Argument for and against government financial support for special events

Introduction

Special events cover well-planned cultural, entertainment, sports, political and business events such as Olympic Games, World Cup, the World Expo, Art and Culture Festivals, performances, and charity fundraising. Australia has thousands of festivals every year (Gibson, 2009). Economically speaking, these events may create economic value for the local. Of course, the successful holding of these events are also in need of financial sources. Shortage of funds often leads to failure of the events. Social capital is often limited. From a financial point of view, the Government’s financial support will be an important help to raise funds to successfully host these events. Olympics are the event various countries compete for. The Successful holding the Olympic Games requires huge financial resources. 2008 Beijing Olympics is the most expensive Olympic Games in the history. This paper will first discuss the argument for and against government’s financial support for special events such as 2008 Beijing Olympics. Following that, the paper will make overall evaluation on government’s financial support for special events.

Arguments

Economically speaking, some events such as Olympic Games, World Cup and World Expo, may create economic benefits which is also the purposes of the events, while some events such as Art and Culture Festivals, performances, and charity fundraising may not create economic benefits, but create other benefits such as cultural benefits and environmental benefits. However, the successful holding of these events also needs financial sources. Shortage of funds often leads to failure of the events. The lack of social capital results in turning to the government. Of course, Government’s financial support will be an important help. However, there is a debate on the government’s financial support for special events.

Argument for government’s financial support for special events

Some people think the government should make financial support for special events. They insist that the Government’s financial support can make the event more successful and attract more viewers, which can boost the regional economy. Supporters argue that the government is also beneficiaries of a successful event. Government can gain public praise and achievements from the successful holding of the events. Naturally, the government should pay a financial price for these gains. Moreover, they believe that special events should be treated as earnings tools by the government. Thus, government expenditure is reasonable and necessary (Allen et al, 2000). Supporters argue that the Beijing government should seize the opportunity to profit at the Beijing Olympics. Therefore, the Beijing government should do their best to put financial support to make this event more attractive, thus boosting a variety of industries such as real estate industry and tourism. To some extent, the host city of Beijing Olympic Games also agreed financial support. Otherwise, the Beijing Olympic Games would not be the most expensive event in the history. In 2000, when Beijing submitted the bid documents for the Olympic Games to International Olympic Committee, the infrastructure project cost was estimated 14.3 billion U.S dollars. After a few years, due to soaring commodity prices, construction costs likely exceeded the original projections. Therefore, a total cost invested by China for the Olympic Games is more than 20 billion U.S. dollars (Owen, 2008).

Evaluation on the view of supporters

This view places too much emphasis on economic benefits brought special events. They even think the government should take these special events as a tool for profit. The advantage of this view is that it gives a reasonable economic reason the Government’s financial support for special events. However, this view ignores the following considerations.

First, many special events are not for profit. A survey on the Australian festival shows 74% of the festival is not for the sake of profit. Only 3.3% of the festivals were run seeking profit (Gibson, 2009). The original intention of the Olympic Games is not for financial gain, but is to a carry forward the sports culture (Burton, 2003). In addition, the charity events are not for economic interests, and they are unprofitable.

Second, the expectations may differ materially from results and the government financial support may lead huge financial burden. Admittedly, a lot of special events can bring economic benefits. However, there are exceptions. 1976 Montreal Olympic Games cost 50 billion of which only 5% was from corporate and private investment while as high as 95% was from the investment of government. The Government did not expect the result is a loss of 15 billion U.S. dollars (Burton, 2003). According to Gibson (2009), if the cost is too large, this event would not be a “good balance”, because the monetary benefit will be not enough. The cost of inputs for the Olympic Games in Beijing is huge. Despite the prolonged economic growth, China’s per capita income is still at a lower level, less than 3,000 U.S. dollars. In Beijing’s bid documents, the expected infrastructure cost was close to the expenditure of Beijing municipal government for the whole year of 2006 (Owen, 2008). As1976 Montreal Olympics and 2004 Athens Olympic Games, the same risk of large losses for the Beijing Olympic Games will undoubtedly increase with the increase of financial investment.

