YESTERDAY, THE FOOTBALL associations of Ireland, Scotland and Wales expressed an interest in hosting the 2020 European Championships.
Despite a failed bid to host this summer’s European Championships nearly 10 years ago, the Irish and Scottish Association haven’t been deterred and with the help of Wales, hope to bring Euro 2020 to these islands in eight years’ time.
If successful the good news would be probable automatic qualification, to what would by then be, an expanded 24-team competition. In the coming month, those behind the push to host Euro 2020 will probably assert that the benefits, particularly economic benefits, from hosting a major tournament are far greater than the cost of hosting the event.
Major competitions are often bid for on the premise, that if successful, the competition will lead to job creation and increased tourist numbers. Economists Robert Baade and Stefan Szymanski have done some pioneering work in this area.
Sadly, despite what we might like to believe, hosting major sporting events rarely results in net income generation for the host country. During the 1994 World Cup, Baade examined economic activity in American host cities and found no evidence of increased economic activity as a result of the tournament.
According to Szymanski, the Olympic Games held in Greece in 2004 cost approximately $11.5 billion dollars to host, with infrastructural improvements alone costing $5 billion. The Games generated revenue of around $2 billion, 50% of which was retained by the International Olympic Committee. The Greeks were left to pick up the tab; somewhere in the region of $9bn and $10bn. The World Cup in Korea and Japan cost $35bn dollars to host.
The 2006 World Cup in Germany generated new revenue of just $2bn.
One hundred thousand welcomes
Evidence collected by Szymanski claims that neither job creation nor surges in tourist numbers are consequences of hosting major events. A previous study by Liverpool University, conducted to assess the economic impact on the region when it acted as a city host for Euro 1996, found that the 30,000 visitors to Liverpool during Euro 1996 created just 30 jobs, all of which were temporary.
More than 50% of spectators at the 2006 World Cup were German. Their spending did not create any new money nor increase economic activity. They simply switched to spending more on leisure activities.
More alarmingly, Szymanski finds that visitor numbers to Greece declined in the Olympic year (2004) from the previous year and rose slowly in the years after the Games. Szymanski says that hosting a major sport event is a bit like throwing a party. It’s fun but whoever got rich from that?
Given this evidence would we not expect countries to baulk at hosting major events? In fact, the opposite is true. Countries continue to clamour to host World Cups and the like. The reasons are often grounded in the prestige that such success bestows upon governments or associations.
Performers form the shape of the five Olympic rings during the closing ceremony of the 2004 Summer Olympics in Athens. (AP Photo/Ivan Sekretarev)
However, research by Kavetos, Szymanski and McCulloch provides us with another. Hosting these events makes people happy! Using happiness data from the European Commission and analysing the host countries of World Cups and European Championship from 1974 to 2004 the researchers found that citizens are likely to be much happier when their country hosts major finals.
In some cases the increased level of happiness lasted years after the event.
Myths about surges in economic activity and increased tourists numbers are not to be believed. Japan, Greece or South Africa are among a growing list of countries which prove that hosting international sporting events costs more to each state than can be generated in revenue from the event.
While Ireland does have the benefit of having two stadia ready to host European Championship matches, the infrastructural investment needed to bring Ireland up to the standard of being a host country would exceed any economic benefits that the finals could generate. If we want to host Euro 2020 it should be because we wish to be happier, not richer.
Given the current depressing mood which has prevailed in Ireland since 2008, it’s high time for some happiness.
- Robbie Butler, an Economics lecturer at University College Cork, has written extensively on soccer economics. Check out some that here.
