The Impact of a Major Sports Event on the Host Country - Literature review Example

Literature Review

1.1Introduction

This literature review focuses on the objectives of the study in an attempt to examine previous research related to the positive impact of a major sports event on the host country.

1.2 Improving the Image of the Host Country on the International Map

According to Gratton, Dobson and Shibli, (2000), attracting foreign investors to the host country largely depends on the reputation of the target market in the international arena. Investor confidence tend to improve depending on a number of factors that include, for instance, political stability, availability of skilled human capital, good infrastructure and implementation of trade policies that can attract both domestic and foreign investment. In this regard, a major international sports event attracts sports enthusiasts from all walks of life, and this is an opportunity for the host country to market itself as the ideal destination for business and investment. In addition, a major sports event other than helping the host nation to market itself as the ideal investment destination, it also provides the host country an opportunity to demystify negative publicity that may sway away prospective investors. For instance, in a country such as South Africa that hosted the FIFA 2010 World Cup, social issues such as racial discrimination remained unresolved especially in the international front. As such, hosting the 2010 FIFA World Cup was an opportunity for the South African government to show the world that apartheid has no place in the country (Andreff & Andreff, 2010).

On the other hand, the long history of apartheid in the country could have been a reason for foreign investors to avoid the country because of fear of reprisals from the communities that were initially oppressed. As such, a major sporting event such as the 2010 FIFA World Cup provided a suitable platform for the South African government to instill investor confidence. Host countries can also use a major international event to showcase, for instance, responsible practices such as good governance and best human rights records. Most countries, and especially in the developing world have been in the international limelight for the wrong reasons. Among the concerns raised by the international watchdog groups, include high rate of corruption, extrajudicial killings, dictatorship, high crime rates and a widening gap between the rich and the poor. These concerns if directed to a particular country may have a negative impact on both domestic and foreign investment. As such, hosting a major international sports event can allow the blacklisted country to improve its dented image in the international arena and subsequently boost the confidence of skeptic investors (Kim, Kang & Kim, 2014).

Other than using a major event to improve the image of a host country as the ideal investment destination, showcasing cultural diversity of the host country is also important in improving a country’s image in the international arena. In a world that is now a “global village” an emphasis on cultural diversity is important due to the increased movement of people across the borders. As a result, a host country can use a high profile event to present an image of accommodating people from different cultural and ethnic backgrounds. For instance, both South Africa and Brazil presented an image of countries that accommodate cultural diversity as evident during the opening ceremonies of both tournaments. The intent by both countries was to communicate to the world their emphasis on creating an open society that is ideal for socio-cultural development, business and investment (Lohmann et al., 2015).

1.3 The Sectors of the Economy That Can Benefit From a Major Sports Event

Hosting major sporting events can help to improve sectors such as the hospitality industry, retail and real estate industry. Major sports events such as the FIFA World Cup often attract a significant number of sports enthusiasts to the host country. For instance, the 2010 FIFA World Cup in South Africa attracted more than 300,000 foreign visitors (Armstrong, 2015). On the other hand, the 2014 World Cup in Brazil attracted over one million foreign visitors (Armstrong, 2015). As such, the large number of foreign tourists visiting the host country is an opportunity to capitalize on sectors such as the hospitality, retail and real estate. The hospitality industry, for example, can play an important role when hosting a major sports event. The large number of visitors attending such events may require services such as lodging and transportation. As a result, the host country can exploit the opportunity presented by hosting a major sports event to expand its hospitality sector. South Africa and Brazil, for example, are among the leading tourist destinations globally and a major event such as the FIFA World Cup is an opportunity to generate significant foreign income. The 2010 FIFA World Cup generated approximately $3. 6billion, while the 2014 World Cup generated over $4billion (Armstrong, 2015).

A significant percentage of the revenue was generated from the hospitality, retail and real estate sector. A host country that has established its image as a tourist destination can benefit significantly from a major sports event. This is because, after the event concludes, some of the foreign visitors may decide to extend their holiday. For example, FIFA World Cup is often held in the summers and this is a peak season for the tourism industry globally. On this note, countries such as Brazil and South Africa that have had the opportunity to host a major sports event used that opportunity to improve infrastructure in the tourism sector to accommodate the changing needs of foreign tourists (Emery, 2002). In addition, the infrastructure improvement in the hospitality sector that is instigated by hosting a major sports event can help to ensure that the sector gains a competitive advantage. On the other hand, consumer spending during major sports event is often high and this is an opportunity that the host country’s retail sector can exploit. During a major sporting event such as the FIFA World Cup, sports enthusiasts often prepare to watch the matches by buying TVs, electrical luxuries and other sports memorabilia. This trend was evident in the 2010 World Cup in South Africa. On the other hand, studies also showed that the Beijing Olympics had a positive impact on a number of online retailers (Tomlisnson, Bass & Bassett, 2011).

Similarly, Emery (2002) notes that retailers dealing in products that seem to have a close affinity with the sporting event taking place stand a better chance to generate significant revenues from sales. In essence, the expansion of the retail sector to accommodate the needs of visitors attending a mega event requires the host country to increase investment in the sector. Investment in this sense may involve building mega malls in the large cities to provide more space for retailers intending to sell their merchandise to the enthusiasts attending the mega event. The real estate sector can also gain from hosting a mega event by targeting the visitors who are willing to remain and invest in the host country. For example, some visitors may want to buy a house of their own or purchase land for private development. In Brazil, for example, the 2014 FIFA World Cup and the upcoming 2016 Olympics has provided a boost for the real estate market in the country. In essence, Brazil is among the top emerging property market especially for the buy-to-let investors. As such, the 2014 FIFA World Cup and the upcoming 2016 Olympics presents a market opportunity for real estate investors (Lohmann et al., 2015).

