ABSTRACT
The aim of this dissertation is to find out the economic and social impact of London 2012 for London since the success of their bid. As such, this report aims to identify the potential benefits and any negative impact of being the host of an Olympiad, but at this stage makes no forecast about the scale of impact. As a result while the dissertation progress there will be arguments, analysis, 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 will initially provide an overview of both earlier and continuing research to aid the discussion around aspects of legacy and economic injection since 2005 consistent with the argument of Veal and Frawley (2009). Drawing on the lessons from past Games, this paper will also focus on the three phase economic benefits of 2012. Kornblatt (2006) states that employment, housing, and new infrastructure benefits are likely to be relatively focused on London and wider areas. In addition to this, the dissertation brought to light that the London 2012 games are more socially beneficial at the pre-game and games year with the economic benefits not proportionally evident. The post-game phase analysis showed that there was great uncertainty in regard to economic growth and legacy with Greece 2004 an example of when things go wrong.
Establishing the impact of the Olympics on residents and countrymen alike is important to any impact study. For this dissertation this inquiry was carried out in form of a survey. The results revealed a great deal, the younger generation found inspiration from the games with 71% of respondents stating they would take part in form of sport. 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 from these results was how the games had united communities and a nation, it was no surprise that 66% of the respondents believe the games were inspirational, captivating and moreover worth all the cost.
CHAPRTER 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 United Kingdom. After three consecutive failed bids, the Olympics were finally award 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 (2008) led the great Olympic inquisition. Gross (2012) describing the bidding process of London 2012 as a gruelling and often farcical campaign, that accompanied itself with a £11.5 billion tab. His agenda was to find out "How the games would be funded?"
According to the ODA (2005) sourcing the funding for the games was from the private sector through a combination of sponsorship, merchandising, ticketing and broadcast rights. This budget was raised and managed by the LOCOG. According to Games organisers, the funding breakdown is 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" (CBN 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 ambition 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 where 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. The primary aim of the dissertation is to explore 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 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 venues beyond the Olympic Hub.
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 not happened. Mangan (2008) offers perhaps an insightful definition of this paradigm. Mangan (2008) states that in their simplest forms, economic impacts and legacy can either be tangible or intangible. In essence this means that the pre-game and games-year phases show evident tangible benefits such as physical infrastructure, the tourism, employment and consumer spending. On the other side this intangible benefits lie in the life after Olympics, where there is greater uncertainty in particular for London 2012 as a consequence of the current economic downturn.
One of the challenges for I have 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 study aims to tackle, following the works of Blake (2005), Barton (2004), Gratton and Preuss (2008). This study will also contribute in no small way towards complementing literary and traditional ideology on the legacy, socio-economic of Olympic Games. This is in hope that this thesis 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 this study (Blake, 2005). Additionally away from the academic exposure and learning experiences derived from the research, this thesis will be providing an informed insight into the chosen area of study. As such, this report scopes out the potential benefits and negative effects that may arise, but at this stage makes no forecast about the scale of impact. Thе еvаluаtiоn оf thе socio-economic impоrtаncе оf thе Оlympicѕ tо а hоѕt city, itѕ rеgiоn аnd to a lesser extent cоuntry is what drives thе оvеrаll purpose of this dissertation.
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 the goal of this dissertation is ascertain if the games are an asset, by determining 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 thesis will investigate the factors which justify the increase of the Olympic budget during a significant and sustained economic downturn.
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 present. I believe this dissertation will raise important economic, political and social issues surrounding 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 and benefits of hosting the Olympics, eventually leading to an appropriate conclusion that summarises the extensiveness and complexity of the concepts surrounding 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 evaluate the legacy of London 2012 and determine whether the LOGOC has in place strategies to maximise 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).
Thе socio-economic evaluation of the Оlympicѕ is of importance to the hоѕt city, itѕ rеgiоn аnd to a lesser extent cоuntry. This by is far is the primary driver for assertiing thе vаluе оr wоrth оf hоѕting thе Оlympic Gаmеѕ (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 critic. 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. Although 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 tourist. 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 sport were being overstated and often the measurable economic impact of sport 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 predetermined hazard. In a way it is possible to argue that the BOA was caught up in the promise of bountiful riches, global exposure and getting one over the French when they pursued this venture.
