Olympics Management Issues - Essay Example

Events Management Introduction Major events such as the Olympics were traditionally thought of as a financial and administrative burden to the organising city and country until the 1980s. The 692 million loss made by Montreal in hosting the 1976 summer Olympics is one of the most solid evidence to support this statement. Munich, in addition, also made a 178 million loss after staging the 1972 summer Olympics. Following these increasing losses, it has been a notion that as if any host city would have to accept such a financial burden if it were to stage the Olympic Games or any other major event. Nevertheless, the 1984 Los Angeles Olympics changed the economics of major sports events. These games made a surplus of 215 million. The financial success of the Los Angeles Olympics changed the way cities and governments regarded the hosting of major sports events. Partly as a result of this, but also because there developed a greater understanding of the broader economic benefits to a city and country that could result from the staging of a major sports event, cities started to compete fiercely to host major World and European championships across a wide range of sports. This article mainly reports the certainties that events can have a positive impact on the economy and community of the host city or country. Several extents are based on actual findings from studies of hosting countries of major events in order to thoroughly support the events' impact. Importance of Major Events The appeal of events, more so with major events such as the Olympic Games, is their ability to attract those whose viewing is light and never entails sport. Sports Business illustrates that families with an income of at least $60,000 were 41 per cent more likely to watch the Atlanta Games, i.e. those families with a higher expendable income, which is precisely why sponsoring companies are prepared to invest large sums of money in the event (no. 4). As compared to 1995, Adidas experienced a 56 per cent rise in profits in 1996, the year of Atlanta Olympics. As a sponsoring company they were fortunate to have more than 200 Olympic medals won by Adidas-equipped athletes (Sports Business, no. 4). It is consequently clear that it is in the interests of these sponsoring companies that their particular athletes arrive on time and that there preparation is not disrupted. Major events have enormous value to cities, countries, athletes and sponsors alike. Numerous studies supported the economic impact of events around the world (Yardley et al., 1990; Frisby and Getz, 1988; Mules and Faulkner, 1996; Crompton, 1995; Turco and Kelsy, 1992; Dobson, Holliday and Gratton, 1997). Delivering the right product is important and often ultimately upon which the event is judged. The media will judge the event in terms of an increase in sales or viewing/ listening figures. Sponsors examine the event in the light of the increase in sales before, during, and immediately after the period of the event, while the civic leaders will attempt to appraise the event in terms of the increased exposure of their city as a result of the event and the subsequent economic impact associated with the influx of visitors before, during and after the event (Elvin and Emery, 1997). It is essential for cities and countries to get the organisation right for the reason that people have a tendency to remember the things that go wrong. Due to the high profile of the Olympics (Atlanta having a gross audience of 19.6 billion viewers [Sports Business, no. 4]), any undesirable publicity has an immediate and enormous impact throughout the world. Impact of Major Events on the Economy of the Host Country In the 1980s, the study of hallmark events or mega-events became a significant area of the tourism and leisure literature. The economic benefits of such events have been the main focus of such literature, even though broader based multidisciplinary approaches have been suggested (Hall, 1992; Getz, 1991). Within the area of mega-events, sports events have attracted a significant amount of attention. One of the first major studies in this area was the study of the impact of the 1985 Adelaide Grand Prix (Burns, Hatch and Mules, 1986). This was followed by an in-depth study of the 1988 Calgary Winter Olympics (Ritchie, 1984; Ritchie and Aitken, 1984,1985; Ritchie and Lyons 1987, 1990; Ritchie and Smith, 1991). It is not always an unequivocal economic benefit to the host cities even with mega-events such as the F1 Grand Prix races and the Olympics (Mules and Faulkner 1996). They generally emphasise that staging major sports events often results in the city authorities losing money even though the city itself benefits greatly in terms of additional spending in the city. Table 1 shows the losses made by Australian cities hosting major sporting events, at the same time as indicating the increase in Gross State Product (GSP) generated as a direct result of the event. Thus the 1994 Brisbane World Masters Games cost A$2.8 million to put on but generated a massive A$50.6 million of additional economic activity in the State economy. Mules and Faulkner's fundamental point is that it generally requires the public sector to be in the role of staging the event and incurring these losses so as to generate the benefits to the local economy. However, establishing a profit and loss account for a specific event is not a simple and easy job. Major sports events necessitate investment in new