Tourism development relating to mega-sporting events

Another benefit which contributes to the fierce competition between countries bidding for the opportunity to host a mega-sporting event is the belief that hosting a mega-sporting event automatically spurs tourism development for the host country (Malfas et al., 2004). This idea stems from the fact that hosting a mega-sporting event creates global awareness for a host country. According to Saayman (2012), mega-sporting events increase global awareness of the host country, which can ultimately result in the host country becoming an international tourist destination. Although, in order for a host country to gain worldwide awareness, it is important that the mega-sporting event which is being hosted experiences sufficient positive media coverage. Furthermore, positive media coverage (positive news and images) of a country hosting a mega-sporting eventually leads to the host country being perceived as more of a tourist destination than would have been the case if it had not hosted the mega-sporting event (Saayman, 2012). However, the authors Malfas et al. (2004:213) state that

‘[r]esearch ... indicates that extensive media coverage of a mega-sporting event cannot guarantee a different tourist image for the host city or region’.

There are two schools of thought when it comes to the literature on a country’s tourism development as a result of hosting a mega-sporting event. The first school of thought is that

- 32 - mega-sporting events have a positive impact on tourism development for host countries.

Fourie and Santana-Gallego (2010) argue that although there are numerous factors which could affect the tourism growth rate in a specific country, hosting a mega-sporting event is certainly a major factor, based on public perception, which contributes to tourism growth in a host country.

In order to support the above argument, Fourie and Santana-Gallego (2010) conducted a research study to investigate whether the number of tourists arriving in a country hosting a mega-sporting event increased or decreased in the same year of the mega-sporting event.

The authors performed this investigation across different mega-sporting events allowing them to make conclusions about mega-sporting events in general. Fourie and Santana-Gallego concluded that, on average, tourism arrivals for a country hosting a mega-sporting event increased by approximately 8% in the same year in which the mega-sporting event occurred.

However, an important finding worth discussing in the study by Fourie and Santana-Gallego (2010) is the fact that there was a large disparity between the types of mega-sporting events.

Although all the mega-sporting events had a positive impact on tourism development, the larger mega-sporting events (the FIFA World Cup™, the Summer Olympics, the Cricket World Cup™ and the Lions Rugby Tour) had a larger significant impact on tourism development as opposed to the smaller mega-sporting events such as the Rugby World Cup™ and the Winter Olympics. The authors suggest that the main reason for this finding is the fact that the Rugby World Cups and the Winter Olympics which were included in their study were hosted by countries which already had a strong tourist attraction.

The second school of thought which exists in the literature on tourism development as a result of hosting a mega-sporting event is that mega-sporting events have a negative impact on tourism development for host countries. Certain authors (Pyo et al., 1988) argue that countries which host a mega-sporting event experience a negative impact in terms of tourism development as a result of hosting a mega-sporting event. In a study performed in the 20^th century, Pyo et al. (1988) investigated the tourism impact on countries which have previously hosted the Summer Olympics, from 1964 to 1984, and found that these countries experienced negative tourism development, meaning that international tourists who entered the host country during and after the mega-sporting event decreased as compared to the years before the mega-sporting event took place.

- 33 - 2.3.5 Developed versus developing host countries

The supposed benefits which arise from hosting mega-sporting events are suggested to be even more important for developing countries as opposed to developed countries (Black &

Van der Westhuisen, 2004; Owen, 2005). Barclay (2009) argues that the supposed benefits are more important for developing countries because they give them the opportunity to kick-start their development from a developing nation towards a developed nation. Rose and Spiegel (2011) support this by briefly reminding us that the opportunity for a developing country to successfully host a mega-sporting event is a big deal for developing countries as it gives them the opportunity to be placed on the global map as a country with the understanding and the ability to stage important mega-sporting events.

However, economists (Matheson & Baade, 2004a) emphasise that in most cases, developing countries are actually worse off than developed countries when it comes to hosting mega-sporting events because of the higher opportunity costs that are incurred in order to provide state-of-the-art facilities as well as the additional investment needed to improve existing infrastructure. It would seem that developing countries are worse off compared to developed countries because of the additional expenditure they would have to incur compared to a developed country. Regardless of the idea that developing countries are worse off compared to developed countries, Bohlmann and Van Heerden (2005) contended this idea by examining the impact of the pre-event phase expenditure (expenditure before the commencement of the event) attributed to the hosting of the 2010 FIFA World Cup™ on the South African economy. The authors were able to conclude that the pre-event expenditure phase in fact had a positive impact on most macroeconomic variables, including gross domestic product (GDP) and employment.

