Common wealth

The Commonwealth Games began in Scotland this week with great fanfare, shortly after the football World Cup came to an end in Brazil. Beyond the opening ceremonies and sporting glamour, the hosting of such events is always subject to economic scrutiny: are they worth the money they cost?

Rio de Janeiro will also host the Olympics and Paralympics in two years time. Rarely, if ever, has one country witnessed two such high profile events in such quick succession. This has not been without controversy, as many Brazilians think money may have been better spent than on stadiums. Not least as these have cost Brazilian builders their lives and suspicions of corrupt payments linger.

We do not need to go to Brazil, though, to think through the economic issues associated with hosting a major sporting event. Following his chairmanship of the Olympics Committee for Yorkshire, Gary Verity thought, according to an interview in Cyclist magazine, ‘what big event would be a game-changer for Yorkshire, in the way that the Olympics were for London?’ Shaving one morning, he disembarked on the Tour de France.

Research by the What Works Centre for Local Economic Growth (WWG) concludes that the economic impact of major sporting events is minimal. So perhaps not so much of a game-changer after all. But numbers have been crunched in the other direction. For example, research by Oxford Economics for UK Music last year found that in 2012 6.5 million tourists attended a festival or gig, generating £2.2 billion in spending. We might presume that sporting tourists have a broadly similar spending propensity and economic impact as music tourists.

Whichever numbers we prefer, they struggle to capture the intangible impact of hosting an event. According to the Financial Times, the Tour inspired Peter Box, Labour leader of Wakefield council, to argue, ‘we need tax-raising powers … independence for Yorkshire’. Box is right that ‘this issue of devolution is not going away’ and I’ve previously noted that the North is rising, while wondering which north exactly.

In other words, the appetite for devolution is building in the North but there are competing visions for this devolution. If the Tour indirectly results in this devolution being Yorkshire shaped, its impact will far exceed anything suggested by the WWG numbers. Moreover, if the Commonwealth Games do tip Scotland into independence, it’s marginal impact will be immeasurable.

In another sense, however, the Grand Départ is less a catalyst to future activity and more the culmination of a spectacular building of grassroots activity. Sport England estimates that 2.1 million people cycle each week – not including commuting. The membership of governing body British Cycling has risen by approaching 400 per cent in the past 7 years. At 93,000, it won’t be long before it has more members than the major political parties.

This growth in cycling participation has bequeathed diverse business models that are the progenitors of a rich culture. Strava is a technology that allows cyclists to measure their times against themselves and others – challenging them to be the best that they can be, while inducing a sense of something bigger than themselves.

Publisher Iain Dale claims that ‘for any small publisher to make it to five years is a minor miracle in today’s publishing environment, especially when you have companies like Amazon apparently about to tell us that we’re not allowed to sell books on our own website at a cheaper price than them’. But Yellow Jersey Press has been churning out highly readable books on cycling since 1998. Rapha isn’t just a manufacturer of cycling kit, often now hipster fashion, but a Soho coffee shop.

I discovered all of this by attending the Rapha Tempest festival in Yorkshire, which coincided with the Grand Départ. Who’d have thought, even a few years ago, that we’d have festivals largely focused on cycling?

As much as the businesses at the festival preceded the Grand Départ, the Tour brought them to new audiences. And while Box’s devolutionary instincts also didn’t begin when the Tour rolled out of Leeds, Yorkshire’s status as a host of a global sporting event has fortified them. The intangible impacts associated with these new audiences and renewed devolution pitches may go well beyond the more tangible impacts that can be picked up in standard multiplier models and the like.

When these intangibles are large and the capital costs, which have driven Brazilian discontent, are low, the economics of hosting a major sporting event are healthier. But by definition, it’s hard to place these intangibles in a cost-benefit spreadsheet, so the debate will no doubt continue to rumble.