Copyright by Gianfranco Esposito 2016

The Report Committee for Gianfranco Esposito Certifies that this is the approved version of the following report:

Event Leverage and Portfolio Planning: The Missing Link Between and the 2019 Pan-American Games

APPROVED BY SUPERVISING COMMITTEE:

Janice S. Todd, Supervisor

Matthew T. Bowers, Co-Supervisor

Event Leverage and Portfolio Planning: The Missing Link Between Lima and the 2019 Pan-American Games

by

Gianfranco Esposito, BBA

Report Presented to the Faculty of the Graduate School of The University of Texas at Austin in Partial Fulfillment of the Requirements

for the Degree of

Master of Science in Kinesiology

The University of Texas at Austin May 2016 Dedication

To my parents, my heroes and friends, who never questioned my dreams and gave me freedom to pursue irrational goals by rational means. Here we are... materializing some of those dreams.

Acknowledgements

"Excellence is an art won by training and habituation. We are what we repeatedly do. Excellence, then, is not an act, but a habit." - Aristotle

Firstly, I would like to express my sincere gratitude to my advisor Dr. Matt

Bowers. His patience, wisdom and never-ending support were key elements for this endeavor. For two years, more than an advisor, professor Bowers has been a mentor, colleague and friend. I would also like to express my sincere thanks to Dr. Jan Todd, whose passion for sport history made me doubt more than once whether I should be a sport historian or a strategist/marketer. Her unconditional support throughout my graduate years not only made me feel at home but also helped me achieve greater goals. Further, the insights, knowledge and expertise gained in the Sport Management field are thanks to my beloved Sport Management professors: Dr. Thomas Hunt, Dr. Emily Sparvero, Dr. Marlene Dixon, and last but not least, Dr. Tolga Ozyurtcu. I must also acknowledge the financial assistance I received from the Texas Higher Education Coordinating Board through the Good Neighbor Scholarship. As an international student, their continuous support has played a pivotal role in the completion of my degree. Additionally, I would like to express my sincere appreciation to the Sport Management faculty for granting me Teaching Assistant appointments. Their support not only helped me financially but academically as well.

v Abstract

Event Leverage and Portfolio Planning: The Missing Link Between Lima and the 2019 Pan-American Games by Gianfranco Esposito, MSKin

The University of Texas at Austin, 2016

Supervisor: Janice S. Todd Co-Supervisor: Matthew T. Bowers

Sport events have played a pivotal role in the regeneration of economies and communities. Furthermore, major events have been used as a tool for economic, social, political, and cultural development for cities. The potential claims gained from hosting lead countries to bid for major sport events, sometimes disregarding the costs and overestimating the benefits. In this regard, the potential outcomes are taken for granted, as if they were an intrinsic attribute of the sport product.

Due to the ephemeral lifespan of sport events and the escalating costs related to hosting, Chalip (2004) called for a shift of paradigm, from impact to leverage, in the study of event and tourism management. By strategically planning for desired outcomes, using the events as a means to focus on the community, host destinations could achieve

vi tangible and intangible benefits well beyond the event's completion date. The underlying discourse also acknowledges that in order to sustain outcomes and counteract the temporal boundaries of sport events, a series of interrelated events, encompassed within an event portfolio, are key to capitalize on economic and social issues to in order prolong the benefits for host destinations.

This report puts into perspective the different challenges faced by Lima, and its organizing committee in the preparation of the 2019 Pan-American Games. Based on secondary sources of evidence, if the continental competition is not put to the service of the city of Lima, with a mindset shift to event leverage, the event outcomes will be nominal and the benefits will not exceed the cost of hosting. To maximize the desired goals proposed by the Peruvian organizing committee, two event leverage frameworks are presented as a means to implement Lima's Pan-American Plan: Chalip's (2004) economic leverage framework, and O'Brien and Chalip's (2008) social leverage framework. The purpose of the analysis is to highlight potential avenues to increase the benefits derived from the event to Lima's local community.

