The global sport industry is estimated to be worthup to $700 billion, with revenues generated by the industry thought to have amounted to $145 billion by 2015. The industry’s scale is set to grow even further, with China having announced its own plans to create a domestic sport economy worth $800 billion by 2025.
It is testament to the growing stature of sport as an economic, industrial and commercial force that China’s President Xi Jinping has committed so publicly to a vision for sport. In so doing, his proclamations pose a challenge to the United States which, at the moment, account for around 45% of global sport industry activity.
Global estimates of sport industry size though are not always as scientific as one might hope for. Indeed, there is no commonly agreed methodology for measuring industry size, hence one has to remain appropriately skeptical about figures such as those above. This is especially the case when comparing countries. Furthermore, one also has to realize that figures are often focused solely upon a financial benefit rather than a broader notion of economic impact.
Even so, the case for investment in and the promotion of sport remains compelling. Consider the case of European football: in 2014/15, the combined revenues of the ‘big five’ European leagues amounted to €12 billion. By 2017, it is estimated that the value of the European football market will exceed €25 billion.
At a national level, this means football often makes a significant contribution to economic activity. For instance, England’s Premier League makes a £3.4 billion annual contribution to the United Kingdom’s Gross Domestic Product. The League also pays £2.4 billion in taxation per annum to the British government, and sustains 103,354 jobs.
Yet there is a broader notion of the contribution that sport can make to a country’s well-being, and indeed to international development. For example, Qatar has adopted sport as one of the key pillars of its 2030 Industrial Vision, which is underpinned by the country’s desire to use its oil and gas revenues to achieve a multitude of goals.
One of these goals is to build a sustainable industrial sector, which has resulted in the creation of new sport businesses as well as a sports sovereign wealth fund which targets revenue-generating overseas investment opportunities. As part of its vision, Qatar successfully bid for the right to host football’s World Cup in 2022. The country is using the World Cup to drive infrastructural developments including a new rail and a new road network, on which it is spending approximately $200 billion.
The role of sport in Qatar also embraces the contribution it makes to social cohesion, to health and well-being, and to national identity. The country is small, with a population of only 2.4 million of which only 10% is Qatari. The balance of its population is drawn from other countries in the Middle East and North Africa, as well as others such as India, Bangladesh, Nepal and the Philippines. Sport is seen as means through which these communities can be brought together.
Given its relatively disparate population and as a relatively new nation, Qatar is seeking use sport too as a way of developing its national identity and to position the country as being an important destination for world sport. US writer James Dorsey has also examined some of the strategic and military benefits of doing this. At the same time, Qatar has high rates of obesity and diabetes, especially among young people. Using sport as a means to engage people in physical activity and sports participation is one way of addressing such problems.
The economic benefits of a national commitment to sport are therefore replete. Indeed, in the light of improved social cohesion, improved health and stronger national identity, research also shows that sport can therefore influence levels of happiness, which in turn delivers a multitude of benefits. But as the forthcoming Olympic Games in Rio de Janeiro demonstrates, investing in sport also carries with it the potential for significant economic costs.
In recent weeks, the governor of Rio has declared a state of financial emergency and begged for federal support to prevent a collapse in public security, health, education, transport and environmental management. The emergency is not solely the result of the Olympic Games, but Brazil’s desire to host global mega-events (which also included the FIFA World Cup in 2014) has imposed significant costs on the country.
In addition to the pressure on public finances, there has been a range of costs which the country has had to address. For example, land values in some parts of the country have risen as venue and infrastructural construction projects have been instigated. This has led to the forced resettlement of some communities, which has proved to be socially divisive. At the same time, security concerns have resulted in what some have called the ‘social cleansing’ in several Rio favelas.
Social unrest thus became a significant feature of the pre-World Cup build-up in 2014, and one suspects there may be further such problems ahead of the Olympics. The Zika virus will be another challenge this summer, as the global movement of people into and out of Brazil poses serious risks to public health. The potential impact of this could well be intensified given problems within the Brazilian healthcare system, something various critics directly attribute to the spending on sport rather than on the nation’s medical facilities.
A major issue for the sport industry is thus to establish a compelling argument that sport generates greater economic benefits than it does costs. Existing research though indicates that this is currently not the case; at best, sport may only have a marginally positive economic impact. Nevertheless, given that there is no clear or established methodology for measuring the impact of, for instance, sport-induced happiness, we may still have some way to go understanding the precise economic role that sport plays across the world.
There remains an issue too around the way in which sport can change behaviors, and the potential economic and commercial impact this can have. In Qatar’s case, much has been made by the likes of Amnesty International about employment conditions for migrant workers (particularly those working in the construction industry).
International scrutiny has therefore prompted a debate within Qatar about the kafala labour system it applies to immigrant labour, and about terms and conditions of employment in general (most notably pertaining to health and safety, and the free movement of labour). Without sport, such a debate may never have taken place; hence, some commentators would argue that sport can positively affect change. Even so, Qatar remains in the spotlight, especially because the country is still accused of not having made enough progress towards labour market reforms. One view could be that sport therefore remains something of a burden for the country.
The way forward for sport at this point simultaneously appears beneficial yet problematic. Sport can have a significant impact upon economic and commercial activity, as well as on the socio-cultural well-being of a nation. As yet though, we are not especially adept at measuring or understanding the effects that sport can have. Furthermore, as many of us continue to be seduced and beguiled by the power of sport, it is important that we all remain aware of the costs can impose upon us. This demands therefore that strong leadership and effective management in sport are crucial if we are to truly unleash and maximise the positive impacts of sport.