Will Lon­don 2012 be the big­gest sport­ing event ever staged?

Sportcal - - CONTENTS - by Mike Laflin, Jonathan Rest and Rosie Davis

The Olympic Games and soc­cer’s Fifa World Cup are un­equiv­o­cally the two largest sport­ing events in the world. While the Olympics fea­tures a greater num­ber of ath­letes and gen­er­ates more in­come than the World Cup, the lat­ter has a wider ef­fect on a coun­try, ap­par­ently has a greater eco­nomic im­pact and costs less to stage.

So which is the big­gest?

It is a ques­tion that has never been easy to an­swer, with a strong el­e­ment of sub­jec­tiv­ity tend­ing to in­trude into most an­swers.

Sport­cal, in con­junc­tion with a team of aca­demics and over 200 in­dus­try sports event ex­perts, has been analysing the im­pact of ma­jor sport­ing events over the last year through its Global Sports Im­pact project. Us­ing this anal­y­sis, it is pos­si­ble to high­light the ma­jor dif­fer­ences be­tween this year’s Olympic Games in Lon­don and the last two edi­tions of the World Cup.

Eco­nomic im­pact

The eco­nomic im­pact of an event, mea­sured by a mix­ture of di­rect, in­di­rect and in­duced fac­tors, is ar­guably the most dif­fi­cult to mea­sure as it can take years for the ben­e­fits of host­ing an Olympics or a World Cup to man­i­fest them­selves in the form of in­creased out­put and busi­ness flow.

Sir Keith Mills, deputy chair­man of the Lon­don 2012 or­gan­is­ing com­mit­tee, ad­mits that whether the games have been suc­cess­ful in kick-start­ing the UK econ­omy will only be known “in three to four years’ time.”

There are a wide va­ri­ety of es­ti­mates as to the likely eco­nomic im­pact of this year’s Olympic Games on the UK, in­clud­ing the gov­ern­ment’s own es­ti­mate of $20.25 bil­lion over the next four years.

The high­est fig­ure - $25.9 bil­lion by 2017 – fea­tures in a re­port com­piled by Ox­ford Eco­nom­ics on be­half of Lloyds Bank­ing Group, a do­mes­tic tier-one spon­sor of Lon­don 2012.

The ben­e­fits have been es­ti­mated from 2005, when the games were awarded to Lon­don, and de­rive mainly from the build­ing of Olympic fa­cil­i­ties and tourism.

It is fore­cast that around $7.8 bil­lion of the gains will come in the five years af­ter the games, as the Olympic venues take on post-games func­tions, and that Lon­don will re­alise $9.4 bil­lion of the over­all ben­e­fits, with the rest of the UK get­ting $16.5 bil­lion.

Visa, the credit card com­pany that is one of the In­ter­na­tional Olympic Com­mit­tee’s top­tier TOP spon­sors, es­ti­mates an $8-bil­lion eco­nomic ben­e­fit by 2015 and is pre­dict­ing the big­gest ever Olympic and Par­a­lympic Games con­sumer spend for a host mar­ket.

But the fig­ure quoted lacks any real in­di­ca­tion of the vol­ume of in­creased tourism that the games are likely to gen­er­ate and is based on pre­vi­ous trends at Olympic Games, which ar­guably took place in less aus­tere times.

In its re­port ‘Golden Op­por­tu­nity - Lon­don 2012 Olympic and Par­a­lympic Games Ex­pen­di­ture and Eco­nomic Im­pact’, Visa said that it ex­pects the UK to ben­e­fit from a $1.2-bil­lion con­sumer spend­ing boost dur­ing the seven-week games pe­riod alone, which equates to an 18.5-per-cent in­crease on what would have been expected if the games were not tak­ing place

Over­all there is very lit­tle ev­i­dence to sug­gest that ma­jor events gen­er­ate an in­crease in tourism and, based on pre­vi­ous games, Lon­don is un­likely to see a ma­jor spike in this area as a con­se­quence of the Olympics.

South Africa’s host­ing of the 2010 Fifa World Cup opened the coun­try up to new waves of in­vest­ment and tourism, and ac­ti­vated a largely un­tapped work­force.

