The Olympic Games’ Employment Opportunities
The primary objective of this dissertation was to find out the socio-economic benefits and impacts of the London 2012 Olympics for London since development and regeneration began in 2007. As such, this dissertation aimed to identify the associated advantages and any negative impact of being the host of an Olympiad, but at this stage of the research made no forecast about the scale of impact. As a result while the dissertation progresses there will be arguments, analysis and evaluations to establish whether there is justifiable cause for the UK government and LOCOG spending billions on a one off event, all in the name of aiding social welfare and economic advancement.
This dissertation initially provided an overview of both earlier and continuing research to aid the discussion around aspects of legacy and economic growth since 2005 consistent with the argument of Veal and Frawley (2009). Drawing on the lessons from past Games, this dissertation will also focus on the three phase economic benefits of the London 2012 Olympics. Establishing the impact of the Olympics on residents and countrymen alike was another aim in the dissertation. For this dissertation this inquiry was carried out in form of a survey. The results revealed a great deal, firstly it showed that the younger generation found inspiration from the games with 71% of respondents stating they would take part in some form of sport and exercise. Additionally the results also showed most of the respondents were unsure whether the games were value for money this resonates with the thoughts of Dennis (2012). The most astounding revelation was that 66% of the respondents believed the games were inspirational, captivating and moreover worth all the cost. The dissertation brought to light that the London 2012 games are more socially and economically beneficial at the pre-game and games year but these benefits and impacts are not proportionally evident elsewhere in the UK. The post-game phase analysis showed that there was great uncertainty in regard to economic growth and legacy of Olympics, with Greece 2004 an example of when things go wrong. Despite this, there is still room for further research on the social impacts of Olympic Games.
CHAPTER 1: INTRODUCTION
“The Olympic Games generates lots of enthusiasm and great expectations. More than simply a sporting event, hosting ‘the greatest show on earth’ is seen by some as a ‘once in a lifetime opportunity’ to provide new infrastructure and deliver benefits to local residents and communities.” (Vigour et al, 2004)
From the time when Pierre de Coubertin, founded the modern Olympics in the late 19th century, cities and countries have sought to redefine themselves by staging the Olympic Games. To the host country, the games offers global exposure and world’s interest in its cultural wealth, creating job opportunities during and after the games, attracting revenues from tourism, and inspiration for the nation. Included in this search for Olympic glory was the Great Britain. After three consecutive failed bids, the Olympics were finally awarded to London on the 5th of July 2005. The optimism and passion towards the London 2012 project from the bid team became infectious spreading across a nation that was very much inspired and expectant. Despite this, once London’s name was pulled out the proverbial hat, critics like Gross (2012) and Dennis (2012) led the great Olympic inquisition in the years after the bid was won. Gross (2012) describing the bidding process of London 2012 as a gruelling and often farcical campaign, that accompanied itself with a £11.5bn tab. He said “the true extent of funding has been hidden, the process is hardly transparent?”
However earlier in 2005 it became apparent that the funding would be from both the public and private sectors. According to the Olympic Delivery Authority (ODA) (2005) a £2bn fund coming from London Olympic Committee Organising the Games (LOCOG) was accrued from the private sector through a combination of sponsorship, merchandising, ticketing and broadcast rights. The ODA (2005) budget which catered regeneration and infrastructure projects was from the public sector, the funding was the breakdown was as follows;
63.3% from Central Government
23.3% from National Lottery
13.4% from the Mayor of London and the London Development Agency
Additional criticism emanated from the France 2012 bidding team, they indicated that London’s bid was based on “promises not linked to reality” (Moulds, 2009) as they believed the budget was cut too low. Monroe (2007) was in agreement after researching Olympic budgets of the past four Olympics, she too said the budget was ambitious to say the least. An aura of vindication befell the critics as it came to light that the London 2012 Olympics budget was not going to plan. The Olympic budget soared from £2.4bn to £9.3bn in 2008, leaving only £475m in the contingency fund (BBC, 2012). However, LOCOG and ODA stated this was not frivolous spending but rather a means to an end. The Games were targeted as a stimulus for social development and economic growth alongside being a ‘step-change’ in the transformation of the East End of London. Per se bidding for the Olympics is a calculated risk that can either turn to gold or leave the hosts in the starting blocks.
More related to the scope of my study, is the socio-economic contribution of an Olympics and the post games legacy. Ascertaining this will be done by exploring the economical, geographical and social implications for London as the host of the 2012 Olympics. The reason for the focus on London is in line with the Barton (2004) report that highlighted that for large economies such as the United States and United Kingdom, the economic impact of hosting major sporting events appears to be more significant primarily at the local or regional level, fewer impacts seen in cities beyond the Olympic Hubs. What is also noteworthy is that this dissertation not only seeks to establish the socio-economic impacts of hosting the Olympics, but also to determine how sustainable these benefits are in the future through a three phase economic assessment. In other words how the games can maximise the so called “legacy”. The challenge however lies in how to measure and quantify future rewards of an event that has just happened. Magnay (2009) perhaps offers an insightful elucidation of this paradigm. Magnay (2009) states that in their simplest forms, socio-economic impacts are either tangible or intangible. In essence this means that the pre-games and games-year phases show evident tangible benefits such as physical infrastructure, the tourism, employment and consumer spending. On the other side lie the intangible benefits or the ‘legacy’, evident in the life after Olympics. In the post games there is greater uncertainty in particular for London 2012 as a consequence of the current economic downturn.
One of the challenges encountered in this research is the scarcity of studies that look at a link between socio-economic agendas and the legacy. In principle a theoretical gap with which my dissertation aims to tackle, following the works of Blake (2005), Barton (2004), Gratton and Preuss (2008). This dissertation will also contribute in no small way towards complementing literary and traditional ideology on the legacy, socio-economic impacts of Olympic Games. This is in hope that this dissertation could serve as groundwork for further research in the study of hosting global sporting events. Nonetheless, hosting the Olympics is certainly a pricey business; as a result of this it gives a basis to create an opportunity to conduct such research (Blake, 2005). Additionally away from the academic exposure and learning experiences derived from the research, this dissertation will be providing an informed insight into the chosen area of study.
