On the eve of the 2012 Olympic Games opening ceremony, global research shows that businesses in emerging markets recognise the ability of big sporting events to attract investment to their economies. This is according to new research from the Grant Thornton International Business Report (IBR).
The IBR reveals the extent to which businesses in developing countries see the importance of major sporting events in attracting investment into their economy. In South Africa a convincing 78% of business leaders believe that big sporting events are key to attracting investment. Two years following our hosting of the FIFA Football World Cup, this positive sentiment is higher that it was just following the event when 73% of local businesses felt that the overall economic impact was a positive one.
“These new figures really indicate how important a major sporting event can be for an economy. For South African businesses to still recognise this economic knock-on from 2010 is testament to this fact,” says Gillian Saunders, head: advisory services at Grant Thornton South Africa which is actively involved in evaluating the economic impact of sporting events locally.
In Latin America, almost three quarters (74%) of business leaders believe major sporting events are important in attracting investment to their economy – in Brazil particularly 83% of businesses are expecting a positive impact on the economy as a result of the FIFA World Cup in 2014 and Olympic Games in 2016. Across the BRIC nations, over half (54%) hold this view. By contrast, far fewer businesses in the EU (42%) and North America (44%) believe in the ability of big sporting events to attract investment, dropping to just over one in three (36%) in the G7.
Saunders continues: “Holding a major sporting event gives an emerging country – often a less well known market with perceived challenges – a global shop window, allowing it to market what it has to offer to a massive worldwide audience. For more established economies, international sporting competitions are still a great opportunity, but are just one element of a much bigger ongoing offensive to attract investment.”
“The message is clear: if international sporting bodies want to make a positive impact on host countries’ economies, they should choose developing nations as hosts more often.”
It’s also more often the case that developed economies will have the venues, transport and technology infrastructure already in place for any major event. Capital investment to build new infrastructure is therefore much more limited in these economies, compared with the level of investment required in emerging markets such as was seen in SA in the build up to the FIFA World Cup.
With the UK currently in the spotlight, two thirds (61%) of business leaders believe that big sporting events will have a positive impact on the economy. In a similar vein, the UK government anticipates that the London Olympics will bring £13bn of economic benefits over the next four years – £6bn in the form of foreign direct investment.
Saunders added: “A big part of winning the race to host big international sporting events is convincing the public and businesses that the benefits will outweigh the obvious costs. Our research suggests that developed economies have to work a lot harder than emerging economies to make a convincing case.”
The research also indicates that business leaders in those economies which have recently held, or are soon to hold, major sporting events are more bullish about the investment they bring (the exception is China, where the legacy of the 2008 Olympic Games in Beijing remains unclear, probably because it occurred during a massive economic boom in a large economy so its impact was less, in relative terms).
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Notes to editors
The Grant Thornton International Business Report (IBR) provides insight into the views and expectations of over 12,000 businesses per year across 40 economies. This unique survey draws upon 20 years of trend data for most European participants and 10 years for many non-European economies.
Data collection is managed by Grant Thornton International’s core research partner – Experian, primarily by telephone. Questionnaires are translated into local languages with each participating country having the option to ask a small number of country specific questions in addition to the core questionnaire. Fieldwork is undertaken on a quarterly basis.
IBR is a survey of both listed and privately held businesses. The data for this release are drawn from interviews with 3,000 businesses from all industry sectors across the globe conducted in May/June 2012. The target respondents are chief executive officers, managing directors, chairmen or other senior executives.
Notes to editors
You may quote freely from this publication, provided you acknowledge the source. This publication is an outline for information purposes and should not be relied upon for detailed planning. Readers are advised to consult professional advisors for guidance relating to new or existing legislation which might affect their business and personal decisions.
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