sports facilities and often this is paid for in part by central government or even international sports bodies. Consequently some of this investment expenditure represents a net addition to the local economy because the money comes in from outside. Also such facilities remain after the event has finished acting as a platform for future activities that can generate additional tourist expenditure (Mules and Faulkner, 1996). Sports events are increasingly part of a broader strategy aimed at raising the profile of a city and hence success cannot be judged on plainly a profit and loss basis. Often the attraction of events is linked to a re-imaging process, and in the case of many UK cities, is consistently linked to strategies of urban regeneration and tourism development (Bianchini and Swengel, 1991; Bramwell 1995; Loftman and Spirou 1996; Roche 1992a). If successful, major events have the ability to project a new image and identity for a city. The hosting of major sports events is often justified by the host city in terms of long-term economic and social consequences, directly or indirectly resulting from the staging of the event (Mules and Faulkner 1996). Table 1: Financial costs and economic impact of various events Event Financial loss (A$ million) Impact on GSP (A$ million) 1985 Adelaide Grand Prix 2.6 23.6 1992 Adelaide Grand Prix 4.0 37.4 1991 Eastern Creek Motor Cycle Grand Prix 4.8 13.6 1994 Brisbane World Masters Games 2.8 50.6 Source: Mules and Faulkner (1996) Roche (1992b) illustrates that these effects are primarily justified in economic terms, by estimating the additional expenditure generated in the local economy as the result of the event, in terms of the benefits injected from tourism related activity and the subsequent re-imaging of the city following the success of the event. Cities staging major sports events have a unique opportunity to market themselves to the world. Increasing competition between broadcasters to secure broadcasting rights to major sports events has led to a massive escalation in fees for such rights, which in turn means broadcasters give blanket coverage at peak times for such events, enhancing the marketing benefits to the cities that stage them. UK's Major Events In the UK, there has been a current acknowledgement of the economic and social benefits that major events can have upon the host city, region or country. In 1994, Major Events Steering Group (MESG) is established by the Sports Council in an attempt to assist governing bodies and local authorities in bidding for, and staging major sports events. A report by the former National Heritage Committee (1995) entitled "Bids to Stage International Sports Events" provided a framework for a coordinated approach to attracting events. The report indicated that the UK had started to fall behind other countries in its approach to attracting major sports events and that the UK had lacked a consistent approach for bidding for events. One of the principal objectives in setting up the UK Sports Council was to rationalise the system. The UK Sports Council has since adopted a Policy and Strategy for Major Events and funding is now available from the National Lottery to support major sports events. Following the economic success of the Euro 96 football championships, the economic importance of major sports events became an increasingly important issue in Britain. Since the 1966 World Cup, Euro 96 was the largest sports event to be held in Britain. It was an economic success story for the host cities and the British tourism industry, attracting 280,000 overseas visits, spending around 120 million in the eight host cities (Dobson, Gratton and Holliday, 1997). The success of Euro 96 has also led to an increased demand for more major sports events to be staged in Britain in the future, most particularly the 2006 soccer World Cup Finals and the 2012 Olympic Games. The UK also hosted the 1999 Rugby Union and Cricket World Cups, and the 2002 Commonwealth Games. Nonetheless, every year in the UK there is a rolling programme of major sports events, some of which are of global significance. The Sports Council's "Calendar of Major Sporting Events" lists 291 major sports events that took place in Great Britain in 1997. Out of the 291 events listed, 46 would attract major television coverage outside, as well as inside, Britain. These would include the Six Nations Rugby Tournament, Wimbledon, the Open Golf Championship, the FA Cup Final, the Boat Race, and the Grand National. Britain probably has the broadest portfolio of annual major sports events in relation to its population size of any country in the world. This gives an expertise and experience that represents a competitive advantage in this rapidly growing global market. It also signals a need to more fully understand how sport events can generate benefits to the cities that host them. Three cities in the UK - Sheffield, Glasgow, and Birmingham - have adopted an economic strategy based on attracting major sports events to their area as a catalyst to stimulate economic regeneration. These three cities have been designated "National Cities of Sport" and two of these, Sheffield and Birmingham, were also host cities in Euro 96. Implications for the Economic Importance of Events It is arguable that if authorities wish to use major sporting events as vehicles by which to regenerate cities, then measurement of how policies are working in practice is essential to evaluate their performance. By committing to such