The tour­na­ment is said to have gen­er­ated about $12.4 bil­lion in eco­nomic im­pact for the coun­try, of which 16 per cent was from tourism and the re­main­der from reap­ing the ben­e­fits of in­ter­nal ex­pen­di­ture on in­fra­struc­ture.

By com­par­i­son, the eco­nomic im­pact of the 2006 World Cup on Ger­many was said to be in the or­der of $13.6 bil­lion.

Even ac­cept­ing the most op­ti­mistic es­ti­mate, the Olympics are un­likely to chal­lenge the World Cup in terms of eco­nomic im­pact, al­though it must be taken into ac­count that the for­mer is fo­cused in a par­tic­u­lar city, with the ex­cep­tion of cer­tain sports like soc­cer and sail­ing, while the lat­ter is staged across the coun­try, thereby broad­en­ing the po­ten­tial fi­nan­cial ben­e­fits.

Given that the es­ti­mate for the over­all unique at­ten­dance of an Olympic Games is gen­er­ally twice that of a World Cup, it is sur­pris­ing that visi­tor spend is es­ti­mated to be roughly the same for both events, at around $1.2 bil­lion.

What is clear is that events like the World Cup in Ger­many at­tracted far more for­eign vis­i­tors - more than 3 mil­lion over­seas tourists at­tended the large fan fests in the var­i­ous home cities – than the Olympics, where the num­ber of non-tick­eted vis­i­tors is much lower.


The cost of stag­ing the sum­mer and win­ter Olympic Games is far higher than the World Cup, largely thanks to the fact there are more ath­letes to ac­com­mo­date and more fa­cil­i­ties to pro­vide.

The Lon­don 2012 or­gan­is­ing com­mit­tee’s bud­get of $3.4 bil­lion is by far the high­est of any ma­jor sport­ing event. Even Van­cou­ver’s bud­get for the 2010 win­ter Olympics of $1.38 bil­lion was greater than the oper­at­ing bud­get of the 2010 World Cup at $516 mil­lion or Ger­many’s 2006 bud­get of $542 mil­lion.

Pub­lic fund­ing is also much greater for the Olympics, which in the case of the Lon­don games, ne­ces­si­tated an in­crease to $9.8 bil­lion as the scope of the project was ex­tended to in­clude fur­ther re­gen­er­a­tion in east Lon­don.

By con­trast the World Cup only re­quired pub­lic fund­ing of $3.9 bil­lion in South Africa in 2010 and $3.1 bil­lion in Ger­many in 2006. While the costs as­so­ci­ated with or­gan­is­ing an

event in Lon­don would nat­u­rally be higher than in South Africa, it is in­ter­est­ing to note that the oper­at­ing costs and pub­lic fund­ing for the two World Cups was very sim­i­lar.

Where the Olympic Games come into their own is in the value of their me­dia rights. The Olympic Games rev­enues ar­ti­cle on pages 6 to 9 shows that the rights for the 2010 win­ter Olympics in Van­cou­ver and the Lon­don 2012 Olympics have to­gether brought in $3.91 bil­lion, an in­cred­i­ble 52-per-cent in­crease on the pre­vi­ous four-year cy­cle.

The IOC’s Mar­ket­ing Me­dia Guide puts the share of me­dia rev­enues from Van­cou­ver 2010 at $1.1 bil­lion, mean­ing that, at about $2.8 bil­lion, Lon­don 2012 broad­cast­ing in­come still com­fort­ably ex­ceeds the $2.4 bil­lion that Fifa, soc­cer’s in­ter­na­tional gov­ern­ing body, brought in from this sec­tor for the 2010 World Cup.

Me­dia rev­enue from the 2006 World Cup came to only $1.3 bil­lion but the fig­ure was 85 per cent higher four years later, in­di­cat­ing in­creased de­mand for rights from in­ter­na­tional broad­cast­ers.

De­spite the tough eco­nomic cli­mate, cor­po­rate de­mand for an as­so­ci­a­tion with the ma­jor sport­ing prop­er­ties con­tin­ues to swell the cof­fers of event or­gan­is­ers.

The Lon­don 2012 do­mes­tic spon­sor­ship pro­gramme ex­ceeded its tar­get of £700 mil­lion ($1.08 bil­lion) as early as last Septem­ber af­ter West­field, the shop­ping cen­tre com­pany, signed up as the 44th part­ner.

