Johannesburg - The economic advantages of hosting major sporting events
do not automatically outweigh the costs, according to Reserve Bank governor
Tito Mboweni.
In a speech at the Corporatesport Directors' dinner in Sandton on Tuesday
night, he warned of the "considerable reputational risk associated
with the hosting of the 2010 World Cup finals", saying "the
success of the World Cup finals in Germany puts even more pressure on
us to raise the bar".
He suggested that South Africa learn from the experiences of other countries
and referred to studies commissioned to determine the economic and financial
implications of hosting mega events.
These revealed that the 1976 Olympic Games in Montreal were considered
an economic and financial failure. "Hosting the Olympics plunged
the city into a huge debt burden, which was only repaid in full in recent
years," he said.
"Similarly, studies have shown that the benefits to South Korea from
co-hosting the Fifa World Cup finals in 2002 fell far short of initial
expectations. The country was left with an oversupply of large stadiums,
some of which have subsequently been demolished."
But on balance, the "broad conclusion is that proper planning for
mega events tends to generate positive spin-offs both in the short and
long run. A study conducted by the Los Angeles sports and entertainment
commission following the 1984 Los Angeles Olympic Games estimated that
income from tourism increased by almost $9 billion [R66 billion] as a
result of hosting the games. The study concluded that hosting major events
could be beneficial to cities if carefully planned."
Mboweni pointed to the 1992 Olympic Games in Barcelona as "a model
of how to plan for a mega event. The games were integrated into an urban
renewal strategy and the economic outcome of hosting the Olympic Games
was significant.
"Unemployment in Barcelona was reduced from 18.4 percent to 9.6 percent
between 1986 and 1992, and from 20.9 percent to 15.5 percent in the country
as a whole. Overall growth in Barcelona is said to have increased at a
pace never seen before, even a decade after hosting the games.
"Similarly, the Sydney Olympic Games in 2000 were planned in such
a way as to generate positive spin-offs, well beyond the event. City planners
focused on infrastructural development of the venues for the games so
that these venues could be used for subsequent sport events."
Turning to South Africa, Mboweni said research had shown South Africa
also stood to benefit from hosting the World Cup finals.
"According to a Grant Thornton study conducted in 2003, the event
is expected to contribute about R21 billion for the economy as a whole,
generate about R7 billion in tax revenue and create about 150 000 jobs."
The potential gains of hosting the tournament could not be fully estimated
ahead of time. "However, there is little doubt that, with proper
planning and interventions by all the relevant stakeholders, the potential
benefits can be maximised.
"The spin-offs are significant. Tourism has become an increasingly
important source of revenue to the economy and now accounts for about
10 percent of total export receipts, almost double that of 10 years ago.
This number is expected to increase further as a result of the World Cup
finals," Mboweni said.
, March 22, 2007.
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