How Sport Events Contribute to the Economy of the Hosting Country

Abstract

The reason for undertaking the study is to look at or answer the question why there is fierce competition amongst the countries to host the World Cup. Also, to look at the great extent to which these countries go in order to be shortlisted as favorites to host the World Cup. In order to achieve this, the current study will answer what is the impact of hosting a major sports event to the economy of the host country as well as what are the measures taken to ensure that a country qualifies to be a host. Further, the researcher has developed a hypothesis which the current paper will try to qualify using the findings. The research will employ both qualitative and quantitative methods. In doing so, face to face and phone interviews, government and private sector financial publications, and questionnaires will serve as the data collection methods while data will be presented in tabular and report forms.  Sampling method will be random and the sample size will be representative of the population.  Data collected will be analyzed using the interpretive analysis. The findings will then be used to make recommendations for further research in the field as well as to countries that are planning to host major sporting events.  

 

How Sport Events Contribute to the Economy of the Hosting Country

1.1 Introduction

The impacts of sports events on the host countries are wide and range from economical to social benefits. Sports bring people and nations together. However, sports are not just meant for competition because most people engage in and watch sports as part of their leisure activities. Today sports industry has become a multi-million dollar industry and, therefore, a lot is at stake for sportsmen and hosting countries. As such, sports have become the livelihoods of many people as well as a source of revenue to hosting nations. This is so because the investment ploughed in preparation to host a major sports event will be recouped multiple times in the form of hotel accommodations, stadia tickets, broadcast rights etc. 

This study will focus on revenues received from hotel accommodations, tourism and gambling sectors. The next FIFA WORLD CUP 2022 competition to be held in Qatar is a major sporting event for the country. The current study will consult industry players as well as organizers such as professionals in the gambling and betting sites managers regarding the increase in the number of betting transactions. Additionally, the researchers will consult with tour guides, hotel managers, beauty spas and parlor managers as well as accounting clerks to get a glimpse of how the tourism sector stands to gain from the event. 

1.2 Background information on the study

Major sporting events are an integral part of the modern world because most people nowadays are spending a lot of their time engaging in sporting activities. The public is mostly engaging in football. People are interested in the modern day football games for different reasons. There are those people who watch the football matches because they want to engage in gambling by betting, while others watch the game just because they love football. Apart from that, there are those people, who are interested in the football games because they see a viable business opportunity. When the major sporting events come up, they greatly influence the economic activities of the host country.

Most of the practices that take place in a given country will be altered based on the magnitude of the sporting event that will take place. Different people will approach the sporting events with different perspectives. The perspective that a person will use is based on the benefit he/she will acquire from the event. Sporting events influence the way the economy operates as well as how the people in the host country socialize. The host country should be able to take advantage of the situation when a sporting event comes to the country because such events carry a lot of potential in them. It is, therefore, very important to be able to study and determine what impacts the sports events have on the economy of the host country.

1.3 Research problem

The research problem that warrants this study is that there are some countries that remained indifferent economically after hosting a major sporting event. Some host nations have spent millions of dollars on constructing and repairing sporting facilities and other infrastructures. However, after the sporting event comes to an end, these nations realize that they have not put in place sustainability strategies to maintain these facilities. As a result, the facilities lie in dilapidated conditions despite spending millions of dollars on construction expenses Therefore, the question is how sports events contribute to the economy of the hosting country and what measures such countries can put in place to realize the economic benefits of hosting sports events. When major sporting events such as the FIFA World Cup are held in a given country, the economy of that country is bound to improve (International Monetary Fund, 2010). There are different sectors that can be improved due to the presence of a sporting event within a country. During the FIFA World Cup, a lot of fans travel to the host countries to provide support to their national teams. The consequence of such travelling is that tourists engage in a lot of foreign exchange transactions and this improves the host country’s economy. The construction of stadiums and other sporting facilities creates employment opportunities for the citizens of host countries. These facilities will then be used during and after the sporting event and, hence, countries continue to benefit economically from such facilities and infrastructures. More infrastructures such as roads and new buildings will be put up within the country, and the right channels should be put in place so as to ensure these facilities are fully utilized.

The host country’s economy can improve in many ways. However, any economic benefit depends on the host nation’s preparedness to host such a major event.  If the government of the host country is not prepared to host a sporting event due to financial reasons or unable to maintain facilities after the event, then no economic gains will be realized. This study will therefore demonstrate the impact of FIFA World Cup on the economy of a hosting country. The study will involve the major players in the economy and the impacts the event will have on them either before or during the World Cup. After the World Cup, the economy's GDP should improve due to the high number of fans travelling to the host country.

