again. Cars with advertisements in support of the joint bid toured through Kyiv, UEFA inspectors were hosted by President Yushchenko and last week even an editorial in the Kyiv Post endorsed Ukraine’s bid.
Though a football supporter, I am rather skeptical about whether organizing the European Championship really would benefit Ukraine and the average Ukrainian. Supporters of the event claim organizing the event will boost the economy through several channels. They say, for example, that it will stimulate consumption – indeed, the sales of T-shirts, football tickets, TV sets and especially beer will substantially go up during the event. Of course, to some extent these things happen even if a country does not organize but just participates in the Championship. The Dutch Bank ABN-AMRO in its report ‘soccernomics’ computed for example that Dutch beer consumption was about 10 percent higher in years when the Netherlands qualified for the World Cup compared to years when they did not qualify. Moreover, one can wonder whether one really wants to stimulate these kind of expenditures – I would wholeheartedly support events that would increase expenditures on education, on health, even on flowers – expenditures that are an investment in the future rather than in short run gratification (I have to admit I do not drink alcohol).
A second advantage, one could argue, is that it will put Ukraine on the map of international visitors – Ukraine, Kyiv, Donetsk, Lviv and Dnipropetrovsk would finally become household names throughout Europe. And, as a consequence, streams of visitors would come to visit Ukraine. I cannot deny that the event itself will attract tourists – while the football tourists obviously will spend money on hotels, transport and beer, I cannot but doubt that these are the tourists that, once back home, will talk to their friends about the natural or architectural beauty of Ukraine. Moreover, even now, I hardly remember in which city the World Cup 2006 final was held, and don’t ask me where any of the other games were played. Research during EURO 2000 has shown that people indeed forget fast about the organizing country (let alone the cities). In 2000, 20 percent of the English remembered that Euro 1996 was held in England. Euro 1996 was won by Germany and four year later, 16 percent of the Germans remembered that Euro 1996 was held in England. But less than 10 percent of the French, Italians and Spanish remembered this.
A third argument often used is that it will lead to investment in infrastructure – money will be invested in football stadiums around the country. Sure, but again, is this the kind of infrastructure Ukraine needs? Investments in roads, yes. In schools or hospitals, of course – but in stadiums? Some people have argued that the building of such a stadium will increase the economic growth of the region where the stadium will be built. A summary of the economics literature on the effect of sport stadiums on US regional growth, however, concludes that ‘independent work on the economic impact of stadiums and arenas has uniformly found that there is no statistically significant positive correlation between sports facility construction and economic development’.
And will the hotel industry really improve its services and increase its supply of rooms because of the organization of the European Championship – allow me to think that serious hotel managers do not let a one time event determine their investment strategy.
To the extent that private investors invest in the organization of the World Cup, I would be fine with it – it’s their money so it’s not up to me to tell them what to do with it – if they think it’s worth the money and effort, if they think it is a good investment, who am I to argue? But I think it is unlikely that no tax payer’s money is going to be used – I would be surprised to see that investments in stadiums will be paid entirely by private money or that private investors will pay for the extra security forces that will have to keep the hordes of supporters under control. Then again, since I’m not Ukrainian, perhaps I should even abstain from this argument. But I just discovered that my native Belgium is developing plans to bid for the World Championship 2018, my skepticism is also targeted at my home country’s plans.
I have to admit that recent studies of the economic impact of the European Championship in Belgium and the Netherlands in 2000, in Portugal 2004 and Austria-Switzerland 2008 are, a bit to my surprise, supporting the thesis that the economic benefits outweigh the costs. The study on the EURO 2000 championship is most revealing – interestingly, the largest financial profit was made by the UEFA – about 81 million Euros – but according to the study the Dutch business community and the Dutch public sector also benefited – one major factor of the latter success was the fact that the Dutch government invested relatively little in the event, mainly using existing venues. I haven’t been able to find the official text of the joint Polish-Ukrainian bid, but I hope the Ukrainian (and Belgian) government keep that strategy in mind. Tom Coupe is Program Director, Economics Education and Research Consortium and Academic Director, Kyiv Economics Institute. The views expressed in this article are only the author’s.
