Table of Contents

International Handbook on the Economics of Mega Sporting Events

International Handbook on the Economics of Mega Sporting Events

Elgar original reference

Edited by Wolfgang Maennig and Andrew Zimbalist

From the Olympics to the World Cup, mega sporting events are a source of enjoyment for tens of thousands of people, but can also be a source of intense debate and controversy. This insightful Handbook addresses a number of central questions, including: How are host cities selected and under what economic conditions? How are these events organized, and how is local resistance overcome? Based on historical and empirical experience, what are the pitfalls for the organizers of these events? What are the potential economic benefits, including any international image effects? How can the costs be minimized and the benefits maximized for host cities and countries? How do these mega events impact the challenges of globalization and what is their environmental legacy?

Chapter 16: The Economic Impact, Costs and Benefits of the FIFA World Cup and the Olympic Games: Who Wins, Who Loses?

Stefan Kesenne

Subjects: economics and finance, public sector economics, sports


Stefan Kesenne 1 INTRODUCTION After the European dominance in organizing the Football World Cup, FIFA now seeks to capture new markets by moving the sports event to other continents. In 2010, for the first time in its history, the FIFA Football World Cup was organized in an African country. Notwithstanding the initial skepticism, South Africa made it a success. In spite of too large a number of participating teams, playing too many boring games, and the failure of the SA team to qualify for the second round, the World Cup in Africa was a boost to the whole continent’s morale and it clearly made many South Africans happy and proud. Nevertheless, the huge costs of hosting the World Cup have not been covered by the revenues, contrary to the positive economic impact studies that invariably show up when a country applies to host a major sports event. As soon as the vuvuzelas were silenced, the South African government and the city governments faced huge budget deficits, and the country was stuck with too many stadiums that are too large to maintain and run profitably (white elephants). This is also what Simon Kuper and Stefan Szymanski (2009) concluded in their recent book Soccernomics (p. 249): ‘It turns out that hosting the World Cup doesn’t make you rich, but it does make you happy’. Well, at least it makes many people happy. In this contribution, I try to explain why economic impact studies contradict cost–benefit analyses of hosting major sports events....

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