1.4 Research questions

The research will be based on the following research questions:

  • What are the impacts of hosting a major sports event to the economy of the host country?
  • What strategies should the host nation implement to ensure that it benefits long after the sporting event is over?

1.5 Research objectives

The following are the objectives of the research to be carried out:

  • To determine how the hotel industry benefits from the event?
  • To rate the increase in the tourism sector capital  resulting from the event.
  • To evaluate the taxes gathered from gambling during the sporting event.
  • To establish the impact of the new infrastructure on the public.
  • To evaluate the increase in the number of jobs as a result of the world cup.
  • To calculate the GDP change in the economy of Qatar.

1.6 Hypothesis

Hosting a major sporting event can be beneficial to a country and at the same time it can also be harmful. These outcomes make the study of the impacts of the sports events highly important. The hypothesis of this study is to establish the impacts both positive and negative of hosting a major sports event on the economy of the host country.

1.7 Research Methodology

In carrying out the research, the researcher will employ several data collection techniques because the current research is both qualitative and quantitative in nature. Therefore, the research will use questionnaires to collect first hand data from respondents. This method of data collection is supported by the fact that this paper is partly a quantitative research. Secondly, the author will carry out face to face interviews as well as phone interviews. During face to face interviews, the author will be taking notes as the respondent answers the questions. On the other hand, phone interviews will be taped and then re-listened by the author for purposes of transcribing. Once transcribed, the author will include data collected as part of the entire interview process. 

The researcher will also review economic data from government publications as well as the private sector. The publications to be used will be the ones prepared during the financial period within which the country hosted a particular major event. The reason for this is that previous researches show that GDP of a hosting country increases accordingly immediately after hosting a major sporting event such as the FIFA World Cup. Financial publications by governments and businesses offer an excellent source of information as they provide the factual position on a country’s economy. 

 

2. Literature review 

Previous research has been done in the field to clearly define the impacts of hosting a major sports event within an economy of the host country. There cannot be a clear guide to knowing whether a sporting event will have positive or negative effects on the economy of the given country. According to Durand & Chantler 2014, hosting a major sporting event requires a lot of capital expenditure mostly on the infrastructure as well as security. The authors argue that some countries lack the required capital as well as skills to undertake constructions of this magnitude. The large capital outlay required may dent the economy of the host country if the event does not generate the amount of capital that was used in its preparation. 

The government, when chosen to host a major sporting event, starts its preparations immediately. The government may at times evict inhabitants of a particular area to create room for construction of the infrastructure such as stadiums. The building of the stadiums may render some people homeless as they are evicted from their natural homes to pave the way for the construction of these structures. A major sporting event may have negative impacts on the social life of the citizens of a hosting country. The event may lead to an increase in the prices of goods and services making it impossible for the local people to afford them. This will lead to a drop in the local expenditure that will negatively affect the economy. An increase in the prices also may lead to a reduction in the number of tourists arriving in a given country, and this will lead to a cut in the foreign visitor's expenditure.

According to Treiman 2013, there are three main benefits of hosting a major sporting event. The first benefit is economic growth. He argues that when new structures are built up in the host country, the country will greatly benefit because the structures will still be in place even after the event. The long term effects of putting up infrastructure within a given economy are that trade will now take place more efficiently as well as the movement of people from one region to another within the country.

The second benefit associated with the sporting events is image promotion. When a major sporting event takes place in a country, the major attractions within that country are exposed to the world. When these attractions are exposed, it creates awareness of the existence of the various sites and as such, it acts as a marketing tool for the host country. In Sydney Australia, the 2000 Olympics helped to rejuvenate the whole Australian economy because of the traffic of people that attended the Olympics (Soderman & Dolles, 2013). The third benefit of the sports events is infrastructure legacies. When a major sporting event is held in a country, certain structures such as stadiums, hotels and facilities for officials are constructed. The construction of these facilities will lead to a cut in costs when another major sporting event is held within the country. Also, the construction of these structures also ensures that there is a reduction in the amount of employment. The stadiums require people to construct them. Hence, laborers from the country will be employed to build the infrastructure. Also, there are people to be employed so as to maintain these structures and also to ensure that there is effective running of the facilities. 

2.1 Rationale for the research

There are countries that, even after hosting a major sporting event, still struggle economically despite the fact that travelling fans market the host nation worldwide. Since the 2022 FIFA World Cup will be held in Qatar, a study needs to be carried out to demonstrate the potential economic benefits to the country. The FIFA World Cup has a lot of potential to be utilized because a lot of construction has to take place to facilitate the accommodation of people during the world cup. Also, more stadiums have to be put in place so as to ensure that the games are played smoothly. The tourism sector is another sector with a lot of potential because when the tourists are not in the stadiums, they will  tour the country and enjoy its scenery.

