PtG Article 17.03.2009

Can developing economies bid for major sports events during worldwide economic crisis?

Opinions remain divided over whether developing economies can bid for major sports events during the worldwide economic crisis even though Turkey this week applied to host the Euro 2016 football finals.

UEFA will send Euro 2016 bid documents out on April 3 to the Turks, France, Italy and a joint bid from Sweden and Norway but another joint bid from Wales and Scotland was dropped at the last minute due to the potential cost.

France alone has pledged to invest €100m in its stadia and this sort of investment makes bids from countries like Turkey for Euro 2016 or Hungary for the 2012 Olympics difficult according to Professor Simon Chadwick, chair in sport business strategy & Marketing at Coventry University Business School, which will host this year’s Play the Game.

He says: “[It is] becoming increasingly expensive for them to host such events. Events such as the Olympics and the World Cup have become behemoths, requiring a level of funding that less wealthy countries are simply unable to afford or cannot justify.”

Hungary is mulling a bid for the 2020 summer Olympic Games but the cost of simply bidding for the world’s biggest sporting event is put at around U$50 million by leading sports agency Octagon.

“It depends on how strong the desire of the government is. In developing nations, the support [of the government] is critical,” says Bob Heussner, Octagon’s senior vice president of games marketing.“In developed countries there is a stronger private sector that can find that support from sponsorship. There’s also money from ticket sales and merchandising. In developing nations, these are there but less prominent and the government’s role is to therefore make up for that.”

A Hungarian Olympic bid would include some help from the private sector but outside Hungary.

The mooted bid includes a U$50 million redevelopment of Budapest’s Stadion Albert Flórián, the home of Hungary’s most famous football club, Ferencvárosi, who are owned by the chairman of English Football League side Sheffield United, Kevin McCabe.

For a country like Hungarian with an economy broken by the credit crunch making a bid would be a big political decision says Bob Heussner.He adds: “On the surface, a bid for 2020 from Hungary may seem ludicrous but they have to learn how to do it. If you take the long-term view and you want to learn how to do it, you have to get in there.”

The US city of Salt Lake City had to make five bids for the Winter Olympic Games before eventually landing the rights to host the 2002 event and whether the Turks or the Hungarians are as persistent in chasing the Euro finals or the Olympics remains to be seen.

Professor Chadwick  adds: “There is a sense of sporting mega-events needing to be associated with a 'safe-bet' countries that can afford to host such an event and/or countries that are appealing to commercial partners [because they] are areas of rapid market growth.

“Without these things, it is going to become increasingly difficult, in the current economic climate, to see how events owners and governing bodies will gamble on opening out sport smaller or less affluent countries".

"It will either take a bold decision for this to happen or else event owners will have to look towards a form of cross-subsidisation from rich to poor countries to enable these events to become more democratically distributed across the globe. I don't think either is likely to happen, especially the latter given that the impacts can be so great on host countries.”