London expected its 2012 Games to cost under £2 billion at the bid stage and £9.4 billion in 2007 and in 2012 it was expected to exceed £11 billion (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, health, and environmental 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 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, 2004). The challenge however was the difficulty in quantifying any economic benefits; even so studies (Blake, 2005; Malfas 2004; Szymanski, 2010) show that in terms of the economic impact of hosting an Olympics. As far as the definition of Olympic Economy is concerned, there have been several opinions by scholars. Most notably Tao (2003) explained Olympic Economy as the direct and indirect revenues that come about as a result of hosting the Olympic Games. Alternatively Yang (2005) said it was a focused Economy, which promptly pushed 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 endure the economic impact of Olympics
Through using a three-dimensional and three phase impact study, Matos (2006) alongside Wei (2006), found that these purported benefits were combination of three phases of the Olympic Games life cycle, 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. As well as that the 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 after the games are gone. Gornostaeva (2009) added to this by stating Olympics are not merely a glorified sports day; a means of image building; competition between cities but a very useful instrument to aid socio-economic advancement.
However some critics like Dennis (2012) have come out by affirming that the research on the economic benefits at time 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, 2004), it eventually forgoes examination of vital links between Olympics economics and wider factors affecting communities, business and stakeholders within the host city. Nonetheless 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.
3.2. ECONOMICS OF LONDON 2012 OLYMPICS
Employment
"It'll be the biggest civil engineering project in Europe, create almost 30,000 new jobs, pump an extra £20 billion in the UK economy, to cement London reputation as one of the world's main financial centres"
In 2010 (London 2012 Olympics official website, 2010) an estimated 4,500 UK businesses had won contracts worth £7 billion for the 2012 Olympics in London the contracts were a route to job creation and opportunities for the unemployed. Ahmar (2008) indicated that employment is probably the best definition of what is considered one of the main centrepieces of economic barometers. Additionally the employment impact depends on the characteristics of the host economy, the size of the labour force, 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, 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. LOCOG (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 London. The economic impact of Olympic Games and the employment opportunities on the host cities are shown as below:
£ (million) Economic Impact*
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)
* TOTAL COST OF CREATING THE EMPLOYMENT OPPORTUNITIES **CUMULATIVE JOB FORECAST (ODA, 2008)
Barber (2008) and Brunet (2008) observed the employment trend from 2006 till 2012; they found unemployment in the East London had dropped about 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 (2009), ODA promised jobs were to be created for the many local people London but this would seem not to be the case. The reason behind this may have been a consequence of the need for skilled labour, because building stadia and arenas requires workmen who specialise in a trade as opposed to the local carpenters and builders. Gornostaeva (2008) also shed light on the possibility of the discrepancies; he stated that ODA employment estimates included volunteers because there were paid irrespective of the pay being a basic rate they would be classed as employees. As a consequence he added 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. What is more, 2012 continues to reflect significant drop in the rate of unemployment across the capital, with more evident employment rises occurring in the host boroughs (Barber, 2012). The illustration below shows a summary of expected impacts on employment
Of course it can be argued the games are achieving one 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) added by stating that there is a disproportionate the employment 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? BETHPH (2012) paints an ominous picture with the headline 'Olympic Jobs Legacy Misses Target', the government had two key schemes set up in 2010 and intended to get unemployed people into jobs during and after the Games 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 have shown that the benefits employment as a by-product of Olympics is over-estimated but 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 is deliverable.
Tourism
The economic benefits of the Olympic Games as direct result tourism are widely research. 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 main USP for LOCOG because the Olympics are said to be one of the key beneficiaries. Early estimate 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 outline three stages of the "tourism effect".