CHAPTER 2: AIMS AND OBJECTIVES
Magnay (2010) stated the LOCOG chief executive has previously indicated, ‘the games are a principal asset to the country’. As a result of this statement there is a need to establish if the games are truly asset or a burden. This can be done by showing whether hosting the Olympics amounts to a greater socio – economic benefit in comparison to the incurred cost from inception through to the eventual clear up. Additionally the dissertations will investigate the factors which justify the increase of the Olympic budget during a significant and sustained economic downturn. Since the International Olympic Committee (IOC) is the lead committee for both summer and winter Olympics, to arrive at a suitable conclusion the aim is to use statistics and other information relating to both these variations of Olympiad as relevant sources of adding to the ensuing argument. This is because the bidding, planning, organisation and funding protocols all follow the same procedures, as a result comparisons can be done in regard to procedure and protocol. However what is pertinent to point out is that any comparisons between London and winter Olympics will be limited to social impacts and cost overruns.
OBJECTIVES
This dissertation is an opportunity to present an unbiased view on the London Olympics and the possible impacts, while making an informed judgement on it according to the evidence presented. This dissertation will raise important economic, political and social issues surrounding the Olympics and possibly give further insight to the following areas.
To identify the nature, characteristics and features of sporting mega-events, with specific reference to the London 2012 Olympic Games.
To critically review the literature on cost, impacts and benefits of hosting the Olympics, eventually leading to an appropriate conclusion that summarises the extensiveness and complexity of the concepts surrounding socio-economic impact of the London 2012 Olympics.
To evaluate the net benefit of “the Olympic Spectacle” to London from the perspective of tourism, employment and redevelopment view point.
To identify the risk alongside the challenges and implications of hosting the Olympics by looking at previous host cities such as Greece 2004, Sydney 2000 to name a few.
To ascertain the thoughts of Londoners and the wider UK population on issues regarding the economic, social, health and environmental benefits of the Games particularly through regeneration and sustainable development in London.
CHAPTER 3: LITERATURE REVIEW
Expenditure on facility and infrastructure preparation, as well as revenues from visitor spending, event receipts and media exposure, forms the baseline of much mega event analysis.” (Hiller, H 2000).
Thõ socio-economic evaluation of the Þlympicѕ is of importance to the hþѕt city, itѕ rõgiþn ðnd to a lesser extent cþuntry. This by is far is the primary driver for assertiing thõ vðluõ þr wþrth þf hþѕting thõ Þlympic Gðmõѕ (Carlin, 2007). The depth of the possible factors affecting London as a result of the Olympics are well beyond the scope of this dissertation, and therefore briefly looking at these vast factors will not evoke the thoughts and arguments desired to deliver a good literal critique. As a result my dissertation will be looking to expand on the academic and research issues in relation to the benefits of hosting the Olympics. It is fair to say that there are complexities surrounding this subject matter, nonetheless the investigations and research conducted during the dissertation aided by published material and resources will help to develop the argument about socio-economic benefits of Olympics.
Over the years there has been a flurry of academic literature including the likes of Bellamy (1995) and Collins (1997), their research assessed the economic impact of global sporting events to the host city and in some instances the wider economic impact on the nation. However much of the literature on major events is concerned with the economic impacts, McLeod (1999) also explored broader issues including sports participation, social impact, and urban regeneration. On the face of it these studies championed the hosting games as a very strong catalyst of economic growth and society improvement. In other words this research was very ‘pro Olympics’. Other proponents further augmented the short-term and long-term benefits by stating the Olympics will birth benefits such as construction of venues, facilities and improvement of infrastructure the trickledown effect of these is increased tourism, as well as improved public welfare and job creation (French and Disher, 1997; Rose and Spiegel 2009). Moreover Spiegel (2009) states that the ‘Olympics Economic Effect’ results in an injection to economic growth thanks to the foreign investment and Olympic tourists. This results in higher tax revenues for the government.
In contrast Hiller (1998) argues against this by stating there is a lack of comprehensive analysis; the focus of these previous studies was on positive benefits, while negative impacts are largely hidden. Other scholars (Noll and Zimblist 1997, Rosentraub 1999, Baade 1996), unearthed some disparities with this previous research and they found that the tangible economic impacts of Olympics were being overstated and often the measurable economic impact of Olympics is very small in relation to the wider economy but was however more evident in the host city or region (Barton, 2004). As stated before the vast majority of publications that focused on the merits of mega events were derived from a variety of empirically and statistical models that looked at both pre-event and post-event benefits. This dissertation does not intend to employ such techniques regarding the subject of Olympics; rather, focusing on a qualitative approach to these stated benefits.
More often than not the Olympic Authorities make their bid consideration based on the economic and social advantages of these said events. However before delving into the depth of the research, it is important to establish what is meant by socio-economic impact. Cullum (2007) described socio-economic impact as a way to determine how development projects, i.e. Olympics, might affect the social and economic conditions of people and communities. In essence the trajectory of such impacts will be inclined towards regional economic boost, social regeneration, and lastly bringing communities together. Even so, Carlin (2007) reiterates that taking on events such as Olympics and World Cups is a predetermined hazard. In a way it is possible to argue that the British Olympic Association (BOA) was caught up in the promise of bountiful riches, global exposure and getting one over the French when they pursued this venture.
This over exuberant was reflected in the continued revision of the Olympic budget. London expected its 2012 Games to cost under £2bn at the bid stage but the budget rose to £9.4bn in 2007 and in 2012 it was expected to exceed £11bn (Carlin, 2007; Simon, 2006; Dennis, 2012). So is London 2012 likely to suffer as a consequence of underestimated costs and overestimated benefits? In order to tell whether the London 2012 Olympic budget and investment are justifiable, it is necessary to examine some key benefits. These key issues will encompass areas including economic, social and health benefits that the Olympics bring to a host city and country.
