Will London 2012 be the biggest sporting event ever staged?
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.
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.”