Emerging markets play harder to land elite global sporting events

Emerging markets are increasingly looking to host major sporting events such as the Olympics or the FIFA World Cup to help put their economies on the fast track to global competitiveness, Deloitte Touche Tohmatsu says. Such events were once thought only for the developed or big nations, but in recent years the developing world has begun to compete fiercely for a spot at the table, the consultancy said in a report released yesterday.

"Emerging countries and cities are seeking to distinguish themselves in the new economy by hosting major events to put themselves front and centre on the global stage," said Greg Pellegrino, the co-author of the report. "The rigid deadlines, political champions and community support accelerate development and expedite change that normally takes decades." Developing nations hungry for a catalyst for this change have begun to compete so intensely in recent years that the event organising committees have begun to look for ways to shorten the application process to lower costs.

For example, the four candidate cities bidding to host the 2016 Summer Olympics estimated they would budget between US$40 million (Dh146.9m) and $50m each for both the applicant and candidate phase of the selection process. The three non-qualifying applicant cities of Prague, Doha and Baku forecast spending of $6m to $11m for just the applicant phase. The total cost of all the submitted budgets was more than $200m.

"Based on early direction from the bid cities reporting, the total actual expenditures from all bid cities will probably exceed $250m," the report stated. "This is a growing concern for the IOC [International Olympic Committee] as the bid process itself can place financial burdens that leave questionable legacies." And developing countries must often budget more to host the events because they often have to build infrastructure that already exists in developed ones. For example, the 2016 Olympics, which were recently awarded to Rio de Janeiro, included plans for investments that were roughly double those of Chicago, which had hosted major sporting events before and did not need to build as much infrastructure.

"The overall trend is a significant concern for organisations such as the International Olympic Committee and FIFA which have a strong interest in expanding their global presence by holding events in emerging markets, as well as a need to validate what they say about their global brands and values," the report said. However, emerging countries find that to host an event is worth the price. "The positive socio-economic impacts that stem from hosting a major sporting event are not just fringe benefits or happy side effects; they are the main reason for hosting the event in the first place," the report's authors wrote.

Dubai announced last summer that it was preparing a bid to host the 2020 Summer Olympics. [e-mail]