Funding Sports/Festivals: Economic Impact and Misapplication - Research Paper

Introduction

Various communities might spend a large amount of money or various kinds of public assistance on sports or festivals for several reasons, but the economic significance of these events is likely to go high as per their expectations. Some of the reasons why the activities will lead to negative economic impacts include.

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Misapplication

The Use of Incremental Rather Than the Multipliers

The concept of the multiplier is a component of economic analysis. It generally recognizes in a point that visitor spend in any given activity in a community then their the amount spend and the initial direct expenditure will stimulate the economic activity of the community and as a result leads to improved business turnover, household income, employment, and improved government revenue in the community (Szymanski, 2001). However, while undertaking the economic analysis, the event organizers need to use the sales rather than the personal income multiplier to represent the general result to the public (Bhowal & Kshetrimayum, (2019). The Sales or the transaction multipliers measure and uses the direct, indirect together with the induced on the visitors spending in relation to the economic activities of the host community while performing their economic analysis.

In contrast, however, the income multiplier is used to measure the induced, direct and indirect effects of the extra units in regards to the visitors spending on the charges that most importantly results in the level of household income of the host community (Temel, 2014). It is described as the ration of the change in final income to the initial change in the expenditure that is brought about. It highly demonstrates the economic impact of the host community.

The Omission of the Displacement Costs

There is a possibility that visitors from the outside communities that are attracted by the sport can or the festival event can displace some of the internal visitors that would otherwise have attended the occasion. this can result from the fact that they cannot obtain accommodation, they cannot find space or sometimes they might be interested to mingle with the crowd that has been attracted by the event (Crompton & McKay,1994). The displacement cost is the revenues that are forgone by a community because the members of the community that would have attended are unable or unwilling to attend because they are displaced or overcrowded out by the visitors. The economic impact in most cases gives the analysis of the financial end expenditure data of those who are attending the event but does not give any analysis finance and spending patterns of the people who have been displaced from the event (Temel, 2014).

According to Crompton & McKay (1994), the displacement cost, in this case, might result from four major sources which include, avoiders, place switchers, leavers, and the replacement. Leavers are the people who walk out of the community at the time of the sport and as a result, they reduce the overall expenditure of the community. Szymanski (2001) continues to explain that avoiders are the people who would have traveled into the community but did not come because of the sporting activity maybe because they would have been affected.

A good case to analyze this kind of misapplication is the study that was done relating to the Olympics games in1984, the Los Angel Olympic games where the financial analyst argued that $163 million out of the region visitors financial input and expenditure to not occur within Southern California. This did take place during the period in which the Olympics games were being held otherwise this income would have been realized because it was a running trend for the financial income of southern California. These were majorly attributed by two major factors and this include, the widespread media report on the possible congestion that would have been realized in the region and the preparation of the Olympics games also leads to visitation planning and vocation by most of the locals who were not interested in attending the sports.

References

Bhowal, A., & Kshetrimayum, R. (2019). Performance Analysis of B2B Communication for Different Sporting Activities. IEEE Sensors Letters, 3(7), 1-4. doi: 10.1109/lsens.2019.2919443

Crompton, J., & McKay, S. (1994). Measuring the Economic Impact of Festivals and Events: Some Myths, Misapplications and Ethical Dilemmas. Festival Management And Event Tourism, 2(1), 33-43. doi: 10.3727/106527094792335782

Szymanski, S. (2001). Book Review: The Economics of Sports, The Economics of Professional Team Sports. Journal Of Sports Economics, 2(3), 297-299. doi: 10.1177/152700250100200308

Temel, B. (2014). Book Review: The Oxford handbook of sports economics: The economics of sports and The Oxford handbook of sports economics: Economics through sports. Journal Of Sports Economics, 15(6), 650-653. doi: 10.1177/1527002514538152