Sports Economy

There is a clear need for understanding the nature of the sports economy and its value to the economy as a whole. Sport has been a major source of revenue for the economy of several countries, and the sports economy that supports sustainable development. A unique aspect is that the contribution of the sports to the economy does not depend on the geographical characters. Almost all the other sources of an economy mainly rely on the geography of the nation or region.

If we look at the sport sector of America, the big four sports leagues – basketball, football, baseball, and hockey – together they’re probably somewhere on the order of $10 to $15 billion in revenue. As Andrew Zimbalist writes, If we begin to add some of the other events outside the orbit of these four major games, (i.e., golf, auto racing, college sports) we see that the figure doubles to somewhere around $30 billion. Even though, it is a small part of the economic contribution to the world’s largest economy (America) that’s almost $11 trillion in size, the sport sector plays a significant role in supporting the economy of developing countries.

Sports, potentially, have a very important role to play, which is why people support them. In America the sports economy accounted for 434,000 jobs and a payroll of $12.9 billion. And the numbers didn’t include motor sports, another big tourist attraction.

It was expected that the Football World Cup, which began in Germany last year, would generate $1billion in advertising revenue, according to leading industry observers, making it one of the most lucrative sporting events of all time. Media agency Zenith Optimedia in Germany said the amount spent by the world’s leading companies on TV commercials, press advertisements and outdoor advertising would break the $1billion barrier for the first time. Zenith’s head of publications, Johnathan Barnard, said, ‘The fact the tournament’s taking place in Europe, where four of the world’s five large advertising markets are located, means total revenue will probably be about $1billion’.

The West Indies Cricket Board had an opportunity of eliminating its financial deficit by hosting the ninth ICC Cricket World Cup this year. The Chairman of the Cricket Board had said that the tournament profits would contribute heavily to securing the future of West Indies Cricket and in the provision of a direct return to host countries. We compare very favorably with much larger countries that have hosted this event before. We sold more tickets (672,000) than the last two cricket world cups in South Africa (625,000) and England (476,000) and garnered $32 million in ticket revenue which the ICC has told us is the highest gate ever. Along with the high standard of organization of the matches, these are worthy achievements the Caribbean can be justifiably proud of. The profit from the event will also eliminate the deficit of the WICB and this augurs well for the future of West Indies cricket,” he said.

There are several ways through which the sports contribute to the economy. A good example is the 2006 World Cup football tournament. This tournament was set to generate approximately 5.2 billion Euros in mobile revenue through text-messaging, ring tones, gambling, video clips
and mobile games, according to a report from market research firm Visiongain. The telecommunications industry in Germany had the potential to generate significant revenue from the 2006 World Cup.

The next Football World Cup is to be held in South Africa in 2010, and it is expected that the country would get enormous economical benefit form the trophy.

Selvarajah Mathangie

Colombo, Sri Lanka