3.1. SCOPE OF STUDY
Before 1976, there were not many studies of the economic benefits of hosting the Olympic Games (Field, 2007). Since then, PriceWaterhouse Coopers (PWC) alongside other researchers offered a glimpse into these Olympic economics. In the summer Olympic Games held from 1984 to 2008, the findings showed varying degrees of measurable economic success. Some of this was as a result of estimates regarding the economic and demographic impacts of hosting the Olympics (Malfas et al, 2004). The challenge however was the difficulty in quantifying any economic benefits; even so studies (Blake, 2005; Malfas et al 2004; Szymanski, 2010) show that in terms of the economic impact of hosting an Olympics, the definition of Olympic Economy has been flippantly used as a result distorted its true meaning. Through using a three-dimensional and three phase impact study, Matos (2006) alongside Wei (2006), found that these purported benefits were combination of the pre-game phase, the games-year and subsequently the post-games phase. There are short-term benefits occurring at the pre-games and games year phases. The post-game phase is characterised by the anticipation of long-term benefits that are less tangible, those come about owing to the promotion of the London as a tourist destination and a potential location for investment. Gornostaeva (2011) added to this by stating Olympics are not merely a glorified sports day; a means of image building or competition between cities but a very useful instrument to aid socio-economic advancement.
Nevertheless, Dennis (2012) once again argued against this by affirming that the research on the economic benefits at times focuses only on the financial performance of games. As a matter of fact they present narrow focus on the economic performance of the Games (Malfas et al, 2004); it eventually forgoes examination of vital links between Olympics economics and wider factors affecting communities, business and stakeholders within the host cites. Economics of London 2012 by Szymanski (2010) is one study that offers a broader examination of the varying economic impacts. Szymanski (2010) stated employment, tourism, consumer spending and GDP movement are the main barometers of success in regard Olympic Games economics this will be explored in the dissertation accordingly.
3.2. ECONOMICS OF LONDON 2012 OLYMPICS
Employment
“The London 2012 Olympics will be the biggest civil engineering project in Europe, create more than 30,000 new jobs a year, and pump an extra £20bn in the UK economy, to cement London reputation as one of the world’s main financial centres”
Ahmar (2008) indicated that employment is probably the best definition of what is considered one of the main centrepieces of economic indicators. He expand further by stating the employment impact depends on the characteristics of the host economy, the size of the labour force, and the state of the labour market which later determines the sourcing of labour. This is because it mirrors trends in both the economic and social dimension. On one hand a higher employment rate implies a higher disposable income rate, optimised utilisation of labour force and boost in consumer spending. On the other hand the social aspects of employment are reflected through health and life expectancy for instance. But Wagner (2007) questioned what this meant for London as a whole. ODA (2009) estimated that it is likely to spend around £2bn in temporary employment of staff, security, and they also stated that 45% of the labour force will be recruited from the Inner, Outer and Greater parts of London. The economic impact of previous Olympic Games and the employment opportunities on the host cities are shown in table 1.1.
Table 1.1: Economic impact of Olympic Games and Employment opportunities on the host cities.
£ (million) Economic Impac
Cumulative Jobs Created**
Barcelona (1992)
190
196,640
Atlanta (1996)
30
77,026
Sydney (2000)
2,884
90,000
Athens (2004)
3,589
100,400
Beijing (2008)
3,500
180,000
London (2012
2,000
132,000
TABLE 1.1 SOURCE: ODA (2008) *CUMULATIVE JOB FORECAST
Barber (2008) and Brunet (2008) observed the employment trend from 2006 till 2012; they found unemployment in East London had dropped by a margin of 41% (Barber, 2008). The ODA had previously forecasted at least 55% of the useable labour resource will be from London by the time the games arrived in 2012. But there were contradictory sentiments emanating from the local councils. According to the Hackney Citizen (2012), ODA promised jobs were to be created for the many local people in London but this would seem not to be the case. It was found there was a disproportionate distribution of opportunities among the unskilled, semi-skilled and specialist jobs. This is because the majority of jobs available suited specialised workers, because building stadia and arenas requires workmen who specialise in building and engineering services as opposed to the local carpenters and builders.
Gornostaeva (2008) also shed light on the possibility of the discrepancies of these figure; he stated that ODA employment estimates included volunteers because these opportunities were identified as volunteering work targeted to get the unemployed people to do low skilled jobs at the Olympics. With this sentiment he argued that volunteers should not be included in the employment figures because volunteers were trained for specific low skilled jobs. Moreover, there was little or no evidence showing that these volunteer skills were transferable to the post-Games economy. Despite these reservations, 2012 continues to reflect a significant drop in the rate of unemployment across the capital, with more evident employment rises occurring in the host boroughs (Barber, 2012). Table 1.2 shows a summary of expected impacts on employment. The employment estimates use similar assumptions as those used in the macroeconomic impact assessment by Blake, (2005) and PWC, (2005)
Table 1.2: Summary of expected impacts on employment from years 2005 to 2016
Spatial Level
*Pre-Event
(2005-2011)
During Event
(2012)
Post Events
(2013-2016)
Overall
(2005-2016)
UK
2,955
3,261
1,948
8,164
London
25,824
3,724
9,327
38,875
North East London
7,344
311
311
7,966
TABLE 1.2 SOURCES: BLAKE, 2005; PWC, 2005. EMPLOYMENT FIGURES
Of course it can be argued the games are achieving one of their primary objectives but research pertaining to Olympic induced employment advises caution (Baade and Matheson, 2002; Ahmar 2008). Baade and Matheson (2002) revealed that prior to the event and leading into the Games year employment also shows a boom. Madelano (2012) expanded on this by stating that there is a disproportionate rise in employment coming from London, leading some to believe that we are floating inside a rose-tinted Olympic bubble. With this in mind, does London have the resources and strategy to sustain post Olympics employment?
Beth (2012) paints an ominous picture with the headline ‘Olympic Jobs Legacy Misses Target’, the government had two key schemes set up in 2010 intended to get unemployed people into jobs during and after the Games. However these initiatives have been dogged by delays and cuts in funding. This contradicts Boris Johnson’s pre-election promise to provide jobs. Irrespective of this, some of the researchers (Gornostaeva, 2008 and Beth 2012) have shown that the benefits employment as a by-product of Olympics are over-estimated but this does not mean that there are none. It would therefore be of interest to gauge whether the locals believe that the post-Olympic job promise has been fulfilled.