Do­mes­tic spon­sor­ship rev­enues have now grown to $1.16 bil­lion, and com­bined with a $338.4 mil­lion do­na­tion from the fees paid by the In­ter­na­tional Olympic Com­mit­tee’s top-tier TOP spon­sors, Lon­don 2012 is pre­dicted to ben­e­fit from $1.5 bil­lion in spon­sor­ship rev­enue, more than dou­ble the fig­ure for Van­cou­ver 2010, and well ahead of the $1.1 bil­lion from the last World Cup in South Africa.

Ticket rev­enues for the 2006 and 2010 World Cups com­bined fail to match up to the $650 mil­lion expected for Lon­don 2012, al­beit there were around 60 per cent fewer tick­ets avail­able in both Ger­many and South Africa.

On av­er­age, a sim­ple cal­cu­la­tion of ticket rev­enue di­vided by tick­ets sold would price each World Cup ticket at be­tween $92 and $103, com­pared with $80 for the Olympic Games.

In­ter­est­ingly, there were only 1.6 mil­lion tick­ets avail­able for the win­ter Olympics in 2010, of which 1.49 mil­lion were sold, bring­ing in $244.1 mil­lion. Al­though the to­tal fig­ure is con­sid­er­ably be­low that of the sum­mer Olympics and the World Cup, tick­ets in Van­cou­ver cost an av­er­age of $164, mak­ing them the hottest in sport.


In terms of pure vol­ume, the po­si­tion of the Olympics at the top of the sports ta­ble is un­ri­valled. Around 10,500 ath­letes from 204 nations will de­scend on Lon­don and they will be cheered on by be­tween 3 mil­lion and 4 mil­lion unique spec­ta­tors, of which some 500,000 to 1 mil­lion are expected to be from over­seas.

Games or­gan­is­ers have 8.8 mil­lion tick­ets to sell across the 26 sports, and by the end of June, there were around 2 mil­lion left on sale, many for soc­cer matches.

While it is true to say that the Olympic Games at­tract more fans, and par­tic­u­larly more fam­i­lies, than a World Cup, it could be ar­gued that they do not have as avid a fan base.

The ma­jor­ity of peo­ple vis­it­ing Lon­don for the Olympics are expected to be ticket-hold­ers, while World Cups in­creas­ingly at­tract a large num­ber of fans that travel around the coun­try fol­low­ing their na­tion, but do not nec­es­sar­ily have tick­ets. At the World Cups in Ger­many and South Africa, these sup­port­ers made use of the new phe­nom­ena of ‘fan parks’ to watch their teams on big screens set up in pub­lic places.

The 2010 World Cup in South Africa drew a unique at­ten­dance of 1.5 mil­lion, of which 373,000 were from over­seas. How­ever, a large pro­por­tion, around one-third, did not have tick­ets for any of the matches.

Fifa sold 2.9 mil­lion, or 97 per cent, of the 3 mil­lion tick­ets avail­able for the 2010 World Cup and vir­tu­ally all 3.3 mil­lion that were on of­fer in Ger­many in 2006, while Lon­don 2012 is fore­cast to sell up to 8 mil­lion, or 90 per cent, of its al­lo­ca­tion.


As a tele­vi­sion spec­ta­cle, the num­bers as­so­ci­ated with the World Cup and Olympic Games are un­matched.

The 2010 World Cup of­fered 71,867 cu­mu­la­tive hours of broad­cast cov­er­age, with matches watched by 3.2 bil­lion in­di­vid­ual peo­ple in 217 coun­tries around the world.

Lon­don 2012 will pro­duce a sim­i­lar num­ber of cu­mu­la­tive hours of broad­cast, but the games are pre­dicted to reach an au­di­ence of 4.8 bil­lion peo­ple, more than 75 per cent of the world’s pop­u­la­tion, ac­cord­ing to the or­gan­is­ing com­mit­tee’s own ‘Ev­ery­body’s Games’ re­port.

View­ing fig­ures for Van­cou­ver 2010 show that the 31,902 cu­mu­la­tive hours of cov­er­age were watched by 3.8 bil­lion peo­ple.

