Analysis of Costs Versus Benefits of a Staging a Global Sporting Event in London - Literature review Example

Running head: staging a global sporting event 25th February Analysis of costs versus benefits of a staging a global sporting event (London) Introduction Based on the positive impact of the global sporting events on the economy and social aspects of the hosting countries, many states have embarked on biding for such events. Some of the notable sporting events that attract most countries include FIFA World Cup and Summer Olympics among others. As the result of the high demand of facilities that are needed to host the events including the accommodations, stadiums, infrastructure and security among others, developed countries have been advantaged due to their state of art facilities. On their part, the developing countries have increased their budgetary allocation to cater for the construction of the facilities with an aim of staging the global sporting events in future. Apart from the benefits that are associated with the international sports, the events brought about high costs that the hosting countries must incur in order for the sports to be successful (Kamper and Mallon, 1992). Some of the major costs are incurred in the process of providing security, construction of stadiums and infrastructure, construction of hotels and restaurants as well as during advertising and promotion of the events. This paper aims at accessing the costs versus benefits of staging the 2012 London Olympic Games, one of the global sporting events that were held in the city of London. Background of London London is the largest city in United Kingdom. Being one of the most populous areas and the capital city of UK, London strength is based on expansive commercial activities, entertainment, health care, professional services, well developed tourism sector and developed infrastructure among other services. With a population of approximately 8.3 million people, London City has the largest airport system by considering passengers traffic. This is based on the large number of visitors who go the UK either for business activities, sporting or learning. Being one of the cities with the largest GDP, the city of London is a home to various ethnic groups (Coates, 1998). Some of the key ethnic groups that are found in the city include the White British, Irish, Asians, Indians, Chinese, Arabs and Pakistanis. Based on the peaceful coexistence of the various ethnic groups within the city, Ackroyd (2001) argues that the region has been one of the favourite places for holding an international sporting event. Approximately 20% of the UK Gross Domestic Product (GDP) is generated by London. With more than $670 billion being generated by the London metropolitan area, the city has significantly contributed to the development of financial institutions in the country. Additionally, the region has played a vital role in the growth of the UK economy be creating more investment opportunities for foreign investors. Being a home of more than 480 foreign banks, London has well developed financial sector that employees more than 300,000 people. Besides the high class facilities in London, the city has well developed tourism sector that acts as a major source of attraction for the domestic as well as foreign visitors. Annually, tourist’s expenditure stands at approximately £15 billion. The city is one of the most visited places in the European region. Some of the London’s state of art tourism attraction facilities includes Tate Modern, London eye, Tower of London, Madame Tussauds, Science Museum and British Museum among others. Dilys (2000) depicts that well developed transport system is also a key contributor to the growth of London economy. Being managed by the Transport for London (Tfl), the public transport sector is one of the biggest globally. On his part, the Mayor of London is responsible for appointing the commissioner who in corroboration with other members of Tfl they are responsible for managing transport sector in London. Other forms of transport in the city of London include air for example the Heathrow, Gatwick, Stansted, Luton and London Southend airports among others (Jones et al, 2007). Similarly, the city has well developed cable car referred to as Emirates Air line (EAL) that was established during the 2012 London Olympic Games. By connecting the Royal Dock and Greenwich peninsula, the EAL has greatly being used by foreigners and local individuals who visit the city of London. In the area of entertainment, the city has some of the best leisure places in the world. These include West End, Royal Opera, English National Opera and London Coliseum. Being the home of famous musicians and designers in the world, Teodorczuk (2007) indicates that there has been an extensive innovation London music sector and entertainment has played a significant role in maintaining the continuous flow of visitors in the city. The justification of the London city for staging the 2012 London Olympic Games Based on the well developed stadiums, London City has been hosting a number of international athletics events as well as football competitions. According to Barden (2008) having held the Olympics events in two times that is in 1908 and 1948, London has greatly invested in the facilities that are used during the normal Olympics as well as during the Paralympics competitions. The city has maintained modern facilities that meet the international standard as indicated by Howell (2012) in his studies on great leadership. This is one of the major factors that made the city to defeat the other 4 cities that were bidding for holding the Olympics. The other cities that offered their bids include New York, Madrid, Moscow and Paris. As indicated by Tuffrey (2012), some of the major facilities that existed before the 2012 Olympics and were extensively used during the competition included the Horse Guards Parade and the Hyde Park. Adequate security was another factor that justifies the staging of the event. Based on the large investment in security measures by the UK government, the International Olympic Committee (IOC) inspectors indicated that London was more peaceful as compared to other cities. The British Military, one of the experienced forces in the world was well prepared to deal with any security challenge including terrorism during the event. In this way, the city was seen as the most appropriate region to hold the 2012 Olympics competition. The transport system within the city of London is well developed while the level of congestion is limited. As a result, the IOC identified easier movement of the participants and the visitors as a major aspect as to why London was the best place for the event. In reference to technology, London has well developed renewable energy that is highly demanded during any Olympics competition. By use of River Thames, the city was in a position to install large turbines and hydroelectric generators that made it possible to generate significant amount of energy. Another notable fact that made London to be winning bid was the well developed tourism sector. The city offers excellent accommodations that are near the stadiums and the facilities that were used by the participants. This implies that the participants were not wasting a lot of time travelling from where they were staying to the stadium. As mentioned