Tourism
The economic benefits of the Olympic Games as direct result tourism are widely researched. They are routinely listed among the principal “legacy effects” of hosting the games, along with new age sporting facilities, cultural and social investment and improved infrastructure (ETOA, 2008). The burst of tourist interest in relation to the 2012 Games was the USP for the ODA and LOCOG because the London economy and society are said to be the key beneficiaries. Early estimates in 2008 predicted that the “visitor economy” would be at least £2bn. PWC (2008) claimed the Olympics would attract induced visitor numbers thanks to “enhanced media exposure”. They outlined three stages of the tourism effect.
Preâ€ÂOlympic tourism – This is typically described as taster tourism effect. This is because the visitors at this point in time are related directly with the planning and preparation for the games.
Eventâ€Âtime tourism – Also as the games year tourism. This stage is characterised by two types of tourist. The first are leisure tourist- they travel to see the Olympic villages and park. Whereas the sport tourists travel to actually see the events and make the biggest proportion of foreign ticket purchasers.
Postâ€ÂOlympic tourism – PWC (2008) state this type of tourism is characterised by two important sources: Gamesâ€Âprompted private leisure tourism and soâ€Âcalled MICE (meetings, incentives, conventions, events) tourism.
Even if we did assume that tourism could be enhanced by the Olympics, what sort of evaluation timescale is appropriate and what sort of empirical information is meaningful? (Dimeo, 2009)
The London 2012 Olympics will no doubt attract foreign visitors in their thousands; the longstanding argument is that their increased spending brings a boost to the local economy. Shaun Woodward, the then tourism minister, in 2006 said “the tourism potential is enormous”. Grohmann (2010) of Oxford Economics forecasted the arrival of 379,156 foreigners in the period pertaining to the Olympic Games. Others have felt that up to 800,000 extra visitors (Visit London and Visit Britain 2010) would be drawn to the capital because of the Games. It is important to note that visitors create the single most important economic benefit to Olympic host cities. The only issue surrounding tourism data is that unlike investments for infrastructure, tourism expenditure is not recorded or controlled centrally. Nonetheless Wallace (2010) produced the table 1.3 that showed the three phase impacts of Olympic tourism.
Table 1.3: Impact of London 2012 Olympic Games on Tourism
Pre-Games
Games Year
Post Games
Year
Year
2008
2009
2010
2011
*2012
**2013
**2014
Visitor Number (million)
14.5
14.9
15.2
15.6
16.2
15.4
15.6
Total Spent (£ billion)
1.3
1.4
1.5
1.6
2.0
1.7
1.4
Avg Spent
1.5
2.0
1.6
Growth %
–
2.9
1.8
2.7
3.7
-4.9
1.3
Avg Growth Rate per Annum %
2.5
3.7
2.6
TABLE 1.3 SOURCE: WALLACE (2010) *FORECASTED IN 2010 **FORECASTED 2011
The table 1.3 revealed a trend similar to that of Athens 2004 and Beijing 2008 Olympics. The trend was characterised by an increase in visitor numbers 4 years prior to the Olympics because of the pre-games events held most notable in 2010 and 2011 with an eventual decline after 2012. Wallace (2010) suggested that because London is a central tourist hub, it would generate just over £10bn in tourism revenue in those three aforementioned games phases. Steward (2008) adds to this by saying that Olympic tourism is a cash cow because not only does tourism bring in revenue but it puts great emphasis on the social and cultural benefits that arise from hosting games. Steward (2008) also adds London is unlikely to cause tourist displacement, because without the Olympics, it is still an attraction in its own merit.
ETOA (2008) bring another viewpoint in regard to argument on the benefits of Olympic tourism. ETOA (2008) found that hosting the Games might actually have a negative impact on tourism to the host city. They state that there has been difficulty predicting the number of foreign visitors in some earlier studies such as Papanikos, 1999 and Dwyer et al 2003. The scarcity of empirical research limited the extent to which Olympic tourism impacts were examined, as a result most of the analysis was conducted through case study discussions. Weed (2007) found it difficult to provide information even on the basic question of whether the host city experienced a longer term boost to its tourist economy. The trickledown effect of this gap in literature is that the more challenging issues, like the negative impact on other tourist destination in the same country, are not addressed (Dimeo , 2009). In spite of these concerns, supporters for sport-related tourism uphold the conviction that holding the Olympics can bring widespread tourism associated upshots. However, this debate is not just about the host city, it is about the Olympics as the linchpin in a global tourism marketplace (Dimeo, 2009).
ETOA (2008) supports this by adding Olympic tourists are unlike regular tourists, they are not interested in tourism, and they are interested in sport. These said tourists spend less on non-Olympic recreation activities; the trickledown impact of this will significantly affect government revenues as these negated activities include specific taxes on alcohol and gambling (Blake, 2005). So their spending habits are very unpredictable and difficult to forecast. As such this unpredictability has been quite evident with London 2012 tourism market. As recently as July 2012, the government revealed that visitor numbers were not meeting the expected targets. This therefore means the likes of Wallace (2010) and Steward (2008) were off the mark. In comparison to the last two Olympics, the London Olympics brought less tourist revenue to recession-hit Britain which was a sharp contrast to the expectation set out by ODA. The reason behind London’s apparent tourist short fall is a result of London effectively closing for normal business. For that reason both tourists and the residents are scared off immediately before and during the events because of overcrowding, transport disruption amongst other things. This absence in the market then creates its own negative effect across the region. In line with sentiments Dimeo (2009) and Wnorowski (2011) , although Olympic tourism has it benefits, post 2003 studies found that growth in Olympic tourism dropped in games year and most significant drop was immediately after hosting the Olympics. The disparity between government expectation and reality leaves a quandary for future Olympic tourism studies.
Conceivably a benchmarking criterion is needed to ascertain how to weigh up tourism input benefits. These benchmarks could be offset against the cost of construction facilities, how these facilities can be transformed for community use after the event and the general disruption to the host city. When it comes down to it many of the claims about Olympic tourism impacts are based primarily on the increased tourism experienced in Sydney 2000. Blowe (2005) adds to this by saying what the proponents of these Olympics fail to consider is that London is among some of the major Central Business District (CBD) in the world, however it also houses a rather inadequate transport system. Therefore rather than spending vast sums on this one event, improving the Tube and rail network would provide a bigger boost for the city and the country directly influencing tourism.