Preâ€Olympic 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€time 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€Olympic tourism - PWC (2008) state this type of tourism is characterised by two important sources: Gamesâ€prompted private leisure tourism and soâ€called 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 below that showed the three phase impacts of Olympic tourism.
Impact of London 2012 Olympic Games on Tourism (FORECAST)
Pre-Games
Games Year
Post Games Year
Year
2008
2009
2010
2011
*2012
**2013
**2014
Visitor Number (million)
14.5
14.92
15.21
15.62
16.2
15.4
15.6
Total Spent (£ billion)
1.3
1.42
1.49
1.6
2.0
1.7
1.4
Avg Spent
1.45
2.0
1.55
Growth %
-
2.9
1.8
2.7
3.7
-4.9
1.3
Avg Growth Rate per Annum %
2.47
3.7
2.55
TABLE 1.2 SOURCE: WALLACE (2010) *FORECASTED IN 2010 **FORECASTED 2011
The table above come from Wallace (2010) Olympic tourism research; it revealed a trend in the Athens 2004 and Beijing 2008 Olympics. The trend was characterised by an increase in visitor numbers 4 years prior to the because of the pre-games events held most notable in 2010 and 2011. Wallace (2010) suggested that because London is a central hub, it will be about to generate just over £10 billion 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 put great emphasis on the social and cultural benefits that arise from hosting games. Steward (2008) also adds London is unlikely to cause tourist displacement, 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) 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 (Papanikos , 1999; Dwyer et al 2003). At the time of this papers there was a lack of empirical research, and most analysis was conducted through the case study discussions. As a consequence 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" - they are interested in sport. These said tourists spend less on non-Olympic recreation activities, which has significant implications for government revenues as these 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 recent as July 2012, the government revealed that visitor number were not meeting the expected targets. This therefore means the like of Wallace (2010) 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 the reason that 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 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 tourism studies.
A benchmarking criteria is needed to ascertain how to weigh up tourism input benefits. Possibly 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 CDB in the world, how it also house 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.
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 Tao (2003) explained Olympic Economy as the direct and indirect revenues that come about as a result of hosting the Olympic Games. Alternatively Yang (2005) said it was a focused Economy, which promptly pushed 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 endure the economic impact of Olympics. A 'ripple effect' on economic process has been described, during which infrastructure investments result in enhancements in overall production conditions for domestic and foreign enterprises, creating investment a lot of attractive.
To see the true extent on of the Olympics on the host who have embarked on hosting the games. Among the previous host cities, Barcelona was successful in using the Olympic to make a good impact on its local economy (Wei, 2006). This was owing to completion of local regeneration projects, the pull it had on investors and the transformation of infrastructure associated with Olympics. Another Olympic success story was Sydney 2000, it accomplishing 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 vale; this was complimented by improvement within the key transport links to the Games.
The economic importance of the games would be seen in the larger at the boroughs of Newham, Tower Hamlets and Hackney as compared to the wider London economy. As mentioned above, 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 (20013-2015) To begin with, in Pre- Pre-Games, this is characterised by preparation for the game, the majority of the boost comes from investments in Olympic facilities and construction. For London, 2012, is considered as the phase of pushing consumer consumption and localised economies. 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
The section below shows GDP movement analysis conduct by PWC (2005) in partnership with Nottingham University, it compare GPD between London and the over UK economy, showing the best and worst case scenario through a sensitivity analysis as well as that there was GDP growth comparison between London and the Olympic Boroughs.
3.3.1 EXPECTED MACROECONOMIC IMPACT (CHANGE IN GDP, £ MILLION)
3.3.2 SENSITIVITY ANALYSIS
3.3.3 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
SOURCES: LONDON ECONOMIC (2010, 2012); CSN, EXPERIAN (2009, 2011, and 2012); OECD (2010, 2012)
*2013-2014 FORECASTED BASED ON 2010 INDEX
Looking at the table above the main focus is on the economic indicators for London City in comparison to the boroughs that would cater to hosting of the games. When it comes to the impacts all the economic indicators slightly vary significantly in relation to the phase 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. Additionally ticket sales play a key role in revenue growth, London 2012 has benefited from getting the largest ticket allocation since 2000 as shown below.
