What should you pay to host a party? An economic analysis of hosting sports mega-events

Heather Mitchell and Mark Fergusson Stewart

Applied Economics, 2015, vol. 47, issue 15, 1550-1561

Abstract: Governments all over the world put huge amounts of money into bidding for, and then hosting, sports events like Football's World Cup or the Olympic Games. They also give money to professional sports teams and other mega-events to encourage them to locate within a particular constituency. This article examines the statistical relationship between tourism and three Football World Cups and five Olympic Games, finding very little positive effect. Given this conclusion, the article looks at why governments continue to bid for these competitions. It presents evidence that shows that these sports contests make people happy, and argues that politicians capitalize on this feel-good factor; harnessing the hubris associated with these events for political gain. The article then contends that the best way to reduce the politics associated with bidding for mega-events is to allocate them via an auction, rather than the wasteful rent-seeking methods that are currently used.

Date: 2015
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DOI: 10.1080/00036846.2014.1000522

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