This leads to the question whether developing countries which host mega-sporting events really experience economic and socio-economic benefits. Barclay (2009) argues that the socio-economic benefit, a decrease in unemployment, for a developing country is only temporary. According to Bohlmann and Van Heerden (2005), the impact of South Africa’s pre-event expenditure as a result of hosting the FIFA World Cup™ had a positive impact on most South African macroeconomic variables (including GDP and employment), but these benefits were short-lived and were not sustainable. On the other hand, the idea that the economic and socio-economic benefits are temporary does not pertain only to developing countries. Miguelez and Carrasquer (1995) report that the 1992 Barcelona Olympic Games led to only several permanent jobs being created, since most of the jobs relating to the 1992 Summer Olympics were temporary. However, in an impact study by Hotchkiss, Moore and

- 34 - Zobay (2003), the authors found a 17 percent increase in employment in the country where an Olympic venue was located in the four years following the 1996 Olympics in Atlanta.

Furthermore, Studebaker (2014) suggests that developing countries should not host mega-sporting events, as these events become too costly for a developing country and ultimately harm their economies. The hosting of the 2014 FIFA World Cup™ cost Brazil approximately

$14 billion, compared to a cost of $1 billion Germany had to fork out in order to host the 2006 FIFA World Cup™. In addition, the 2010 FIFA World Cup™ cost South Africa $5 billion to host the prestigious mega-sporting event, which is approximately double the amount South Korea and Japan spent to host the 2002 FIFA World Cup™. The costs incurred by South Africa and Brazil to host the FIFA World Cup™ tournaments are simply too excessive for a developing country to realistically experience economic benefits. Studebaker (2014) believes that developing countries are not capable of hosting mega-sporting events because, firstly, these countries have less money than developed countries and, secondly, developing countries should rather be spending money on improving social problems which would benefit the poor and initiate the development of developing countries.

However, an economic benefit that a developing country might be pursuing is a trade benefit. Rose and Spiegel (2011) claim that countries which host mega-sporting events experience an increase in trade. The authors found that countries which bid for the Olympics (even if unsuccessful) experienced an increase in trade similar to the increase experienced by the country which actually won the bid to host the mega-sporting event.

Therefore, this begs the question whether developing countries which host mega-sporting events really experience economic benefits and, if so, whether these benefits are long lasting and sustainable. From this research, the findings of whether home-based sponsor companies experience an increase in wealth will not only help answer the research question of this event study but will also add to the literature in terms of the possible economic benefits (wealth effect of sponsor companies) that are experienced or not experienced by developed and developing countries which host mega-sporting events.

2.4 The FIFA World Cup™ soccer tournament

The FIFA World Cup™ soccer tournament is the most prestigious event in soccer. It is an international soccer tournament which is held once every four years in a selected country in order to determine which country has the best soccer team in the world (Arlitt & Jin, 1999).

However, that being said, there has been one instance where the FIFA World Cup™ soccer

- 35 - tournament was jointly hosted by two countries, namely South Korea and Japan, for the 2002 FIFA World Cup™ (www.fifa.com).

The first FIFA World Cup™ soccer tournament was hosted by Uruguay in 1930 and since then the FIFA World Cup™ has occurred every four years, except in 1942 and 1946 as both of these years fell in the period during World War II (www.fifa.com). Thus, there have been 20 FIFA World Cup™ soccer tournaments since the inception of the FIFA World Cup™

soccer tournament, with the last FIFA World Cup™ having taken place in Brazil in 2014.

Interestingly, to date there have only been eight countries (see Table 2.3 below) which have won the FIFA World Cup™. The fact that only eight countries have won the FIFA World Cup™ is an indication that some of these countries have won the FIFA World Cup™ more than once. The number of times each of the eight countries have won the FIFA World Cup™

is also listed in Table 2.3.

TABLE 2.3: List of countries which have won the FIFA World Cup™ soccer tournament

Country Number of times won

Brazil 5

Italy 4

Germany 4

Argentina 2

Uruguay 2

England 1

France 1

Spain 1

The rest of section 2.4 is divided into the following sections. Section 2.4.1 deals with the history around the FIF A World Cup™ soccer tournament. Thereafter, sections 2.4.2 to 2.4.3 deal with the format of the FIFA World Cup™ soccer tournament and the process involved in choosing a country to host a FIFA World Cup™ soccer tournament (bidding/selection process).