Argument against government’s financial support for special events

Some people do not support the Government’s financial support for special events. They think that means of business operations should be more widely used to host these special events including the Olympic Games. Commercial tools can reduce the impact caused by “siphon effect” and the “valley effect” (King, 2003). In addition, they argue that the Government’s financial support for the special event is bound to increase the financial burden. A total cost invested by China for the infrastructures and sports facilities of 2008 Olympic Games is more than 14 billion U.S. dollars. Public money was invested in such a large scale to sports facilities, which will not help to improve people’s livelihood.

Evaluation on the view of objectors

This view palaces too much emphasis on the financial burden of the government, while ignoring the potential economic benefits. A successful special event can bring economic benefits, even if the event is not for profit.

First, the success of the event can bring direct economic benefits. According to Gibson (2009), it is difficult to accurately calculate the economic impact caused by an event. However, in fact, an event will bring economic impact, even if the event is non-profit. The Olympics can promote tourism, construction industry, and lead-related industries (Gibson, 2009). It is an indisputable fact that Olympic Games can promote economic development for the host cities. However, it should be said that the most direct impact is on tourism, construction and service industries. According to Gibson (2009), audience development is worthy of concern. During the Olympics, host city to host athletes, journalists, spectators and tourists from other countries in the world. This is a tremendous demand for the construction industry. At the same time, the Olympic Games will also bring strong tourism needs, because Sporting events like the Olympics attracts attention of people around the world. A large number of spectators, athletes and staff came here to participate in, watch the Olympic Games and the visit the host city not only during but also after the event. Beijing is a historical and cultural city, its connotation is sufficient to attract tourists to visit. Coupled with its experience of hosting the Olympic Games, it will be more attractive.

Second, the event will bring more job opportunities. According to Gibson (2009), it is no doubt that an event can increase employment opportunities, including full-time and part-time jobs. 1988 Seoul Olympics provided 16 million jobs for the services sector, 50,000 jobs for manufacturing industry, and 90,000 jobs for the construction industry (Burton, 2003). According to experts’ statistics and computing base on the investment, Beijing Olympic Games would Generate 745000 job opportunities. This will undoubtedly help solve the unemployment problem to some extent (Owen, 2008). For Beijing in which the employment pressure was still relatively large in, this would undoubtedly help to alleviate some of the employment pressure, to increase people’s income and to stimulate economic growth.

If the lack of adequate funding, these events may fail or can not drive more industries. In other words, only private capital may not be enough to make a successful specially a grand international event like the Olympics, World Expo. Of course, the Government can play its public function to help solve financial problems rather than having to invest.

Overall Evaluation

Both sides have advantages and disadvantages. They analyzed the problems and state reasons from two different emphases. In fact, the government should not put too much financial support for special events. However, the Government can not give up support for special events. First, the Government should pay attention to every special event. Government should mobilize all participants through its public functions. Government should seek private resources, especially non-governmental personnel and private funds from the design, planning, organization, operation, to the human, material and financial resources. Second, Government should strengthen the information services and the use of certain means of appropriate macro-policy adjustment. First, the Government should try to reduce the blindness of the organizers, participants and investors. For example, the government can guide the coordinated development of t consumer he from the hot consumption, guide rational consumption from herd behavior consumption.

In short, the Government should play the public management functions such as service functions and regulation functions to service and regulate specific events rather than simply providing financial support.

Conclusion

Special events cover well-planned cultural, entertainment, sports, political and business events such as Olympic Games, World Cup, the World Expo, Art and Culture Festivals, performances, and charity fundraising. Shortage of funds often leads to failure of the events. There is a debate on the government’s financial support for special events. Supporters think that the government should make financial support for special events and argue that Government’s financial support can make the event more successful and attract more viewers, which can boost the regional economy and that the government is also beneficiaries of a successful event. Objectors think that means of business operations should be more widely used to host these special events and argue that the Government’s financial support for the special event is bound to increase the financial burden. Both sides have advantages and disadvantages. They analyzed the problems and state reasons from two different emphases. In fact, the government should not put too much financial support for special events. However, the Government can not give up support for special events.