To BRICS, big sporting events attracts investments

Hosting a major sporting event is a good opportunity to attract investments and help the local economy. According to research from the Grant Thornton International Business Report (IBR), 54% of the BRICS’ business leaders believe major sporting events are important in attracting investment to their economy. Brazil, Russia, India and South Africa show big faith in sport’s ability to deliver investment (the exception is China)

Among BRICS, business leaders from Brazil are the most optimistic ones. The country—which is going to host the 2014 FIFA World Cup and 2016 Olympic Games—show the greatest faith in sport’s ability to deliver investment: at least 83% of Brazilian entrepreneurs say these events will attract investments to the country. In Latin America, almost three quarters (74%) of business leaders believe major sporting events are important in attracting investments to their economy.

In India, the results are not so different. According to the study, 63% of the Indian entrepreneurs think mega sporting events attract investments while in Russia the rate is 62%. Business leaders in South Africa—which hosted the FIFA World Cup 2010—are also positive (78%). On the other hand, in China—which hosted the Olympic Games in 2008—only 38% of the business leaders believe major sporting events are a good way to boost investments in Chinese economy.

“Holding a major sporting event gives an emerging economy a global shop window, allowing it to present and market what it has to offer to a massive worldwide audience”, says Stephen Gifford, Chief Economist at Grant Thornton UK. “For more established economies, international sporting competitions are still a great opportunity, but appear to be just one element of a much bigger offensive to attract investment.”

By contrast, fewer businesses in the European Union (only 42%) believe hosting big sporting events can increase investments in their country, while in North America the rate is 44%. According to the study, among G7 countries, just 36% think major sporting events can attract investment.

To Chief Economist at Grant Thornton UK, this difference between emerging markets and developed countries can be easily explained. “It’s also more often the case that developed economies will have the venues, transport and technology infrastructure already in place for any major event. Capital investment to build new infrastructure is therefore much more limited in these economies, compared with the level of investment required in emerging markets such as China and Brazil,” says Gifford.

It’s important to note that although United Kingdom is one of the G7 countries, British businesses leaders are more enthusiastic than their counterparts. According to the study, 61% of them say big sporting events are important for attracting investment. The report says the UK government anticipates that the London Olympics will bring £13bn of economic benefits over the next four years—£6bn in the form of foreign direct investment.

“A big part of winning the race to host big international sporting events is convincing the public and businesses that the benefits will outweigh the obvious costs”, says Gifford. “Our research suggests that developed economies have to work a lot harder than emerging economies to make a convincing case.”


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