Ticket revenues (current £).
Games
Tickets sold (millions)
% capacity
Revenue to OCOG (£million)
2000 Sydney
6.7
88
351
2002 Salt Lake
1.5
95
123
2004 Athens
3.8
72
145
2008 Beijing
6.5
96
117
2012 London
8.1
93
382
TABLE 1.4 SOURCES: IOC, 2010 MARKETING FACT FILE, P.39; IOC, 2012 MARKETING FACT FILE, P. 52.
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 borough experienced negative growth. When 2013-2014 is highlighted, London city begins to operate at its long run 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.
3.4. EVALUATING AND CRITIQING ECONOMICS IMPACTS
Wei (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. Miller (2006) suggested that Greece 2004 be a warning to London after revelations of their errant budget. 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 through 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 made losses of £178 million and £692 million created losses of £178 million and £692 million respectively. A 2008 report questioned 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 little surplus in relation to the funds invested; afterward the city 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 more if the London Olympics are to add economic boost to the underprivileged Olympic borough 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 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 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 separate because the function in 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, also adding their worth to host cities can most likely be of further standing in cities where there is high social and economic depravity. Books and articles detailing the negative social effects dominate the literature (Baker, 2002). Baker (2002) adds, 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.
In light of this, I have taken caution while exploring the depth of this subject area because of the problems in the report, because they have not been confirmed through empirical research. 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 never quantified 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, in terms of 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
LCG (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 employment and skills pathways and mixed provision housing in addition to the creation of new jobs and homes. Unlike Beijing and Greece Olympics, London 2012 had a framework for business support for new starts and business growth, particularly for business based in the Olympic catchment areas. But as always government cuts and other extenuating factors resulted in only 35% of the targeted business benefiting (OECD, 2009).
A sense of community
Emmy the Great summed up the shared feeling about the games stating it made 'It made me addicted to patriotism'. Blair (2008) commented that the past 8 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 GB team and the elation that followed demonstrated that the nation was truly sharing the experience. This Olympic together filtered out in other aspects of the communities and sport. For example, new guidelines from the 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 the good light. The 'super humans' as they are called has lifted the stigma attached to disabilities, educating people and creating tolerance. This inclusion is sharp contract to the case of Beijing (2008) were disability rights are as ignored as human rights. Furthermore LCG (2008) 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 sharp contrast to Sydney 2000, this because Mulligan (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
Murphy (2012) said 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 to in that respect. Additionally the five key Olympic boroughs will benefit a lot from the improvements that are being made to house and community centres and this will increase the living standards in that areas a great deal before and after the Games. (Chaplin, 2000).
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, as education for the younger generation and the global audience. The significance of this as Olympic social impact is that it was a vehicle to educate.
3.6. RESIDENTS PERCEPTION OF SOCIAL IMPACTS
At a first glance, the subsequent table 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 (2009, 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 of the Olympic catchment areas, primarily the main six host boroughs.
SIA (2009, 2012) stated that the best was 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 Greater London will be at a localised level primary benefiting the disadvantage and to a greater extent to the homeless with the introduction of affordable housing Mussolum (2009, 2012). Looking at the findings in more detail, Mussolum (2009, 2012) states there are very significant disparities in expectations between the burrows. 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.
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
SOURCE: MUSSOLUM (2009; 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, 2008), 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) do however argues 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), lead write for the FT, argued against the cause of the London 2012 being a nation's games. He argued London 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 of 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 studies 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) establish 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 with the Olympic boroughs. In addition to this over 1200 were demolished to cater for the games and also the 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. An example The Clay's Lane estate which was demolished in 2007 to make way for the 2012 London Olympics and 450 residents were displaced. When resonancefm (2012) interviewed these displaced residents they found that they had been relocated to accommodation of paltry standard in comparison to their previous lodgings. After considering the literature, Miller (2010) and Blake (2004) hit some very important points. When it comes to the socio-economic blowback the main losers are the resident 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 light. Moreover gauging the opinions and feeling of the people will give an indication of how well the games were received, and because of this the next chapter of this dissertation will focus on these said stakeholders.