Olympics and the host city economy
As far as the definition of Olympic Economy is concerned, there have been several opinions by scholars. Most notably Carlsen (2003) explained Olympic Economy is the direct and indirect revenues that come about as a result of hosting the Olympic Games. Alternatively Chalip (2005) said it was a focused Economy, which promptly boosted the economy of host cities by putting economic resources together. To put it simply all the economic and social activities directly or indirectly influenced by the Olympic Games were considered as Olympic Economy. However least we forget not all industries will benefit from the Olympic Games. Manufacturing, tourism, communication, sporting, investment, real property and consumer consumption are the industries that experience the best of the economic impact of Olympics. A ripple effect from these industries to the economic process is characterised by infrastructure investments that result in enhancements in overall production conditions for domestic and foreign enterprises, creating attractive investment opportunities eventually providing an economic stimuli.
To see the true extent of hosting the Olympics we have to look at host cities like Barcelona and Sydney. The two were successful using the Olympics to make a good impact on their local economies (Wei, 2006). This was owing to completion of local regeneration projects, the attraction it had on investors and the transformation of infrastructure associated with Olympics. Additionally Sydney 2000 accomplished record price ticket sales and which subsequently result in Olympic legacy we see today. In light of this if the London 2012 Olympics can mirror the success of these two previous hosts, they can be affirmed as an economic success. MacRury (2009) stated that for London, there would be vital localised economic impacts because of the location of the main Olympic site in Lea valley; this was complimented by improvement within the key transport links to the Games.
Moreover, the economic importance of the games would be seen in the larger boroughs of Newham, Tower Hamlets and Hackney as compared to the wider London economy. As mentioned before, the influence of holding the Olympic Games on economy can be discussed through three phases: Pre-Games (2007-2011), Games-Year (2012) and Post-Games (2013-2016). For London, 2012, the first two phases are considered as the phases of pushing consumer consumption and localised economies; the majority of the boost comes from investments in Olympic facilities and construction. Post-Games, is a period after holding the Olympic Games, also known as the uncertain phase. It is distinguished by promoting the host city and redevelopment of venues and parks for reuse.
3.3. THREE-PHASE IMPACTS – THE MACROECOMIC ANALYSIS
Table 1.4 below shows Gross Domestic Product (GDP) movement analysis conducted by PWC (2005) in partnership with Nottingham University, it compares GPD between London and the overall UK economy.
Table 1.4: Expected Macroeconomic impact (change in GDP, £ million)
Spatial Level
Pre-Event
(2005-2011)
During Event
(2012)
Post Events
(2013-2016)
Overall
(2005-2016)
UK
248
1,067
622
1,936
London
3,362
925
1,613
5,900
North East London
464
31
31
525
TABLE 1.4 SOURCES: BLAKE, 2005; PWC, 2005.
The sensitivity analysis shown in table 1.5 assesses the impact the varying assumptions on the expected economic impact. In essence there is an 84.4% chance that the Olympics will have a positive impact on UK GDP over the period 2005-2016, in comparison to a 95.3% positive impact for London in the same period if there was a 10% decrease in the revenue and other economic boosters.
Table 1.5: Sensitivity analysis of the impact of the varying assumptions on the expected economic impact
UK
London
£
10%
Change%
£
10%
Change %
2005-2011
248
-204
75.9
3,362
-2,377
77.3
2012
1,067
513
99.3
925
665
10010
2013-2016
622
-875
70.3
1,613
-1,169
77.1
2005-2016
1,936
-517
84.4
5,900
1,386
95.3
TABLE 1.5 SOURCES: BLAKE, 2005; PWC, 2005.
Table 1.6: London Growth Percentages
Average Growth Rate %
London (city)
Olympic Boroughs
2007-2011
2012
2013-2015
2007-2011
2012
2013-2015
Economy
-0.1
3.2
3.5
-1.7
3.9
2.4
Investment
1.9
2.9
3.5
3.1
1.9
2.7
Revenue
1.4
3.7
2.6
1.9
2.7
-0.3
Consumption
-0.6
1.6
2.0
-1.1
3.1
-0.5
TABLES 1.6 SOURCES: LONDON ECONOMIC (2010, 2012); CSN, EXPERIAN (2009, 2011, AND 2012);OECD (2010, 2012)
Table 1.6 shows the GDP growth comparison between London and the Olympic Boroughs, there is a suggestion that the economic indicators vary significantly at each interval in the Olympics process. For instance more investment growth was reported in the host boroughs prior to Olympics, it was significantly above the long run average as a result of money being pumped in by both Olympic investors and the government. The reason for London city showing lower than expected growth prior to Olympics is in direct correlation with the global economic crash that began late 2007. Consequently between that period and 2009 both London City and the Olympic boroughs experienced negative growth. When 2013-2014 is highlighted, London city begins to operate at its long run trend whereas the previous surge growth for the Olympic borough slows, it however does not slump. This because in three years after Olympics, the Olympic catchment areas will succumb to a transformation where the venues and any related infrastructure deconstructed and rebuilt for community and alternative use. This period in time will be identified by a boost in economic performance on account of outsized increases in consumption, private and government investment, and job creation once more.
On the other hand ticket sales play a key role in revenue growth, London 2012 has benefited from getting the largest ticket allocation since 2000 as shown in table 1.7.
Table 1.7: Ticket sales of the Olympics Games
GAMES
TICKETS SOLD (MILLIONS)
% CAPACITY
REVENUE TO OCOG (£MILLION)
2000 Sydney
6.7
88
351
2004 Athens
3.8
72
145
2008 Beijing
6.5
96
117
2012 London
8.1
93
382
TABLE 1.7 SOURCES: IOC, 2010 MARKETING FACT FILE, P.39; IOC, 2012 MARKETING FACT FILE, P. 52.
3.4. EVALUATING AND CRITIQING ECONOMIC IMPACTS
Carlsen (2006) indicated that the Sydney 2000 Olympic Games were praised as the best Olympic Games; this was sharply contrasted by the Athens 2004 games, they did not inspire the expected economic growth owing to its deficient promotion and a huge quantity of expenditures. But then again a study by PWC of summer Olympic Games showed varying degrees of measurable economic success. The majority of hosts showed some positive economic growth but the amount of GDP growth was considerably uneven depending on the global standing of the host nation.