measurement, authorities will in effect be integrating economic impact objectives into their overall event appraisal, rather than looking upon them as being desirable but immeasurable intangibles. In addition, there is considerable economic and political logic to comparing the additional resources flowing into a city as a result of an event with the resources used to generate such inflows. The results of both the Sheffield and Glasgow studies are positive statements of how events can boost local economies and have been welcomed by both the governing bodies and city councils. The expense of conducting such studies, often an explanation for not doing them, is not necessarily prohibitive. The cost of the Sheffield and Glasgow research projects was approximately 5,000 each. It would therefore appear that there are several reasons for conducting economic impact studies at major sports events and very few reasons for not doing so. Strategic Planning and Management for Events The organisational complexity of events requires that planning for the worst case scenario is essential (Weir, 1991). The PruTour Cycle race (Tour of Britain) is a prime example of where innocuous problems can occur (The Times, 1998). The peloton were directed the wrong way when chasing the lead group and this nearly lead to their disqualification, leaving potentially only five cyclists in the event from a started field of nearly 100. For the sponsors and organisers this had potentially enormous consequences for this new event, as did the killing of a police motor cycle escort at a road junction the following day (The Times, 1998b). The pressure that was created at these events by the expectation of the media and worldwide audience was enormous and a contingency plan for every aspect of the event is vital. Disasters such as Kings Cross (Richardson 1993), Piper Alpha (Weir 1991), Clapham (Androff 1984), Zeebrugge (Perrow 1984) and Hillsborough (Mitroff, 1984) demonstrate how devastating mismanagement of organisational and procedural tasks can be and stresses the need for safety and reliability techniques applied across all aspects of the organisation. Each particular event will have its own individual requirements and consequently potential problems. Often these problems occur at the human-techno interface (Weir, 1991). The techniques utilised in the industrial world will also therefore assist with highlighting the probability of certain critical aspects of the organisation and technology going wrong and assisting with ordering, prioritising and developing hierarchies that will identify the critical cut off points required to avoid the "big bang". Identification of Potential Problems For the first four days at the World Athletic Championships in Athens 1997 the average number of spectators was fewer than 24,000, in a stadium with a capacity of 85,000 (The Times, 1997a). At this stage in the competition the media were making a big play on this issue and questioning the ability of Athens to host the 2004 Olympic Games, prior to the decision being made by the International Olympic Committee (IOC). The pressure on the organisers to get bodies into the stadium was immense and all efforts had to be put into attracting the citizens of Athens to attend the event. The organisers of the World Cup '98 were faced with the opposite problem. The potential of dealing with excess demand for tickets to the matches and hence associated problems with the black market and supporters traveling with no hope of getting into the stadia has created a number of security related problems. For this reason, Weir (1991) asserts that contingency and crisis management plans have been critical and involved the coordination of intelligence and police forces throughout the world. These security forces acted before the tournament to minimise associated risks and potential terrorist attacks, but application of further techniques is essential as illustrated by the hooliganism that has dogged the tournament. There are also other unforeseen problems that intentionally create chaos, such as striking pilots, railway workers and lorry drivers. All placed a potential organisational threat that required negotiation, crisis management techniques and planning. Crisis identification and management The FMEA (Failure Mode and Effects Analyses) technique can successfully identify those potential 'failures' of the sporting event which may result in crisis. The next stage in the remedial process is to determine the crisis management procedures to be undertaken. There must be a proper concern that there is attention paid to the aetiology of the event in order to assess the potential problems and to assist with the identification of the factors that led to the problem. Weir (1991) highlights the need to identify both causal and consequential factors and the procedures implemented must attempt to rectify the problems identified in the most efficient and cost effective manner. The FMEA technique can further aid the consequential procedure by actually calculating which crisis is most likely to occur (i.e. the probability of the cause being realised). This eliminates those events which are deemed highly improbable and have negligible probabilities of occurring. After the event it is always worth critically appraising the organisational aspects so that lessons can be learned and effective techniques put into place. The changes in the delivery of IT systems between Atlanta and Nagano by IBM justify this investment. As with