1.4 The Gains Locals Can Derive From a Major International Sports Event

Hosting a major sports event can bring significant benefits to the locals that range from securing employment, improving their living standards and social interaction. A mega event such as the World Cup or Olympics requires preparations such as improving the physical infrastructure that include, for instance, stadiums. On this note, to ensure that the entire infrastructure to be used in a mega event is completed in a timely manner, the input of human capital is necessary. As such, the companies contracted to improve the infrastructure may need to recruit more laborers to ensure they complete the contracted projects on time. In South Africa, for instance, the 2010 FIFA World Cup created over 130,000 jobs. As an emerging economy, the poverty level in the country is still high, and hosting the 2010, FIFA World Cup helped to reduce the high unemployment rate in the country. Apart from creating employment for the locals, mega events such as the World Cup and Olympics also helps to improve social interaction between people from different geographical and cultural backgrounds. For instance, the interaction between locals and foreign visitors can contribute to cooperation in different spheres of development. Through interacting with the foreign visitors, the locals are in a position to solicit for help necessary to enhance community development (Tomlison et al., 2011).

After major sports events of global proportions, various projects have emerged in the local communities of countries that have hosted such events. These projects are often the outcome of social interaction between the visitors and the locals. For example, in South Africa, various organizations that support the fight against HIV/AIDS increased their funding to different community initiated programs such as Grassroot Soccer (Andreff & Andreff, 2010). Major sports events also help to promote inclusion as evident in the 1995 World Cup Rugby in South Africa. For instance, 1994marked the end of apartheid in South Africa, and it was an important period following the dark era of violence, death and imprisonment. The country hosted the Rugby World Cup the following year in 1995; however, the reconciliation process was still fragile. In South Africa, Soccer, Cricket and Rugby are the dominant sports; however, rugby was perceived by the blacks to be a “white man’s” game. As such, it was difficult for the blacks and colored to support the national team due to an emphasis on social allegiances (Steevnveld & Strelitz, 1998).

Mega events often bring people from all occupations together under one roof, and this was evident in the 1995 Rugby World Cup where the country’s citizens from different backgrounds converged in one stadium to support the national team. In this regard, the greatest victor of the tournament was not winning the 1995 Rugby World Cup, but the inclusive atmosphere that the 1995 tournament created. The event created an enabling environment for social change as evident on how the South Africans used the event to share their commonalities rather than differences. In addition, the event also helped to bring together different communities that ordinarily had never interacted together (Steevnveld & Strelitz, 1998).

1.5 The Impact of the Media on a Country Hosting a Major International Sports Event

The media can have a positive or negative effect on the country hosting a major international sports event. The media often showcases a country’s ability to host a mega event and the rhetoric in this regard can either enhance or impede the successful hosting of a major sports event. As a platform to disseminate information, both print and electronic media are often used to promote a mega event. Such promotions may appear in the form of advertisements that target sports enthusiasts and thus playing a role in improving the expected attendance to a mega event. With the advancement of information technology, a significant number of sports enthusiasts and particularly the youth are relying on the internet to obtain important information related to such events. As a result, various media outlets have shifted attention to the use of the internet to disseminate information related to mega events. For countries that are not well known in the international map, the reliance on media outlets can provide an opportunity to showcase their political, social and economic prowess to the outside world. Some of the information that prospective visitors often search prior to making the decision to attend a mega event include, political stability and socio-economic prosperity in an attempt to secure their safe stay in the host country (Latham, 2009).

However, while the host country can use various media platforms during a mega event to improve its image in the international arena, these platforms can also be used by activists to criticize the host country on a number of fronts. Activists often use the media to expose the ills perpetrated by governments in different countries around the world. To achieve their purpose, they tend to storm major events to ensure their campaigns reach a large audience. In addition, the international media often cover major events and this provides an opportunity for activists to pressurize the targeted governments to implement political or social change. For instance, human rights activists took advantage of the media coverage of 2008 Beijing Olympics to pressurize China to improve its human rights record. They can also use the media as a tool to convince, for instance, sports enthusiasts to boycott a mega event. However, while the media can be used as a tool to frustrate a country that is hosting a mega event, the benefits still supersedes the negative publicity. This is because, while the media is an important platform in promoting mega events, it also helps to reach a larger audience and to display a country’s potential to the outside world, which is necessary to attract foreign investment (Latham, 2009).

1.6 The Sustainability of Political Social and Economic Development in the Aftermath of a Major Sports Event in the Host Country

While the benefits associated with hosting a mega event are significant, their sustainability after the end of the event has often been elusive. For instance, infrastructure developed prior to hosting a mega event have turned into “white elephants” after the conclusion of such events as evident in the stadiums that operate below capacity. A tangible case, in this regard, includes the stadiums constructed to be used for the FIFA World Cup or Olympics often remain underutilized after the event concludes. As a result, the government incurs additional expenses for maintaining such stadiums without generating any form of income to offset the maintenance cost. In addition, political and social developments are only evident when the mega event is taking place probably to hoodwink the international community. Consequently, ensuring the sustainability of the political, social and economic gains made when a country is hosting a mega event require proper planning on how such gains can be sustained in the aftermath of a major event (Girginov & Hills, 2008).

1.7 Conclusion

While related literature has focused mainly on the positive impact that a country hosting a mega event can gain, there is also a need to explore ways of ensuring that such gains are sustainable on a long-term basis in the aftermath of such an event. On the same note, future research needs to focus on how host countries can make use of the infrastructure left behind after a major event. In addition, future research should also focus on policy implementation to ensure that the political, social and economic gains realized when hosting a major event are not eroded by an emphasis on retrogressive ideologies. In essence, the implementation of appropriate policies to target the sustainability of the positive gains from a major sports event can help to ensure that the host countries reap a return on investment.