Gibraltar is getting ready to host the XVIII Island Games this month. With years of preparation finally coming to an end, the biggest sporting event in Gibraltar’s history is ready to take place.

Hosting a major sporting event can give many economic, social and cultural benefits. However, the costs of hosting the event can also be quite high. Having completed a number of Cost-Benefit Analysis and Feasibility Analysis for some large projects, Benefit Business Solutions Ltd has experience in presenting a balanced approach that captures the project’s ultimate potential while ensuring no stone is left unturned with regard to costs.    

The advantages of hosting a major event include:

1. Raise Gibraltar’s profile on the international stage

Increasing the profile of a city can lead to lasting economic benefits. For example, cities which host the Olympics can be assured of a persistent increase in recognition and tourism. Barcelona, Sydney, Beijing have all seen this. For a country like China with a controversial human rights record, hosting a major sporting event can be a way to gain greater international acceptance. When South Africa hosted the Rugby World Cup and later the Football World Cup, it was a defining moment in highlighting the new ‘post-apartheid’ South Africa. This raised profile can be important for giving economic benefits, such as attracting tourists and business investment.

Hosting a major sporting event can give many economic, social and cultural benefits.

2. Long-term investment

A significant benefit is the long-term investment which comes from preparing for a major event. Owing to the Island Games, Gibraltar will now have a legacy of improved sporting venues. Also, cities will usually have to invest in infrastructure and transport to cater for an influx of tourists. For example, there has been significant investment in public transport projects around London in the run up to the 2012 Olympics. This will leave a lasting legacy for residents of London, especially East London who have benefited from improved public transport.

3. Jobs and Investment

The several years of planning and investment have created jobs (both directly and indirectly) and in some cities can actually revitalise depressed neighbourhoods. This was an important claim of the London Olympics, choosing a site in East London, which at the time was relatively depressed. It is estimated the London Olympics 2012, created 8,000 full-time jobs and lead to a boost in economic output of close to £2bn.

4. Enthusiasm

It is often easy to find reasons not to host a major sporting event, too much debt, more important priorities. But a major sporting event can create enthusiasm and excitement for such an event. It can help promote uptake of sport which has lasting benefits for the nation’s health. Also, a major sporting event can lead to a rise in volunteerism which promotes civic virtues.

5. Short-term economic benefits

The Island Games will see a surge in visitors, athletes and media. This will provide an increase in spending and injection of money into the local economy. However, this injection of money, will only be short-term (a week or two in the case of the Island Games) and make little overall impact on the wider economy.

The disadvantages of hosting a major sporting event include:

1. The cost of building stadiums

To host a major sporting event like the Island Games can cost significant sums, which have to be paid for by the taxpayer. Especially for the small nations/communities hosting the Island Games, such costs can have a big burden on public debt, especially as such costs have a tendency to rise over time and be much greater than expected. The Montreal Olympics was estimated to have cost $120 million (1970) and then rising to $310 million (1973). The final cost was around 13 times greater at $1.6bn. It took 30 years to pay off the Olympic debt!

2. Short-term use

Many facilities built for the Olympics can never be fully used again. E.g. an 80,000 athletic stadium will rarely be full outside of the Olympics. This can be mitigated by careful planning. For example, the London Olympic Stadium is now used by West Ham football team. However, some cities which failed to plan for the legacy of the Olympics were left with unused giant stadiums.

3. Potential for negative publicity

If things go well, a city can benefit from positive publicity, but if things go badly, it can cause the opposite. For example, the Winter Olympics in Sochi (Russia) has received adverse publicity because of corruption allegations of state-sponsored doping by the Russians. The 2022 football World Cup in Qatar could backfire if players complain about the heat and conditions of migrant workers. There have also been numerous events where the sporting facilities were not completed on time or built not up to standards, which reflected badly on the host city.

It took 30 years to pay off the Olympic debt!

4. Threat and cost of security

Major sporting events increasingly have to implement higher levels of security as they are seen to attract greater threats. This is both costly and can restrict freedom of movement of local citizens and visitors during games.

5. Higher taxes to pay cost

Some cities have seen an increase in municipal tax post games to finance a loss of putting on the sporting event.

The 2019 Island Games in Gibraltar are a significant event for Gibraltar, and we wish the players, visitors and locals, a smooth, enjoyable and successful event.   

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Eran Shay Managing Director, Benefit Business Solutions Ltd. With over 20 years’ experience in the world of Finance, Eran specialises in helping companies grow in innovative ways. Eran has ample experience in the fields of Corporate Finance, Regulatory Advisory, Business & Strategic Planning, Valuations and Transaction Support and his focus on technology means he keeps in touch with innovative companies in a variety of sectors. Ayelet Mamo Shay Co-Founder & Business Development Director, Benefit Business Solutions Ltd. Ayelet specialises in online and offline marketing, sales, and PR. She is the author of the successful novel “Relocation Darling, Relocation!” and provides relocation consulting and personal coaching. A busy entrepreneur, Ayelet also serves as Chairwoman of the Gibraltar-Israel Chamber of Commerce.