However strong and thorough the methodologies used are, the studies about these economic benefits have been plenty of criticized for over-estimating the economic and social advantages that the Games would generate for the host city. According to Brown and Massey (2001), hosting the Olympic Games doesn’t invariably bring financial rewards. The 1972 Munich Olympics and 1976 Montreal Olympics created losses of £178m and £692m respectively. Additionally there are questions about the potential economic contribution the Games make for London, bearing in mind that London is an already a global economic centre. In addition, the bidding cities like London are seemingly motivated by their own explicit gains as opposed to the nationwide economy. What is important to note is a hosting OCOG could have a surplus in relation to the funds invested; all the while the host city itself might go on to experience a deficit from the Games.
Regen (2008) expands on this point by suggesting that London is unlikely to profit to a similar extent as previous hosts cities but won’t be burdened by debt if the event is unsuccessful. This is because the London bid was largely underwritten by the UK Government. What is more, if the London Olympics are to add economic boost to the underprivileged Olympic boroughs then after the games the infrastructure developments should not only facilitate post event usage (Berman ,2010), but also encourage long term private investment in East London. However, it is crucial to remember that the effect of Olympics may not always be positive, because at times the games can diminish the localised internal investment which would lead to reduced long term employment opportunities. Monroe (2010) concluded that the relation between the host city economy and the long term social welfare of residents cannot be separated because they function as a symbiotic entity, one relying on the other.
3.5. SOCIAL IMPACT OF OLYMPICS
Whether direct or indirect, noteworthy or immaterial the blanket social impacts of Olympics are ever present in the host city and in some cases like Sydney 2000 spread across the nation (Videmo, 2005). Globalscan (2010) describe the social influence of Olympics as akin to a social engine that promotes development, change and camaraderie. The games also add their worth in cities where there is high social and economic depravity. Books and articles detailing the negative social effects dominate the literature (Brunet, 2002). Brunet (2002) states, very few of the expected impacts or benefits are measured or monitored in a reliable means. There is very little hard data within the scope of this research for the quantification of information stating whether or not the expected social effects occurred.
As a matter of fact the ODA (2002) stated that the Olympics would rejuvenate this run-down the East London boroughs as this global event was a catalyst for tourism and new public services but at no point did they move to state or quantify the extent of these benefits. Nonetheless, East London has a specific set of needs that could in part be met by the outcomes from the 2012 Olympic Games, through economic and sustainable development and liveability, engagement in employment, transforming its image, tourism and enterprise. This idea was echoed by Ken Livingstone (2001) he said “I am confident that the London 2012 games will enhance London’s international prestige and provide regeneration prospects to the Olympic Boroughs.” Exploring these said impact would allow for a better understanding of how studies have quantified or established the causal factors of the games and the social welfare. This section of the social impact investigation considers the potential social impacts of London hosting the 2012 Olympics. It examines the impacts on three accounts:
people, skills and employment;
sporting and cultural legacy
socio-economic, physical, mental and well-being health.
Housing and Jobs
The organisation for economic co-operation and development (OECD, 2008) a partner to the LOCOG stated that their main agenda in regard to the social dynamics of London 2012 was to develop a strategy that catered to the wider social, environmental and economic regeneration priorities. For instance, the locals would benefit from education and skills pathways alongside mixed provision housing. However, government budgetary cuts and other extenuating factors resulted in only 65% of the housing and jobs being made available by 2013 (OECD, 2009). Alongside this there have been concerns regarding the allocation of new affordable housing across the boroughs.
A sense of community
Emmy the Great a renowned British musician summed up the shared feeling about the games stating it made ‘It made me addicted to patriotism’. Tony Blair (2004) commented that the past eight Olympics exuded a sense of patriotism which would be mimicked across the UK. For London 2012 one of the main mantras was ‘in this together’. The success of the Great Britain team and the elation that followed demonstrated that the nation was truly sharing the experience. This Olympic togetherness filtered out in other aspects of the communities and sport. For example, new guidelines from the Football Association (FA) to footballers focused on mimicking of the Olympic spirit of fair play, respect and hard work.
Tolerance and acceptance
The London 2012 Paralympics have offered an insight into a community often neglected. Per say the publicity surrounding this year’s games has put the disabled community in a good and positive light. The Paralympic focus on the ‘super humans’ as they are called has lifted the stigma attached to disabilities, educating people and creating tolerance. This inclusion is sharp contrast to the case of Beijing 2008 were disability rights are largely ignored as human rights. Furthermore London Committee of Games (2011) stated that the London 2012 Olympics acted as force of unity that helped subdue the racial and social tension of the July 2011 London riots. This is a far cry from the ethnic issues visible at the Sydney 2000 Olympics .Arup (2003) found that the Games did relatively little to encourage social inclusion for its Aboriginal community in the games which subsequently led to a protest by the aforementioned community in 2001.
Health and well being
The government needs to capitalise on the interest in London 2012 to overthrow our sedentary habits of the nation. At the end of the games there was an uptake of 15% at health and fitness centre across London and 21% for the rest of UK, most people sighting London 2012 as their inspiration to get fit (FIA, 2012). While previous Olympiad, not even Sydney, have considerably accrued sports participation to a level that may conceivably cause health advantage, London 2012 appears to be on target too in that respect. Additionally the five key Olympic boroughs will benefit a lot from the improvements that are being made to housing and community centres and this will increase the living standards in that areas a great deal before and after the Games (Chaplin, 2004).
Cultural Awareness
Danny Boyle’s opening ceremony show was applauded as an invitation into British culture; the significance of showcasing the culture educates the global audience and captivates a nation. With the hosting of the Olympics comes the increased display of local culture. The opening of the 2012 London Games perfectly displayed our culture to the rest of the world and presented a platform to demonstrate the diverse and welcoming nature of the UK. To some like Kenyon (2012) and Sawyer (2012) it was journey through the history of Britain, an education for the younger generation and the global audience. The significance of this Olympic social impact is that it was a vehicle to educate.