Therefore, determining how host countries of major sporting events can benefit from such events is critical. The information likely to be derived from this study will prove important to various sectors of the economy that are likely to benefit directly. Improvement in economic performance of these key sectors will consequently drive the other sectors of the economy (Vilakazi, 2012). A list of recommendations and solutions will then be provided to help other nations handle common problems related to preparing to host major sporting events as well as recommendations on how best to ride on the success of the sporting event years after its completion. For instance, the hosting nation can decide to build lodges and inns around the major stadium during the sporting event to attract more tourists who want to stay near the facilities. 

3.1 Research design

The research design to be used in this study is the case study since the researcher will be focusing on the impact of FIFA World Cup in the Qatar’s economy with Qatar being the case study subject. Data will be sampled, collected, presented, analyzed, and findings discussed to provide possible recommendations.  

3.1.1 Geographic area

A geographic area in research is an area that is covered by the researcher when he/she wants to study a particular phenomenon or is sampling a particular population. In this proposal, we shall look at the areas of Doha and Al Rayyan. Doha is the center of Qatar’s administrative, finance, transport and social services. Doha is mainly populated by residents from other countries, and this dictates the forces of demand within the city because the people have different tastes from those in the city. This made Doha an international city. Doha will be a major city during the FIFA World Cup in 2022.

There are six stadiums in Doha that will be used during the FIFA World Cup. The fact that the majority of the stadiums are situated in Doha means that most football fans that will travel to Qatar will mostly spend their time in Doha. The final of the World Cup will be held in Doha and as such, infrastructure must be put in place so as to be able to handle the population that will travel there during this time. The city is the most populous in Qatar since it is the country’s capital with 60% of the nation’s entire population living in the capital (Salama & Weidmann, 2013). Most of the country’s economic activities take place in this city. The capital is able to accommodate a population of between 20,000 people per km² and 25,000 people per km². Al Rayyan will also be part of the analysis of this study since it is the largest municipality in Qatar. Al Rayyan covers approximately 5814 km² and has a population density of 81 people per km². Al Rayyan is considered as the hub for agriculture in Qatar because of its low-lying ground. These are the two areas to be covered where stadiums to be used in the 2022 world cup are located. 

4.1 Sample size and sampling method

A sample is usually a smaller group that represents the population within which it is picked from (Miller-Cochran &Rodrigo, 2014). The rationale behind sapling is that researchers are not able to carry out research on the entire population due to limited resources such as finance, personnel, and time. This study will use a sample of ten hotels, five gambling sites, ten casinos, one hundred members of the public, and fifty tour guides. 

The sampling method to be used is random sampling method which is a type of probability sampling. Probability sampling ensures that all elements in a population have equal chances of being picked to be part of the sample. Particularly, this study will employ simple random sampling since the population meant for this study is quite large. 

Simple random sampling preferred since it does not carry the risk of classification errors (Sant, 2012). Additionally, data collected can be easily interpreted in simple random sampling. The researcher therefore needs limited information about the target population. Furthermore, data can be efficiently collected on randomly distributed items. The researcher therefore prefers simple random sampling for this study due to its wide scope of the scope. This is coupled by the fact that data will be collected randomly from my case Doha and Al Rayyan. The area of Doha is quite densely populated and as such, the best means would be the simple random sampling without replacement because I need to collect information from different people. There is a need to collect information from different people because different people have different perspectives. Different people perceive different situations differently and for this reason, if a person is sampled more than once, the information may be biased based on his/her perspective. 

4.1.1 Participants 

The research for this study will be conducted on a voluntary basis. The research will be private and confidential, but the results will be used for the research in question. The groups to be used in this research will be the hotel managers, casino managers, tour guides and the public. However, the research will be directed to the hotels and the casinos with the most traffic because the chance for a biased view is limited. A casino with many people gambling in it will experience the change in the traffic of people when a major sporting event takes place. The casino will give the most accurate figures because of the influx of people visiting it. As for the tour guides, I will contact the tour guides in the major tourist attractions because most people will be inclined to visit the most famous attractions in the host nation. As for the public, I will sample random people from different areas so as to have information based on different perspectives. The research will be based mostly in the cities of Doha and Al Rayyan. 