earlier, London has high population that have strong positive relationship with sporting activities. Thus, most of them like to volunteer and act as Game Makers during such events. For example, in 2004, the organisers of the event targeted 70,000 Game makers but more than 240,000 volunteers applied for the job when the hiring process was conducted in 2010. Investment and changes in the London city at the time of the 2012 Olympics The 2012 London Olympics which took place from July 27 to August 12 positively impacted on the economy position of London. Major area that experienced a boost was the employment sector. As the result of the high demand for buildings and other facilities that were needed by the visitors, significant number of London residents was employed (Wallechinsky, 2005). For example during preparation for the games, London’s unemployment rate reduced by 1.2%. This resulted to increment in the household income thus resulting to improved demand for goods in the city of London. During the sporting event, the consumer spending increased by £750m. This led to establishment of more food and other products industries to cater for the increased national demand for goods and services. Another major area that benefited during the event was the tourism sector (Topping, 2012). Based on the Office of National Statistics, the tourists who flocked the city of London in 2012 stood at 590,000. Each of the visitors spent approximately GBP 1,290. Despite the wide range of benefits that London benefited from during the event, it incurred significant costs to ensure that the sporting activity was successful. Jackson (2011) depicts that as the result of usage of more than 13,500 members of the army that employed air missiles, ships and the Eurofighter jets, the security costs hiked to £553 million from £282 million. In total, the government spent approximately $15 billion to prepare for the sporting event with a significant amount of them going to the construction of London Olympic Village (Rosner and Shropshire, 2010). According to UK Trade and Investment department (2013) the event operational costs that were funded by ticketing, sponsorship and merchandising stood at £2billion. The long term outcomes Whenever, an international sporting event is held in a particular city, Preuss and Marcia, (2005) argues that there are always inward investments and improved infrastructure that are beneficial to the residents of such a city or country. For example, after the sporting event in London, the 50 meter swimming pools, water polo pools as well as the arenas were disassembled and constructed in other parts of the country (Jonas, S and Andrew, 2011). Thus the increase on the level of employment was not only experienced in London, but also in other parts of the entire UK. As the result of holding the 2012 London Olympics, the city of London and the UK in general are expected to benefit from long term positive outcomes. For example according to the studies done by Oxford Economics, the event will have resulted to generation of more than GBP 16.5 billion by 2017. This is based on a number of pre-game activities that resulted to establishment of facilities that are used even in the current times. Another report by Elcock (1994) indicates that based on the expansion of foreign domestic investment in the city of London during the event, UK could enjoy benefits worth GBP 41 billion by 2020. London 2012 will also provide an opportunity in the growth of UK GDP. This is not only based by the expansion of the construction industry that is expected to have generated £7.3 billion towards the UK economy but also the 17, 900 new employment opportunities that are created annually (Thorp, 2010). The creation of labour market legacy has also been one of the major long term impacts that have been caused by more than 70,000 individuals in the city of London who are working in the games related facilities. Conclusion The London 2012 Olympics is an event that has greatly contributed to the growth of London city. With a population of more than 8.3 million people, London has been a home of foreign banks and investment companies. London generates approximately 20% to the UK GDP with most of the revenue being generated by games related activities. One of the major factors that justified the holding of the event by the city of London was the peaceful coexistence of the residents of the area. In the same way, having held similar events in 1908 and 1948, London has well maintained facilities that were still needed during the 2012 Olympics. Similarly, the city has well equipped security personal and large number of volunteers who aimed at making the games a success (Weiler, 2004). The event generated various benefits to the city of London and UK in general. For example, there was reduction in the level of unemployment, improvement in the construction industry, increased number of tourism and sporting legacy among others (John, 2012). However, the government incurred high costs that stood at $15 billion. Nevertheless, the high costs will be offset by the long-term benefits that are expected to be generated by the event. Long-term outcomes will include GBP 41 billion by 2020 that are expected to be generated by the game related events by 2020, improved UK GDP and creation of labour market legacy in London. References Ackroyd, P. 2001. London. The New York Times. October 2008. Barden, M. 2008. Londons first Olympics. London: Sage. Coates, R.1998. A new explanation of the name of London. Transactions of the Philological Society 96 (2): 203–229. Dilys, M. 2000. Urban Policy and Politics in Britain. London: St. Martins Press. Elcock, H. 1994. Local Government: Policy and Management in Local Authorities. London: Routledge. Howell, J. (2012). Snapshots of Great Leadership. London: Taylor and Francis. Jackson, J .2011. London riots will not affect 2012 Olympic security, says IOC. New York: Macmillan Publishers. John, E. 2012. Olympics: Kristian Thomas keeps cool as Team GB grab gymnastics bronze. The Guardian Retrieved 23 February 2014. Jonas, S and Andrew, S. (2011). London Olympics: The Games will be a success but doubts over their long-term legacy remain. Available from http://www.citymayors.com/development/london-olympics-legacy.html Jones, B., Kavanagh, D., Moran, M., Norton, P. 2007. Politics UK. Harlow: Pearson Education. Kamper, E and Mallon, B. 1992. The Golden Book of the Olympic Games. Milan: Vallardi & Association. Preuss, H and Marcia, G.2005. The Economics of Staging the Olympics: A Comparison of the Games 1972–2008. Edward Elgar Publishing. Rosner, S and Shropshire, L. 2010. The Business of Sports. MA: Jones & Bartlett. Teodorczuk, T. 2007. London is the world capital of the 21st century ... says New York. London Evening Standard. Thorp, E. 2010. Kelly Capital Growth Investment Criterion. World Scientific 23 (9): 23-46. Topping, A. 2012. Olympics opening ceremony: the view from abroad. The Guardian Retrieved 23 February 2014. Tuffrey, L. 2012. Olympics regulations force cyclists to dismount. London: Sage. UK Trade and Investment department (2013). Available from https://www.ukti.gov.uk/ Wallechinsky, D. 2005. The Complete Book of the Winter Olympics, Turin 2006 Edition. London: SportClassic Books. Weiler, I. 2004. The predecessors of the Olympic movement, and Pierre de Coubertin. Cambridge: Cambridge University Press. Read More