3.6. RESIDENTS PERCEPTION OF SOCIAL IMPACTS
At first glance, table 1.8 shows relative issues expressed by the communities and their perception of potential impacts of the Games. Following on from the Vancouver 2010 winter Olympic and winter Paralympic games, Mussolum (2012) conducted a social impact assessment using an opinion poll. The purpose of this opinion poll was to ascertain the baseline socio-economic impacts envisioned by the residents for their community the focus was primarily the main six host boroughs.
Mussolum (2012) stated that the best way to establish these social impacts would composite of accounting the changes either positive or negative at each juncture of the games. In essence observing impacts during the bidding, organising and hosting phases would enable the assessment of long-term benefits.
Red – to show that residents expected no changes to their community or that the change will bring out negative impacts
Yellow – indicates very little or moderate impacts
Green – represent positive impacts and favourable changes
The impacts to Greater London will be at a localised level primarily benefiting the disadvantage and to a greater extent to the homeless with the introduction of affordable housing. Looking at the findings in more detail, Mussolum (2012) states there are very significant disparities in expectations between the Olympic boroughs. He noted that the most underprivileged Hackney and Newham expressed more sceptical opinions and most of their responses focused on the potential negative impacts associated with existing and future housing problems.
Table 1.8: Social Impact Assessment
No/Negative Impact
Moderate Impact
Positive Impact
Housing
Tourism
Employment
Local economy
Transport
Regeneration
Sports
Health
Residents
Newham
Pre-Games
*During/Post-Games
Barking & Dagenham
Pre-Games
*During/Post-Games
Waltham Forest
Pre-Games
*During/Post-Games
Hackney
Pre-Games
*During/Post-Games
Tower Hamlet
Pre-Games
*During/Post-Games
Greenwich
Pre-Games
*During/Post-Games
TABLE 1.8 SOURCE: MUSSOLUM (2012) *CONDUCTED ON 27/07/2012
3.7. EVALUATING AND CRITIQING SOCIAL IMPACTS
The literature pertaining to social benefits offers some interesting insights in regard how events such as Olympics deliver towards some key social agendas within host communities. Most studies on the social impacts of Olympic Games (Miller, 1999; Videmo, 2005; Wnorowski, 2011) state that the most notable factors include negative impact and positive impacts. Socially the Olympics have been viewed as a tool for the development of urban communities, and the reduction of social exclusion and crime. Although theoretical links between the Olympics and sport participation, quality of life and employment have been established, there has not been enough rigorous analysis done to substantiate the claims created on the socio-economic impact of the Olympics. Moreover this tentative research is often limited to the researchers objectives (Dennis, 2012), as a result there is difficulty coming across a more expanse collection of critical literature aimed at Olympics or other mega sporting event. Bowdin et al (2006) does however argue that the majority of previous studies social impacts of hallmark events are researched further in the years after the games.
Be that as it may, there have been in house critics of the London 2012 social agendas. Heathcote (2012), the lead writer for the Financial Times, argued against the case of the London 2012 being a nation’s games. He argued ‘London is booming and short of land; it seems strange that a vast sum is being poured into it’. Heathcote (2012) added more social benefits were to be had if the investment was put to reviving deprived northern cities. Parkinson (2009) supported the London Olympics, but stated his exasperation in regard to the repeated focus on London and the South East. A study commissioned by the OCOG of Beijing and Greece found that there more residents outside the Olympics cities attending the games in comparison to locals. So there is an argument here to host a multi-city Olympics, which has every event being held in a different city.
Slavin (2011) established a link between locals attending the games and forced displacement. Forced displacement can be described as the phenomenon whereby locals and business relocate either temporarily or permanently within the country to avoid the disruption that come about as a direct result of the Olympics. Beijing 2008 also came under huge criticism as many as 57% of natives were displaced to accommodate their Olympic games, as of yet a figure has not been published for London 2012. Slavin (2011) added that the residents and companies in the marginal and neglected populations of cities hosting the Olympics where seen as a profit gold mine for profit seeking property developers and government subsidies that used taxpayer funded schemes for private profit and career advancement. London 2012 attained a bad reputation after amateurish removal of over three hundred businesses supporting around 5000 jobs within the Olympic boroughs. In addition to this over 1200 homes were demolished to cater for the games and also there were severe disruption to other long standing community project (Slavin, 2011 and GAMESMONITOR, 2011). A few of the displaced residents felt that consultation and planning procedures were generally hurried, denigrating and deceitful shams.
Another argument is whether these socio-economic benefits were shared equally across different communities, especially in terms of any housing. For instance for Atlanta 1996 some poorer neighbourhoods were relocated to make way for Games facilities. While for Sydney 2000 there was no opportunity for affordable housing or local business reinvestment, even in Barcelona, the evidence that local communities shared equal benefit was limited. After considering the literature, Miller (2010) and Burton (2004) hit home some very important points. When it comes to the socio-economic blowback the main losers are the residents and the host city if things do not go to plan. Safeguarding a sustainable future for the host city should be the priority as opposed to having a name shinning in bright lights.
CHAPTER 4: METHODOLOGY
4.1. JUSTIFICATION OF RESEARCH METHOD
The primary purpose of conducting this research was in order to find out what UK residents actually think about London hosting the Olympic Games and how this will affect their everyday lives and the country as a whole. The focal point was to explore perceptions on the socio-economic benefits of the Olympics. With the objective set, there were two possible options available in the research. The first option was interviewing people visiting the Olympics about these aforementioned impact and benefits. The second option was to conduct an internet based survey. After careful consideration it became apparent that the interviewing option would be time consuming as the process comprised of preparation, interviewing, transcribing, analysing, and finally reporting which would take the dissertation beyond the deadline.
Additionally, a significant challenge that would have encountered when using interviews was that it was not suitable for use with a large sample; subsequently it would result in reducing the sample size considerably eventually the sample would not represent the target population. Furthermore, Oatey (1999) following on from Lull (1990) found that many studies using the interview method used another methodology such as questionnaires for more precise results and greater interpretation of responses. In light of this, a decision was made to use the interview technique as a basis for a participating pretest in a focus group. Wimmer and Dominick (1997) made the argument for using the interview in the pretest; they stated interviews may be used in preliminary studies to identify ideas that will be explored further in the following research.