2.4.1 Brief history of the FIFA World Cup™ soccer tournament

In May 1928, FIFA’s Executives Committee, who were part of the FIFA Congress, met in Amsterdam and decided that FIFA will stage its own soccer tournament called the FIFA World Cup™ (www.fifa.com). The idea to stage their own tournament was due to the fact that soccer around the world was growing in popularity as well as the fact that soccer, as an

- 36 - official Olympic event, was a great success at the Summer Olympic Games prior to 1930, especially at the Summer Olympic Games in 1920, 1924 and 1928. Kruger and Murray (2003) support this idea by explaining that the FIFA World Cup™ in 1930 was strongly supported around the world as it was a game which brought everyone together regardless of their race, culture or social standing. Furthermore, the authors explain that the first FIFA World Cup™ tournament in 1930 was so popular that it rivalled the popularity of soccer matches at the Summer Olympic Games prior to 1930.

Uruguay, the first country to host the 1930 FIFA World Cup™ soccer tournament, was chosen as the host for two reasons. Firstly, they were considered the best soccer team in the world at the time as they had won gold medals at the previous two Summer Olympic Games in 1924 and 1928 (Dunmore, 2015). Secondly, Uruguay would be celebrating 100 years of an independent constitution in 1930 and thus recognised the FIFA World Cup™

soccer tournament as the perfect opportunity to celebrate and showcase their celebrations to the entire world (Dunmore, 2015). The announcement that Uruguay would be the host of the 1930 FIFA World Cup™ was officially made in 1929 in Barcelona by the FIFA Executive Committee (www.fifa.com).

The 1930 FIFA World Cup™ in Uruguay saw only 13 countries compete in the first FIFA World Cup™ soccer tournament (McDougall, 2012). These counties comprised seven countries from South America, four countries from Europe and two countries from North America (www.fifa.com). Furthermore, only four European countries (Belgium, France, Yugoslavia and Romania) competed in the 1930 FIFA World Cup™ as the other European teams, which were invited by FIFA to participate in the FIFA World Cup™ tournament, simply did not want to make the long trip to Uruguay or could not afford the expensive trip to Uruguay (www.fifa.com).

In addition, between the years 1934 and 1978 (excluding 1938 and 1950), the number of countries which participated in the FIFA World Cups increased to 16 (www.fifa.com).

Thereafter, in 1982, FIFA increased the number of countries which were allowed to participate in a FIFA World Cup™ to 24. This new regulation did not last long as in 1998, FIFA expanded the number of teams which were allowed to represent their country to 32 (Glanville, 2005).

Interestingly, in October 2013, UEFA (United European Football Association) President Michel Platini announced his intentions to possibly increase the number of countries which should participate in the FIFA World Cup™ soccer tournaments to 40. However, this idea did not materialise as only 32 national soccer teams representing their countries competed in the 2014 FIFA World Cup™ in Brazil (www.thetimes.co.uk).

- 37 - 2.4.2 Format of the FIFA World Cup™ tournament

Before a specific country (e.g. South Africa) can qualify for a final FIFA World Cup™ soccer tournament (the actual FIFA World Cup™ soccer tournament), they first need to play against other countries in qualification rounds which are situated on their continent (i.e. Africa). The reason for this is to reduce the number of national soccer teams which will eventually participate in a final FIFA World Cup™ soccer tournament (www.fifa.com). Qualification rounds which essentially thin out the field before a final FIFA World Cup™ tournament also mean that only the best national soccer teams from each continent qualify for a final FIFA World Cup™ soccer tournament.

According to Downing (2014), qualification rounds are held in the six FIFA continental zones, namely Africa, Asia, North and Central America and the Caribbean, South America, Oceania and Europe. The number of places for a country, from each of the six FIFA continental zones, to qualify through to the final tournament is decided by FIFA before the start of qualification rounds (Downing, 2014). Qualification rounds can start as much as three years before a final FIFA World Cup™ soccer tournament and can last more than two years.

Interestingly, host nations automatically qualify for a final FIFA World Cup™ soccer tournament. However, this rule was implemented only from the third FIFA world Cup™ in 1938 (www.fifa.com).

