THURSDAY, March 28, 2024
nationthailand

The economics of hosting a major sports event

The economics of hosting a major sports event

LAST WEEK there was news that the government had approved a budget of Bt300 million for Thailand to host MotoGP, the premier class of motorcycle racing held since 1949. The amount will cover the Bt100-million annual licence fee for three years. The event will be held in Buri Ram province in the Northeastern region.

The news quickly gained attention on social media, with comments both for and against the decision. 
The project is part of the government’s policy to promote sports tourism in order to stimulate economic development and growth. But the question is, what is the impact on the economy? What do policymakers need to consider? Here we will analyse the costs and benefits, the economics involved in holding a major sports event.
Let’s look first at the benefits. It is speculated that around 100,000 attendees, both Thais and foreigners, will visit the Chang International Circuit in Buri Ram for the event. This will make the city and country better known globally. 
What needs to be considered further is the amount of spending per person, consisting of accommodation, dining, shopping, entertainment, and transportation. How many days will they spend in Buri Ram and elsewhere in Thailand? Furthermore, revenues include ticket fees, TV licences, sponsorships, and souvenir sales. In short, we want to know what the increase in demand created by holding this event is. 
At the macro level, new infrastructure will be developed, creating jobs and stimulating the local economy. 
However, there are two sides to this coin. Let’s now look at the costs involved. 
For many events such as the World Cup and the Olympics, there is a bidding process. Because they want to win the rights to host the event, countries often end up bidding much more than they initially thought they would. 
Moreover, even before winning the bid, countries need to invest in infrastructure to show that they are ready to be the host. This does not apply to Thailand in the MotoGP case as the circuit has already been constructed, but in other cases, it can lead to an oversupply of stadiums, athlete villages, hotels and so forth. 
Examples can be seen from the cases of Greece and China hosting the Olympics, and South Africa and Brazil hosting the World Cup. After those events, much of the infrastructure was left unutilised, largely because of the huge operating and maintenance costs. 
Besides an increase in tourists, we need to take into account the fact that regular visitors may decide to postpone their trip to Thailand to avoid the crowds, increased costs, and higher security.
There is another group of benefits and costs that are often overlooked. Holding a major sports event and having world-class athletes come to compete can create what is called attitudinal and value changes, including sport values and social influences. 
For instance, it could create a culture for young people to enter the sport or encourage locals to experience an international event involving people from different countries and cultures. These aspects are, however, difficult to measure in monetary terms and in many cases need to be evaluated in the long term.
Last is the environmental dimension. What are the environmental impacts of such an event? They include noise and waste created during the event itself and pollution during construction of the infrastructure. Don’t forget that it is the local people who have to bear this. 
As the government’s idea of hosting the MotoGP is not 100 per cent funded by private funds but also Bt300 million of our tax money, many angles need to be seriously considered. All in all, this is for the benefit of the country and its people.  

SARAN SARNTISART PhD is a lecturer at the Graduate School of Development Economics, National Institute of Development Administration.
 

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