4.1.2 Data collection instruments 

The data collection methods to be used by the researcher include interviews and questionnaires which would constitute the study’s primary sources since they will provide firsthand information from the respondents as data is collected. Primary sources will provide information based on the factual views of the participants. In the interviews, the research will ask questions that would seek to qualify the hypothesis formulated as well as those that would attempt to answer the research questions. The study will use both structured interviews and open interviews since the study will be both qualitative and quantitative. 

The interviews will be composed in advance. A mock interview will take place just before the research is carried out to guarantee that sufficient data is collected. The researcher will conduct interviews with the managers in the different sectors mentioned before so as to get firsthand information regarding how well their respective sectors have done as a result of the FIFA world cup. The research will employ a combination of both open interviews and structured interviews. Additionally, the researcher will conduct interviews with the public in Doha and Al Rayyan in an attempt to determine what they think of the impact of the world cup on their country’s economy. The questions in the interview will be mainly focused on the economic value of the world cup as well as the impact of the world cup on the prices of the commodities in the country. During the interviews, the researcher will use both open and structured interview questions interchangeably. 

Questionnaires are already compiled forms that respondents fill on their own. These questionnaires will be sent to participants either via mail or handed out directly by the researcher. If sent via mail, the questionnaires will have to be posted back in a stamped and addressed envelope. The questionnaires to be used will be constructed using the country’s national language for easy understanding.  They will also be simple and to the point (Durand & Chantler, 2014). Like interviews, questionnaires can have open ended questions as well as close ended questions and this gives respondents an opportunity to discuss their views at length and briefly. This study will use questionnaires that have both open ended and close ended questions. 

The use of both sets of questions is supported by the need to incorporate figures in the data collected and discussions relating to what these figures mean. These questionnaires will be mainly focusing on the economic value of the structures put up as a result of the world cup as well as the changes in the incomes of the respondents from the onset of the world cup. The main objectives of this research are to estimate the impacts of the major sports events on the economy of the host country. The questionnaires and interviews I plan to use in my research will come up with the required data in the form of numeric values as well as statements that will be useful in the evaluation of the impacts of these events on the economy.

During collection of the primary data, the researcher will rely on secondary sources of information. This will provide the study with a plethora of information some of which will be supporting each other. The main secondary sources of information to be used will include government agency, private sector websites, financial publications from both the government and the private sectors, and previous research studies on the topic under study.  Qatar’s census report covering the last two decades will provide critical information on the population spreads and the composition of the population. The secondary sources will act to support the information from primary sources. 

4.1.2 Data Presentation

Data collected will be presented in different forms depending on whether the type of data is qualitative or quantitative. The data collected from government agencies and the private sector will be presented in tabular form since it will be majorly financial date in the form of figures. This will allow the researcher to make economic comparisons between financial periods before the hosting of a major sporting event and financial periods after the hosting of the sporting event. Data collected from interviews will be presented in the form of a report outlining the responses made by respondents since this data will be qualitative. 

4.1.4 Data analysis and findings

Data collected from interviews will be recorded for analysis. In order to analyze recorded data, daily interpretive analysis is useful as it involves the reviewing of notes and data recorded after each and every day of interviewing. After data is analyzed, the researcher will write a report that explains and summarizes the information. This type of analysis is advantageous since it makes it easy for the researcher to reconstruct information because it is easy to remember how the interviewee expressed him/herself using various conversational cues. Daily interpretive analysis also saves researchers valuable time by avoiding revisiting information previously collected. 

For quantitative data collected, data analysis will be tabulated, analyzed and presented in tabular form to facilitate computation (Treiman, 2009). Tabulation will enable the researcher to compare financial data collected before, during and after the FIFA World Cup event to be compared. Tabulated data will also be used to plot a graph that will demonstrate the trend in financial changes over these financial periods. 

5.1 A Timeline for the research

One month: learning the languages of the people who live in Doha and Al Rayyan.

Two weeks:   Conducting literature review on the case study and learning about Doha and Al Rayyan from the secondary sources.

1 week:    buying the equipment required for the research.

One day:     Visiting Doha.

1 week.    Defining the samples for the case study in Doha.

Eight weeks:   Commencing the research and visiting the target populations.

One week:   Analysis of the collected data and checking it for mistakes.

1 week: Defining the final results and inferences based on the covered information. 

One day:    Travel to Al Rayyan

1 week.    Defining the samples for the case study in Al Rayyan

Eight weeks:   Commencing the research and visiting the target populations.

One week:   Analysis of the collected data and checking it for mistakes.

1 week: Defining the final results and conclusions. 

Two days:  travelling back home.

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May 14, 2019 in Economics
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