November 2010

"Tonight, here, in the glow and wonder of the Flame, we can all aspire to be Olympian. From whatever continent you have come we welcome you to Canada, a country with a generous heart. We love that you are here."

John Furlong, VANOC CEO
Opening the Vancouver 2010 Olympics

Abstract

Major events of all kinds, especially sport events, are becoming a major element in the competitive arsenal of cities and and their economic development and tourism offices. Major events bring people to the city, provide attractions for residents, and ensure that the city's name is profiled in the national and international media. But they also can involve major infrastructure investment in facilities and amenities, some of which might have limited post-event utility. This article discusses some of the pros and cons of event hosting as an economic strategy and suggests some useful decision-making guidelines.

Introduction

This has been a bumper year for major event hosting in Canada. In Vancouver, the 2010 Winter Olympics provided both a spectacle of sport that enchanted the nation as well as a haul of medals, including those all-important hockey golds. More recently, the decision of the Pan American Games Federation to confer the right to host the 2015 Pan American Games on Toronto and the Golden Horseshoe communities will ensure a continuing stream of economic activity as the region readies for the event. This will involve the construction of new facilities and the hosting of many lead-up events. Even Hamilton, which was the Canadian bid city for the 2010 Commonwealth Games, can take some solace from the last-minute efforts of Delhi, India to prepare for those Games, which likely overshadowed the later successes of the event.

Event Costs and Benefits

Major events, whether they be sport events, cultural festivals, or events such as the Junos or the East Coast Music Awards, bring significant economic benefits to the cities and regions in which they are hosted.

As was the case in Vancouver with the Winter Olympics, there is significant capital expenditure on new and improved facilities, which are generally funded from the public dollar, as well as investment by the private sector, such as to provide additional hotel rooms and other tourist-related capacity. In addition, the construction of other public infrastructure may well be brought forward in time; the new highway to Whistler and the new light rapid transit from the airport to downtown Vancouver are cases in point.

Major events also have significant operating expenditures. Some event organizing committees may well be run by volunteers, but even a modest triathlon or community festival can involve road closures, extra police time, and the renting of a wide range of facilities and equipment. But of course this is also the stuff of economic development in as much as it keeps businesses operating and workers employed.

This economic development also includes significant participation from private sector entrepreneurs. This might be major international firms that offer ticketing services, IT support (ranging from athlete accreditation to race timing), or security, but it also includes a myriad of small businesses offering hot dogs and merchandise. It can also include innovative relationships and contracting with social agencies. The medal winners’ bouquets at the Winter Olympics were prepared by students of Just Beginnings Flowers, a social enterprise that provides training, work experience, and job placement services for people in the community who face barriers to employment.

Many major events are justified on the basis of tourism and visitor expenditures. There is no question that major events, such as the Grey Cup, or even a community event, such as an airshow or equestrian competition, do draw people to the host community, often in large numbers. However, crowds at the event can often disguise the fact that there are few out-of-towners and that most of the spectators are local people. True economic impact comes when money flows into the local economy that would not have otherwise done so. Therefore money spent by local people to buy tickets or beer at a hockey game does not count.

On the economic side of the ledger, successful events would: i) involve a minimum of capital expenditure, using existing facilities wherever possible; ii) leverage volunteer resources to the maximum; and iii) attract the maximum number of spectators and participants from out of town. Thus, events such as the Boston Marathon, which attract thousands of participants and their families, use the existing roads and parkways, and are supervised by thousands of volunteers, are in many ways the perfect events. Throw in some good marketing, ensure that people stay for a week instead of just the weekend, and make it happen every year, and you have a great economic engine for the city.

Major events also bring many other benefits that can have significant impacts on economic development, albeit not directly financial. For instance, the facilities constructed for a sport event will be available for many years after, enriching the quality of life in the city and region, and thus enhancing its attractiveness to new migrants and footloose entrepreneurs. The city of Kelowna, for example, has invested heavily in sport facilities and cultural amenities that are used for events and has built a reputation as a great place to move to.

Building a sense of community and building community capacity is another benefit that flows from hosting major events. All those volunteers in the blue jackets who were trumpeted as the hallmark of Vancouver's community so thoroughly enjoyed their experience that many have moved on to volunteering in other sectors and for other events.