many socio-technical system, sports events have a mixture of 'soft' and 'hard' technology. The hard technology often guides the soft aspects of events organisation (such as checking accreditation), but as mistakes in the past have illustrated, often the 'softer' elements (often human error) cause critical failures in the system. The accreditation system at the last Olympics proved technologically sound, however the failure of security guards to scan the passes properly resulted in unaccredited persons entering the village (Rushman, 1998). The Application of Risk, Safety and Reliability Techniques to Events For each of the individual sets of groups involved; the organisers, the athletes, coaches, officials, sponsors and the spectators, the successful and smooth operation of any major sports event is critical. Montreal, the host of the 1976 Olympics can bare testimony to this, but even more harrowing is the failure of the Hillsborough Stadium event system in 1989. This organisational failure resulted in the ultimate price, the loss of 95 lives (Taylor Report, 1990). Poor or insufficient organisation, together with inadequate emergency planning procedures and crisis management techniques, can lead to disastrous consequences for all involved, as the Hillsborough disaster tragically illustrates (Taylor Report, 1990). Assessing the safety and reliability of these systems is therefore critical, and it is important that sports management utilises the techniques developed within the world of industrial engineering, where these techniques have proved vital to the successful operation of potentially lethal systems. Organising of Events Too often in the past, as the continued media attention on the 1996 Olympics in Atlanta illustrates, civic authorities have become too embroiled in the organisation of major events and have failed the citizens of the host city as a consequence ( Miller, 1996). Political expediency has often impinged upon the role and influence of professional management and as a consequence the cities themselves have suffered. With the power of the world's media looking in at every aspect of the event the need to 'get it right' is vital. Added pressure is often exerted upon the civic authorities by the International Federations or International Organising Committees themselves. Critics of the organisation of major sports events are quick to dismiss those entrusted with the task of putting on the event on behalf of the city, region or country. As Brodie (1997) comments, 'a sardonic joke heard in Atlanta nowadays is that the only amateurs left in the Olympic Games are unfortunate civic leaders forced with organising them'. While this simplifies the argument, it is obvious that the modern demands placed upon organising committees are enormous, the resignation of two SOCOG chairmen (the Sydney 2000 Olympic Organising Committee), bares testimony to the demands placed by the Olympic Games. The 'no past no future' argument (McGookin, 1998) also encourages the expediency of the local political hierarchy to continue their involvement, with obvious escape routes out of public life provided by the numerous commercial organisations vying for the high profile associated with such men and women after the event, as they appear to champion the city and have a global presence and appeal. Conclusions The field of managing events is a broad and complex tasks. There are key lessons for event organisers, sponsors, the media, and for events management as an emerging discipline. Collaboration in applied research will enrich events; encourage the development and transferability of skills and relevant objectives of all groups involved. Major events now play an important part of Britain's tourism industry. Britain has become the global market leader in the staging of major sports events because many of their annual domestic sporting competitions such as the FA Cup Final and Wimbledon attract a large number of overseas visitors and a global television audience. Major events held in Britain are a essential ingredient in the creation of the tourist image of Britain. The evidence presented above shows that some major events also have the potential to generate significant economic impact in the local economy of the host city. This is most recognised in the USA and Australia, but has been less so in Britain. The Australian Tourist Commission estimates that major events contribute 5 per cent of Australia's total tourism income each year. This article has shown that there is a wide variation across events, especially sports events, in their ability to generate economic impact in the host city. Just because the event is a World or European Championship does not guarantee that it will be important in economic terms. This article lives for the purpose of enhancing ones understanding of the parameters of the economics of staging major events. While this article initially reports the economic importance of events to host cities/countries, several disadvantages are also emphasised. These disadvantages come in the form of organisational complexity and can be counteracted through the strategic planning and management for events. References Androff, HS 1984, Implanting Strategic Management, Prentice Hall, Englewood Cliffs. Bianchini, F & Schwengel, H 1991, 'Re-imagining the City', In: Comer, J. and Harvey, S. (eds), Enterprise and Heritage: Crosscurrents of National Culture, Routledge, London, pp. 214-234. 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