CHAPTER 4: METHODOLOGY
4.1 FOCUS GROUP AND SURVEY COMPILATION
The aim and objective of the research part of this dissertation was to analysis and explore the impacts of the London 2012 Games on cultural, social and economic welfare of Londoners and people living in the UK as well. Initially I had set my survey to be aimed at the local and business entombed in the Olympic boroughs, however after careful consideration, I recalled Johnson (2009) stating these games were the pride of Britain. As a result I decided to target the survey to London residents, and UK visitors to the Olympics.
This decision further compounded to my earlier survey objective to ascertain whether these UK residents actually accept London hosting the Olympic Games and the way this will have an effect on their everyday lives and also the country as a whole, clearly focusing on the cultural socio-economic side of the games. When I decided to conduct this research I was hoping for open and honest views and attitudes of the residents, and the findings would subsequently form key part of the assessment of the impact of the Games. In addition questions on perceptions of the local area improvement, community cohesion, employment, Olympic costs were asked in the survey.
To initiate a very good in-depth qualitative research method I did a participating pretest. With this test I was able to put a small focus group that represented the demographic for my target sample for the survey I had decided to do. In line with Converse and Presser (1986) the nature of the pretest I was conducting would be a way to ascertain whether the questionnaire is understandable. Moreover these initial respondents gave an informative insight into the nature and structure of questions. This is because working with test group allowed me to identify issues that i could not have thought of prior to conducting the final survey. This then set a pattern for how my questionnaire will be set up. In order to ensure this survey was did not violate ethic and evoke bias, I followed the methodology per that of the DCMS participating Survey (2012). It follows the Code for Official Statistics. Furthermore this guideline as warned about non-participation bias, as a result doing my planning phase, I followed Larson et al, 2004, increasing my sample size from 100 to 250 respondents so as to counteract this bias.
To begin with, I contacted a former student colleague whose family owned an internet café and restaurant in Hackney Wick. He asked some of his regulars to be a part of this focus, out the 20 he asked, 8 volunteered their time. 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
Respondent 8: Male, Unemployed, 65, Newham
In approaching the selection of this test group I was aware if the group consisted of respondents with highly contrasting characteristics, the quality of the collated responses as well the participation of the group would be limited. As a result the focus group had ages of ranging from 18 to 65. The owner also allowed me to use his seven computers in his internet café for the test survey and my final survey. It was important for me that the individuals participating in this focus where not restricted in the answers and opinions they had in regard to my questions. Additionally I found this opportunity as 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) I was looking assemble a group that would be able to discuss and comment on the changes experienced around their areas of residence 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 I had 25 questions but immediately the group informed me that the questionnaire was too long and additionally it was too wordy. So I asked them to rank the question in terms of importance, from there I then I choose the top 12 questions. I also allowed them to debate among themselves about the merits of Olympics and the socio-economic impacts, all the while I was taking notes and listening intently. After an hour of intense discussion and changes the focus group and I concluded the meeting in agreement about the finished product. I then return with the finished questionnaire and showed it to the stand in dissertation supervisor who also game additional feedback on the survey. There after I tried to ensure that I made the survey's objectives as specific, clear and succinct.
4.2 SAMPLING AND COLLATION
Once I finalised the layout and structure of the survey, I proceeded to create it in survey monkey. I chose to do the survey at my chosen location on the 30th of July. I felt that 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, I felt that at this was suited to the schedule I set for my dissertation. While, I do not make an assertion that these respondents are representative of all the UK, these two groups were selected for two reasons. Firstly, I felt that Hackney Wick was in proximity of where most of the 2012 events would be held. Secondly, according to Angus and Katona (1953), the versatility of the surveys meant that I could use the survey to explore for extensive and interlinked range of issues.