Innovation in major event hosting has proceeded very rapidly in recent years, as the variety of information technologies have been adopted by event organizers. In reality, this has changed almost every aspect of the event from the standard prevailing ten years ago. Registration is now online, accreditation is computerized, timing systems are to the thousandth of a second, and results appear instantaneously at both the venue and across the world. Yet there are many aspects of the event process that can still be refined. For example, at Yates, Thorn & Associates, we are working with ProGrid, a Canadian decision-support software firm, to develop an event assessment and selection support tool to assist cities in strategically selecting events to bid on. As described by ProGrid's CEO, Fraser Barnes, the software, “generates visual comparisons of all the proposals to allow strong proposals to be identified, weak proposals eliminated or improved, and to facilitate discussion and final decisions. In addition, the evaluation methodology and software improves objectivity and transparency, and builds corporate memory of past decisions."

However, perhaps the strongest non-financial benefit that can flow from hosting major events is the international profile and visibility that is provided by television and other media coverage. It is impossible to put a value in dollar terms on this media coverage, but there is no question that the images of Vancouver in February have contributed significantly to its international image as a vibrant economic community with a high quality of life. Indeed looking back at other Olympic cities such as Barcelona, Salt Lake City, and Sydney, all have established themselves as world cities through the hosting of this major event.

Increasingly, the ability to spin this media image also provides the opportunity to present the city in the most positive light. The focus on the environment and sustainability has required that every large event these days have both an environmental and social agenda, which become as important as the economic agenda in positioning the city and its event.

Choosing Events

So for cities contemplating using major events as part of the economic development strategy, what is important and what are the potential pitfalls?

A key guideline must be to choose events carefully. All too often, decisions about which events to bid on are not made strategically. Rather, decisions are made in response to short-term pressures, which are frequently political. In many cases, the analysis measures whether the event will be good for the city economically. If the decisions are made by politicians, the analysis may evaluate whether there is a favorable political climate to be created. In Canada, every year, there are likely in excess of 200,000 sports events and many more cultural and other events. Therefore, when considering one event, the choice is not “Should we or shouldn't we?” Rather, the decision makers should ask: “Is this event better than all the other ones out there that we could be bidding for?” This kind of analysis requires some strategic thinking, an organized process to review potential events, and the collaboration of all the various agencies who will be involved in the bidding and hosting process.

Cities should also be aware of the pitfalls that can be associated with major event bidding and hosting. Some of these pitfalls are as follows:

  1. Thinking that any spending is economic impact: The key question to ask is whether the event in question will bring participants or spectators from out of town to spend money in the host city. Events that rely on large numbers of local participants or spectators can be great for building a sense of community or providing recreational opportunities for local people, but they generate very little economic impact.

  2. Building white elephants: Many major events require that the host community build facilities that serve a very high level of activity. Examples include an aquatic centre that meets international hosting standards for swimming, or a facility for sliding sports, such as bobsled and luge, as was the case for the Vancouver Olympics. The likelihood of these kinds of facilities being extensively used by local residents after the event is minimal. In contrast, a four-plex for softball or slow pitch can be used for major sports events but also will be extensively used by local residents.

  3. Focusing on a single event rather than a stream of events: Some of the facilities noted above may indeed be worth investing in if they are able to host many different events over a long period of time. A major gymnasium with seating for 1,000 or 2,000 people can be the host facility for upwards of 20 different sports, all of which have national and international championships, often for a wide variety of age groups and genders. Building such a facility for one event makes no sense, but with strategic planning and collaboration between local, provincial, and national sport organizations, the economic impact from a number of events would easily outweigh the construction cost.

  4. Not knowing the objectives and not building collaborative partnerships: Major events, whether sport, cultural, or any other, require collaboration between a large number of different organizations. For example, an event my require collaboration between the city, facility operators such as universities, local hotel and tourism agencies, and community organizations such as sports or cultural groups. All these agencies have different objectives when it comes to hosting major events, and it is essential that these objectives are understood, articulated, and framed into a strategic plan. Once this is done, it is easy to choose the right events because they are simply the ones that meet the shared set of objectives.

Conclusion

Hosting major events has been a successful strategy for a wide range of cities around the world. Barcelona in Spain used the 1992 Olympics to put itself on the stage as a world-class city. Vancouver did the same in 1986 with its Expo, and reinforced this in 2010 with the Winter Olympics. On a smaller scale, towns like Kamloops, British Columbia and Sherbrooke, Quebec, have both used sport tourism and sport events as the lead for their overall tourism and community development. However one thing links these cities: they all had a clear strategy that they have followed closely over many years.

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