Perhaps the most compelling justification for the use of a survey comes from Pinsonneault and Kraemer (1993) they defined a survey as a means of gathering information about the characteristics, actions, or opinions of a large group of people. This definition explains the purposes of this survey succinctly. In addition, it was justifiable to do an online survey over the archaic methods of collecting responses because the responses are automatically stored electronically. In the end the data analysis becomes easier and can be streamlined, and is available immediately. Furthermore, according to Angus and Katona (1953), the versatility of the surveys meant that there was an opportunity for the survey to explore for extensive and interlinked range of issues. What is more is that when completing a survey, there are no verbal or visual clues from an interviewer, thus limiting any interviewer bias, the absence of this bias means that the aim of getting honest and objective responses remains feasible. While using this method, it was approached knowing full well that surveys only provide estimates for the true population, not exact measurements.
4.2 ETHICS STATEMENT
The purpose of this ethical statement is to advise that due diligence has been observed in regard to any ethical issues that may arise throughout the research process and the researcher has taken responsibility by ethically conducting this research. The primary research conducted did not collate any personal data or address any emotive sensitive issues and or use harmful or forceful procedures in getting responses from participants. The anonymity and privacy of those who participated in the research process was respected. Furthermore at each juncture in the research, the objectives and aims were clarified in advance of participating in the survey and there after consent forms were presented to each respondent. To ensure that the research followed adequate ethics protocol as well as the Nottingham Trent University research ethics policy, an ethics self-audit was carried out to establish whether there are foreseeable ethical risks or issues within the research, it can be found in appendix 1.
4.2 FOCUS GROUP AND SURVEY COMPILATION
The purpose of this research part of the dissertation it to address the issues stated in the fifth dissertation objective, which was to evaluate and explore the impacts of the London 2012 Games on cultural, social and economic welfare of Londoners and people living in the UK. Initially the survey was to be aimed at the locals and businesses entombed in the Olympic boroughs, however after careful consideration, there was a stark realisation that these games were the pride of Britain as result the survey needed to be all encompassing. The target respondents of the survey were to consist of London residents, and UK visitors to the Olympics. When the decision to conduct this research was made, it was in the hope of getting open and honest views and gauging the attitudes of the respondents. The findings would subsequently form a key part of the examination into the social of the impact of the Games. In addition questions on perceptions of the local area improvement, community cohesion, employment and Olympic costs were asked in the survey.
To initiate a very good in-depth qualitative research method a participating pretest would be used as a blueprint of the finalised survey. For this test a small focus group was put together, it would form a sample that represented the demographic for the target population for the final survey. In line with Converse and Presser (1986) the nature of the pretest would be conducted in a way that helped ascertaining whether the questionnaire is understandable. Moreover these initial respondents gave an informative insight into the nature and structure of questions. Working with the test group allowed for identifying issues that could not have thought of prior to conducting the final survey. This then set a precedent for how my questionnaire will be set up. In order to ensure this survey did not violate ethics and or evoke bias, the methodology followed was per that of the DCMS participating Survey (2012). It follows the Code for Official Statistics. Furthermore these guidelines also warned about non-participation bias, as a result during the planning phase, the recommendation of Larson et al, (2004) was followed by increasing the sample size from 100 to 250 respondents so as to counteract this bias.
To begin with, a former student colleague whose family owned an internet café and restaurant in Hackney Wick offered to assist with their premises to conduct the pretest. He asked some of his regulars to be a part of this focus group, out the 50 he asked, 8 volunteered their time, before the respondents took part in the survey there were asked to fill in a research consent form (appendix 2). This is the list of respondents who attended the focus group session:
Respondent 1: Female, Restaurateur, 51, Hackney (London)
Respondent 2: Male, Football Coach, 18, Enfield (London)
Respondent 3: Female, Former Junior Olympian, 19, Coventry
Respondent 4: Female, Local Laywoman, 40, Greenwich (London)
Respondent 5: Female, Economics Lecturer, 32, Greenwich (London)
Respondent 6: Male, Brick Layer, 29 relocated to Wembley in October 2007
Respondent 7: Female, Olympic Volunteer, 19, Croydon (London)
Respondent 8: Male, Unemployed, 65, Newham (London)
In approaching the selection of this test group it was apparent that the group consisted of respondents with highly contrasting characteristics, the quality of the collated responses of the group would be very diverse and enlightening. It was important that the individuals participating in this focus were not restricted in the answers and opinions they had in regard to the survey. Additionally this opportunity was a way to gauge their feelings and attitudes, to give a sense of what is going on with people’s minds and lives that you simply can’t get with survey data (Larson et al, 2004). Perhaps following on from Powell (1996) the assembled group would be encouraged to discuss and comment on the changes experienced as direct result of the Olympics and in the latter stages consider their thoughts about the future for London and the UK after the games. Originally 25 questions had been compiled for the survey but immediately the group jointly agreed that the questionnaire was too long and it was too wordy. As a result the respondents were asked to rank the questions in terms of importance; thereafter the top 12 selections were used as the survey. Moreover the participants were then given a forum to engage in a healthy debate about the merits of Olympics and the socio-economic impacts, all the while notes were being complied. After an hour of intense discussion and survey alteration, the meeting was concluded in agreement about the finished product. The finished questionnaire was then presented and showed to the stand in dissertation supervisor who also gave additional feedback on the survey. Once more another check was conducted to ensure that the survey’s objectives were specific, clear and succinct.
4.3 SAMPLING AND COLLATION
Once the layout and structure of the survey was finalised, it was then created on survey monkey. The initial survey commenced on the 30th of July 2012. At this point the euphoria and excitement was heightened and the respondents were more likely to be more open minded and honest in responses. Additionally, this date suited the schedule of the dissertation. Following on from Weisberg et al (1989), the focus group mirrored the actual target sample for the survey; it would later prove beneficial when assessing reliability of the survey by comparing the answers respondents give in the survey with answers from the pretest. A target of 250 respondents was set. In this way, even within this modest sample, there was an opportunity to learn something about the public perception of the Olympics. Over the duration of the survey 4 temporary booths were set up inside the café. This survey was conducted by indiscriminately asking customers to participate in the survey. Respondents were informed about the project’s objective prior to attempting the survey and asked to fill in a consent form, after this point they were then asked to complete the survey. There were no financial or alternative incentives
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