Since 1998, final FIFA World Cup™ soccer tournaments have consisted of 32 teams. There are two stages in a final FIFA World Cup™, the first being the group stage and the second being the knockout stage. These two stages are further discussed in more detail below.

Group stage

Thirty-two different national soccer teams compete within eight groups (Group A to Group H) of four teams within each group (BBC, n.d.). Once the eight groups of four teams are finalised, each group plays a round-robin tournament. This means that each team in a specific group (i.e. Group A) is scheduled to play three games against the other three teams in Group A (Krumer, Megidish & Sela, 2014). An example is provided below:

Suppose Group A consists of the following qualified national soccer teams:

 England

 South Africa

 Argentina

- 38 -

 South Korea

This means that England will be scheduled to play South Africa, Argentina and South Korea, South Africa will be scheduled to play Argentina as well as South Korea and Argentina will be scheduled to play South Korea. Thus, all the teams in Group A will have played each other once and a total of six games will have been played in Group A.

A points system is used during the group stage to rank the four teams within a specific group. Since the 1994 FIFA World Cup™, three points are awarded to teams for a win, one point is awarded for a draw and no points are awarded for a loss (Todd & Gigerenzer, 2012).

The top two teams from each of the eight groups advance to the next stage which is the knockout stage.

Knockout stage

The knockout stage is a lot simpler to understand. After the group stage is complete, 16 teams remain (top two teams from the eight groups). These 16 teams then compete head-to-head in a single elimination format (FIFA, 2013). This means that teams will play each other in a once-off match to decide the winner. Should there be a draw after 90 minutes in any knockout stage game, extra time and penalties will be implemented to decide on a winner (FIFA, 2013). As mentioned, the knockout stage begins with the final 16 teams in which the winner of a specific group (i.e. Group A) plays the runner-up of another specific group (i.e.

Group B). This process continues up to and including the semi-finals (final four teams).

2.4.3 Selecting a host country (bidding/selection process)

The selection process for deciding a country to host a FIFA World Cup™ soccer tournament is not as complex as one might think. A simple nine-step process on how a country can bid for the opportunity to host a FIFA World Cup™ soccer tournament can be found on FIFA’s website (www.fifa.com). This nine-step process, as per the official FIFA website, is listed below:

1. FIFA sends out requests for expressions of interest.

2. Member associations (MAs) express an interest in bidding for a specific event.

3. FIFA sends out bidding information, including the Bidding Manual and supporting documents (Hosting Agreement etc.).

4. FIFA hosts a workshop for interested bidders.

- 39 - 5. MAs return the Bidding Agreement confirming compliance with bid requirements.

6. MAs submit bids in accordance with the Bidding Manual.

7. FIFA evaluates the bid submissions and identifies the selected candidate for approval.

8. FIFA recommends the selected host country.

9. FIFA announces the successful host for the event.

The rest of section 2.4.3. deals with a discussion around some of the nine steps mentioned above. Once the first two steps have been completed, FIFA sends out a “Hosting Agreement” to the MAs of the countries which are interested in hosting a FIFA World Cup™

soccer tournament. In the context of this study as well as in the context of the literature on FIFA World Cup™ host selections, MAs refer to the national football associations of countries which are interested in hosting a FIFA World Cup™ tournament. The “Hosting Agreement” which the MAs receive from FIFA is documentation explaining the process MAs should follow in order to present a strong bid, one which is in compliance with the bid requirements, to FIFA’s Executive Committee.

Step 5 of the bidding/selection process requires MAs to sign the “Hosting Agreement” and return it to FIFA for two reasons. Firstly, it gives FIFA confirmation that MAs have agreed to comply with bid requirements and, secondly, it is the only way FIFA will recognise a bidding country as an official candidacy.

Once the first six steps in the bidding/selection process have been completed, FIFA then sends a group of inspectors to the different bidding countries to establish whether the bidding countries have met certain requirements (FIFA, 2010). These requirements, just to mention a few, would include topic areas such as stadiums, transportation systems, safety

Once the first six steps in the bidding/selection process have been completed, FIFA then sends a group of inspectors to the different bidding countries to establish whether the bidding countries have met certain requirements (FIFA, 2010). These requirements, just to mention a few, would include topic areas such as stadiums, transportation systems, safety