ECONOMIC IMPACT OF SPORT EVENTS: A REASSESSMENT

Governments are spending increasing amounts to attract and host sporting events in the belief that they generate significant additional economic activity and jobs. Current practice is to measure the economic impact of events through the use of multipliers that are derived from Input-Output (I-O) models. Computable General Equilibrium (CGE) techniques are now preferred to I-O models because of their superior ability to reflect resource constraints and feedback effects across the economy. The authors have applied a CGE model of the Australian and New South Wales state economies to examine a selected event, the Qantas Australian (Motor Racing) Grand Prix. The results are compared with projections using an I-O approach. The CGE analysis estimates impacts on gross product that are half of those projected by the I-O analysis for the host state and 20% of the I-O projections for the Australian economy as a whole. The article then discusses the distinction between the impacts and net benefits of events. Finally, the article discusses the institutional framework required for a more rigorous assessment of economic impacts of sport events, making some general observations about event strategies and evaluation internationally.