In a completely unexpected turn of events, UEFA (the Union of European Football Associations) just announced that Poland and Ukraine will co-host the 2012 European Football Championship. The three competing hosts were Italy, Hungary and Croatia, and Poland and Ukraine. European bookmakers made Italy (odds of hosting 1:1.85) the favorite, with the Balkan bid a distant second at 1:3.25 odds and Poland/Ukraine the dark horse at 1:3.75.
It should only be a few moments before some sort of official announcement about the fantastic economic impact of this event on the economies of Poland and Ukraine. We here at the Sports Economist like to stay ahead of the curve. I wrote a paper on the potential economic impact of UEFA 2012 in Poland and Ukraine, along with Szymon Prokopowicz, a Polish graduate student, over a year ago. Here’s the abstract:
Developing economies have increasing interest in hosting
sports mega-events. Poland and Ukraine are the finalists
to host the Union of European Football Associations (UEFA)
2012 Football Championship. Although the event will attract
a large number of spectators and television viewers, a
simple cost benefit analysis indicates that the costs of
hosting the event will exceed the direct economic impact
related to increased tourist spending by a wide margin and
the presence of positive benefits depends on benefits from
factors, like improvements in the transportation infrastructure.
Sports mega-events may not be effective regional economic
development vehicles in transition economies.
The transportation infrastructure in Poland and Ukraine is in pretty poor shape. As part of their bid, these two countries plan to increase their spending on roads and rail significantly. Any improvement in the transportation networks in these two countries will clearly help the local economy. But they also plan to build or renovate ten stadiums with capacities of between 30,000 and 77,000. Average attendance at matches in the top professional football league in Poland was just over 5,000 in 2004-2005, and around 7,000 in Ukraine. They also plan to build a large number of new Five Star hotels to host teams and UEFA officials. In the paper we argue that the overall economic impact of a mega sports event in a transition economy will be difficult to determine, but probably not positive.