Economic benefits of hosting a sporting mega event are overestimated, new research finds

• Experts from Aston University and New York University (NYU) studied how industrial firms in Beijing fared in the run-up to the 2008 Olympics
• Dr Johan Rewilak and Ted Hayduk (NYU) looked at whether industrial firms in Beijing disproportionately increased their investment ahead of the Games compared to similar Chinese firms
• The results are interesting for academics, policy makers, businesses and entrepreneurs.

Economic experts from Aston University and New York University (NYU) have found that host cities do not receive any disproportionate economic benefits from hosting a sporting mega event.

Dr Johan Rewilak from Aston Business School and Ted Hayduk (NYU) studied how industrial firms in Beijing fared in the run-up to the 2008 Summer Olympics. Most studies of this kind focus on the service sector, but this is one of the first examining industrial firms.

They looked at whether industrial firms in Beijing disproportionately increased their investment ahead of the Games compared to similar Chinese firms, and explored how those firms compared when it came to profitability.

The study found that hosting the 2008 Olympic Games did not provide disproportionate benefits in terms of capital investment or earnings relative to other comparable cities in China.

Dr Johan Rewilak, lecturer in economics at Aston Business School, said:

“One criticism of having cities host the Olympics is that it funnels public funds into a specific region or area of a country. However, our findings do not support that hypothesis.

“Specifically, manufacturing firms in the host city did not receive greater economic benefits compared with firms in similar cities across China, and we found evidence that complements previous arguments that SMEs typically have limited to no disproportional positive impact on the local economy.

Ted Hayduk, clinical assistant professor at New York University, said:

“In terms of capital investment, we found that the host region had no differential effect for both the Summer and the Winter Games. Given that we found no significant result in 2008, it is somewhat unsurprising to find an insignificant result for the 2022 Winter Games.

“This is because the budget for Beijing 2022 is only 10% of what was spent in 2008, and/or alternatively, as the necessary infrastructure has already been built, it has yet to depreciate sufficiently to warrant investment in its replacement.”

You can find out more about the study HERE.

You can also listen to Dr Rewilak on Aston University’s podcast series, EURO 2020: The Business and Science of Football.

He joined journalist Steve Dyson, Dr Danny Fitzpatrick and Dr Robert Thomas to discuss the benefits of holding EURO 2020 across the continent, and whether it was likely to bring an economic spike in a world still living through Coronavirus.