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Business benefits/costs of the cricket world cup

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A study by PriceWaterhouseCoopers (PWC), commissioned by the Cricket World Cup Organising Committee, Cricket Australia and Cricket New Zealand, reports that the recent Cricket World Cup generated more than $1.1 billion in direct spending ($25 million in the ACT), created the equivalent of 8,320 full time jobs (250 in the ACT), and a total of 2 million bed nights across the two countries (30,000 in the ACT).

Total attendance at World Cup matches was over 1 million with 295,000 of these being unique international and interstate visitors (19,000 to the ACT). The tournament was reportedly watched by more than 1.5 billion people worldwide.

From a business perspective, the obvious beneficiaries are likely to have been broadcasters, airlines, hotels, restaurants and cafes, catering, security and transport companies. Other businesses will also have benefited, some indirectly.

But do such mega sporting events always have a positive impact? Is it always good for business for countries/cities to bid for such sporting events?

It is interesting the PWC report is titled an ‘Economic and Benefits Analysis’. There is little reference to costs. Sports organisations do themselves no favours by restricting such reports to benefits. It is true that reports that look at both costs and benefits carry greater risk for the commissioning sport but they are also likely to be taken more seriously by governments, businesses and the public. It would have also been helpful to include more explicit comparisons with other events such as the recent Asian Cup.

One major advantage this Cricket World Cup had over other mega sporting events is that much of the infrastructure already existed. This will have minimised potential costs to taxpayers, especially to the ACT as the upgrade to Manuka Oval had already taken place. The Cricket World Cup can be viewed as part of the return on that investment. But there will have been other organizing costs to governments that should have been listed in the report.

The benefits of sports related tourism must also take into account crowding out effects as some potential visitors to a country/city may decide to avoid travel to that location – this would reduce the overall benefits. Such crowding out will be less during the ‘off-season’ which for Australia will tend to be winter. But the Cricket World Cup was in the warmer months when more international tourists come to Australia anyway and when Australians take their holidays.

In addition, there are substitution effects whereby entertainment spending on attending the cricket may have replaced other forms of entertainment spending – thus further reducing the overall benefits.

There also may have been some inconvenience and congestion effects on local consumers and residents who as a result may have spent less of their money in Canberra (or indeed left Canberra during the event).

On the whole, however, it is likely the Cricket World Cup was a positive for businesses in Australia and in Canberra.

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For more information, contact Abul Rizvi Managing Director Yabba.guru
on 0413 990 439 or go to www.yabba.guru

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