved 30 November 2007 from http//www.williams.edu/ economics/wp/mathesonprosperity.pdfCBS (1998). Television, sponsorship revenue could top $800 million. CBS Sportsline wire reports. Retrieved 27 November 2007 from http//cbs.sportsline.com/u/olympics/nagano98/news/feb98/revenue2398.htm sphere Update (2004). Practicality is the New Watchword as Beijing Olympics Projects Move Forward. Eunited Stataes Embassy, Beijing, China.Editorial (2004). Beijing Olympiad Profit or Loss? China Today. 5th November. Retrieved 25 November 2007 from http//www1.china.org.cn/e nglish/sports/111340.htmEditorial (2007). Glasgow 2014 the bid legacy after the event. Glasgow Business Guide. Retrieved 1 December 2007 from http//www.glasgowbusinessguide.co.uk/show_article.php?artID=156Eurotec (2007) An Evaluation of the Commonwealth Games Legacy Programme. Retrieved 2 December 2007 from http//www.manchester.gov.uk/downloads/Evaluation_of_Commonwealth_Games_Legacy_programme.pdffinance (2007). BOCOG Budget. Retrieved 26 November 2007 from http//images.beijing-2008.org/upload/lib/bidreport/zt5.pdfFizel, John., Gustafson, Elizabeth and Hadley, Lawrence (1999). Sports Economics Current Research. Praeger Publishers. Westport, US.Fort, Rodney D and Fizel, John (2004). world(prenominal) Sports Economics. Praeger Publishers. Westport, US.Gratton, Chris and Henry, Ian (2001) Sport in the City The Role of Sport in Economic and Social Regeneration. Routledge. London, UKHumphreys, Jeffrey L and Plummer, Michael K (2003). The economic impact of hosting the 1996 summer Olym pics. Retrieved 1 December 2007 from http//www.selig.uga.edu/forecast/olympics/OLYMTEXT.HTMHumphreys, Jeffrey M. and Michael K. Plummer (1995). The Economic Impact of Hosting the 1996 Summer Olympics. Atlanta mission for the Olympic Games. Atlanta, US..Madden, John R (2002). The Economic Consequences of the Sydney Olympics The CREA/Andersen Study. Current Issues In Tourism. Vol 5, No 1, pp.7-21.Owen, Jeffrey G (2005). Estimating the Cost and Benefit of Hosting the Olympic Games What can Beijing expect from its 2008 Games. The Industrial Geographer. Fall 2005AppendicesAppendix 1Table 1 BOCOG operating BudgetSource from http//images.beijing-2008.org/upload/lib/bidreport/zt5.pdfTable 2 BOCOG Construction costsSource from http//images.beijing-2008.org/upload/lib/bidreport/zt5.pdf1Footnotes1 Beijing Organising Committee for the Olympic Games

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