Mov­ing to the in­ter­net, sta­tis­tics show that the of­fi­cial web­site for the 2010 World Cup, the largest sport­ing event web­site ever built, at­tracted 7.4 bil­lion page views.

How­ever, es­ti­mates for Lon­don 2012, in­clud­ing views on mo­bile phones, are in the or­der of 10 bil­lion to 15 bil­lion page views, ev­i­dence of the in­creases in us­age and ca­pa­bil­ity of smart­phones over the past two years.

Fig­ures sug­gest that the num­ber of unique users of the Lon­don 2012 web­site will be up to dou­ble the 150 mil­lion recorded for the 2010 World Cup equiv­a­lent.

How­ever, dig­i­tal me­dia now com­prise much more than just the of­fi­cial web­site, with Face­book, YouTube, Twit­ter and con­nected tele­vi­sions among the many other plat­forms that will be used by fans to en­gage with the Olympic Games.

Ciaran Quinn, di­rec­tor of Olympics & Strate­gic Busi­ness at delta­tre, the sports me­dia ser­vices com­pany, ex­pects that more than 1 bil­lion peo­ple will use at least one of these new dig­i­tal me­dia ser­vices to con­nect to the games.

Quinn said: “The of­fi­cial rights-hold­ing broad­caster web­sites and mo­bile ap­pli­ca­tions will pro­vide ac­cess to video con­tent that would have oth­er­wise never seen the light of day, so many of the expected 1 bil­lion users will use dig­i­tal de­vices to ac­cess of­fi­cial games con­tent.

“When we com­pare this num­ber to the 9 mil­lion users that vis­ited the of­fi­cial web­site for the Sydney games just 12 years ago, and re­alise that dig­i­tal video con­tent was only first tested dur­ing the Athens games eight years ago, this in­creased take-up is sim­ply stag­ger­ing.”


The suc­cess of Lon­don 2012, the “proof of the pud­ding”, as Mills put it, will only be fi­nally known once the games have been fully di­gested, pos­si­bly not for an­other three to four years.

In con­clu­sion, it would ap­pear that the Lon­don 2012 Olympic Games, if they de­liver on all their prom­ises and ex­pec­ta­tions, may well be able to claim to have been one of the big­gest sport­ing events ever but by the time we find out, the 2014 World Cup in Brazil and the 2016 Olympics in Rio de Janeiro will be on our doorstep.

What next for Lon­don?

Hans Wester­beek, di­rec­tor of the In­sti­tute of Sport, Ex­er­cise and Ac­tive Liv­ing at Vic­to­ria Univer­sity in Aus­tralia, be­lieves a suc­cess­ful Olympics in Lon­don will put the city at the cen­tre of the world’s sport­ing map.

He ex­plained: “Where the Olympics in Bei­jing may have been serv­ing to con­clu­sively put China on the map of the world as a ma­jor eco­nomic pow­er­house, the Lon­don Olympics should de­liver more holis­ti­cally, to im­prove the well-be­ing of an al­ready es­tab­lished first world so­ci­ety.

“[Our] re­search has shown that the short- and long-term im­pact of host­ing ma­jor sport­ing events is greatly im­pacted by the port­fo­lio of other events that have been hosted and are planned in the same city or re­gion. Long-last­ing ef­fects will be strength­ened if other events continue the ‘legacy build­ing’ that mega events such as the Olympics have spurred.

“Lon­don, much more than Athens, Bei­jing or Delhi [the host of the 2010 Com­mon­wealth Games], is en­gaged in on­go­ing brand eq­uity build­ing through ma­jor sport­ing events. Not only do more than 20 pro­fes­sional sport­ing teams call Lon­don home, but iconic fa­cil­i­ties such as Wem­b­ley Sta­dium, and iconic events such as Wim­ble­don serve the city well in con­sis­tently ex­pos­ing it to a global au­di­ence.

“The same re­search showed that fol­low­ing the Sydney Olympics, Sydney briefly took over the reign from Mel­bourne as Aus­tralia’s most recog­nised host of sport­ing events, but within three years fol­low­ing the Games, Mel­bourne was back on top. The fact that Mel­bourne was al­ready pre­par­ing to host the 2006 Com­mon­wealth Games played an im­por­tant role in this process.”

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