Additionally 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. I set myself a target of getting 250 respondents. In this way, even within this modest sample, I hoped to learn something about the public perception of the Olympics. I set up 4 temporary booths 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, at this point they were then asked to complete the survey. There were no financial or alternative incentives offered as compensation for completing the survey. I had the booths running throughout the duration of Olympics eventually closing the survey on the 17 of August 2012.
The sample I chose was composite of respondents aged 16 and over who acknowledged that they would be watching at least some of the Olympic Games this year or had a views on the Olympics. Eventually after collecting all the results and filtering through the survey responses I had a total sample of 150 respondents. All the data and the initial survey feedback from the focus group were made anonymous straight away as their responses where used in the survey.
CHAPTER 5: SURVEY ANALYSIS
For the survey please refer to Appendix 1. The section below details the questions for my survey that were part of the requirements to ascertain the socio-economic impact of the London 2012 games.
5.1. INTEREPRETING SURVEY RESULTS
Population Profile
The first three questions offer an introductory overview of the population profile in this study. The primary purpose of these first three questions is so that I would use them as the key parameters for cross tabulation. Mitchell (2007) elaborated that cross tabulation provide a wealth of information about the relationship between the variables as well as that it records the frequency of respondents that have the specific characteristics described for example age, gender amongst others. The distribution of male v female is very interesting, as according to Matheson (2004) females are more like to respond to survey than men. It will be seen if this gender split has an effect on the survey outcomes. Additional what is more apparent in question 3 is that just under 57% of the respondents reside in the Olympic borough compare this to 2010 Vancouver Winter Olympics survey where it was found that 69% of the resident visitors where from the Olympic catchment areas (Launhardt, 2007).
Q1. What is your gender?
Answer Options
Response %
Response Count
Female
48.7%
73
Male
51.3%
77
Q2. Which category below includes your age?
Answer Options
Response %
Response Count
Under 20
14.0%
21
20-29
36.0%
54
30-39
18.0%
27
40-49
19.3%
29
50-59
11.3%
17
60-69
1.3%
2
70+
0.0%
0
Q3. In what Olympic Borough or U.K Region do you live in?
Answer Options
Response %
Response Count
Barking and Dagenham
11.0%
16
Greenwich
20.0%
30
Hackney
13.0%
19
Newham
3.4%
5
Tower Hamlets
6.2%
9
Waltham Forest
5.5%
8
Other UK Region
43.2%
63
Cost and Delivery of Games
I believe this section of the survey was more about accessing the respondent's thoughts about the transparency of the funding and costs surrounding the games. There is little dispute from what was collated that the majority of respondents felt London was well prepared for the hosting challenge. The only issue surrounding preparation was in the form of the farcical G4S security contract which burnt an additional £500 million in the Olympics budget. In terms of the cost, the constant revision and adjustment of the budget did not give the public any confidence that the cost of the games was being reported earnestly. Just over 67% of the respondents of this survey were either unsure or not convinced that LOCOG and Government had been truthful and perhaps this explain why it took until 2012 for attitudes towards the games to be more accepting.
Q4. I think the Government and the Mayor of London have done a good job preparing for the 2012 Games and I am now more positive about the games?
Answer Options
Strongly Disagree
Disagree
Neutral
Agree
Strongly Agree
Response %
2.7%
6.6%
16.7%
60.7%
13.3%
Response Count
4
8
25
91
22
Q5. The London Olympic Committee Organising the Games is open and honest about the cost and social benefits of the games and the cost of hosting the 2012 Olympics represents good value for money?
Answer Options
Strongly Disagree
Disagree
Neutral
Agree
Strongly Agree
Response %
4.7%
28.7%
34.0%
30.0%
2.6%
Response Count
7
43
51
45
4
Social and Economic Impacts
The socio-economic impacts assessment forms the basis of this research, on the evidence taken from this survey, at first glance the, it seems as though the expected benefits of the Olympics contrast those that have been observed in the Olympic catchment area and the wider UK community. For example instead of London becoming the tourist haven it was purported to be, instead it because a deterrent, familiarised with pictures of deser
