Attracting Major Sporting Events: The Role of Local Residents

Abstract

The decision where to host major sports events is the result of a political process, involving local and national politicians as well as national and international sport governing bodies. Politicians and local/national sport governing bodies decide whether to apply for an event, while international sports governing bodies select the host cities (nations). Local and national residents play an important role in this process as their opinion will influence whether the political system supports the application and is willing to fund the event. Many event impacts have characteristics of public goods and externalities. This represents a potential welfare economic rationale for the public sector to fund them.

Empirical data from 117 polls of urban and national residents that either have hosted or applied for events reveal that three out of four residents supported hosting the event. Statistical analyses show the strongest support to be in low-income nations. This raises doubts whether such events should be regarded as luxury goods, which is a typical characteristic for sports goods. The major reason for this can be that people are aware that the events will influence the production of other goods and services in society. In particular people in nations where the public sector has had a financial deficit in the years before the poll were more sceptical than others. This pattern does not occur in heavily populated nations where event-related costs represent only a “drop in the ocean” on a macroeconomic level. The surveys also indicate that economic growth resulted in people voting more positively in favour of the events.