vii Table of Contents

List of Tables ...... ix

List of Figures ...... x

Chapter 1: Introduction ...... 1

Chapter 2: Literature Review ...... 5 BEYOND HEDONICS: THE POWER OF SPORT ...... 5 IDENTITIY, SUBCULTURE AND SOCIAL CAPITAL ...... 7 CREATING AN EVENT PORTFOLIO ...... 12 EVENT LEVERAGE ...... 16 ECONOMIC IMPACT ANALYSIS VS. COST BENEFIT ANALYSIS ...... 21

Chapter 3: Discussion ...... 24 AFTER THE OLYMPIC DREAM ...... 25 LIMA, FROM PLANNING TO IMPLEMENTATION ...... 28 LIMA: PERU'S EVENT DESTINATION ...... 37 TOWARDS EVENT LEVERAGE AND PORTFOLIO PLANNING ...... 43

Chapter 4: Conclusion ...... 53

Reference ...... 57

Vita ...... 67

viii List of Tables

Table 1: Bundling sport events with the host destination ...... 14 Table 2: Major Sport Events held in Peru ...... 37 Table 3: Lima major sport events grouped into clusters ...... 40 Table 4: 2019 Pan-American Program ...... 41

ix List of Figures

Figure 1: A typology of major sport events ...... 1 Figure 2: Objectives and means for generating and cultivating liminality and communitas ...... 10 Figure 3: A schematic representation of event leverage ...... 18 Figure 4: Proposed model for social event leverage ...... 19

Figure 5: 2019 Lima Pan-American Games' election and event dates with regard to the presidential timeline...... 36 Figure 6: 2019 Lima Pan-American Games' election and event dates with regard to the municipal timeline ...... 36 Figure 7: A schematic representation of event leverage ...... 45 Figure 8: Proposed model for social event leverage ...... 50

x Chapter 1: Introduction

Sport events are regarded as major phenomena. Their rapid expansion and importance is grounded on political, social, cultural and economical motives (Crompton,

1999; Fredline & Faulkner, 2001; Burbank, Andranovich, & Heying, 2001; McCabe,

2006). While sport events are treated, irrespectively of their size and nature, as a unitary concept in the sport industry, the literature offers a wider classification of terms: special events; hallmark events; major sporting events; large-scale sporting events; mega-events; among other definitions (Ritchie, 1984; Getz, 1997; Hall, 2001; Parent & Smith-Swan,

2013). To clarify the terminology, considering that there is neither an agreed definition nor consensus among scholars, Parent and Smith-Swan (2013) offered a sport event typology grounded on the research of Jago and Shaw (1998), and Getz (2005).

Figure 1: A typology of major sports events. Reprinted from Managing major sports events: Theory and practice (p. 4), by M. M. Parent and S. Smith-Swam, 2013, New York: Routledge. Copyright 2013 by Milena Parent and Sharon Smith-Swam. Reprinted with permission.

1 Major sport events have been utilized by many cities as a fundamental tool of their tourism strategy to catalyze economic development (Gratton, Dobson, & Shibli,

2000; Getz 2008). The relationship between major events and tourism is grounded on the idea that the images, values and attractions associated with the event can be transferred to the destination to reinforce, enhance or change the destination's brand (Jago, Chalip,

Brown, Mules, & Ali, 2003; Chalip & Costa, 2005). Therein, the challenge of sport event tourism is to "incorporate events more strategically into the host destination's overall mix of tourism products and services"(Chalip & McGuirty, 2004, p. 267).

In recent years, there has been a shift in the demand for major sport events.

Historically, the top three most viewed sports - the , the FIFA World

Cup, and Formula One - were hosted predominantly in Europe. Due to the expansion of emerging economies, major sport events offshored to new markets and were used as a vehicle for trade and politics, and as a symbol of a modernized economy (Zimbalist,

2015). Such is the case of the BRICS - the former five major national economies composed by Brazil, Russia, India, China and South Africa, or the latest TICKs - composed by Taiwan, India, China and Korea. According to Zimbalist (2015), since 2008 the BRICS countries have hosted one of the following: the Olympic Games, the FIFA

World Cup or the . Additionally, out of the seven countries that compose these economic blocks, five have been or are currently part of the selected club of Formula One destinations. However, the limitation faced by emerging economies, according to the scholar, is the lack of infrastructure to host major events. Consequently, the investment required for hosting these events has skyrocketed. To justify the large 2 investments required to host major sport events, event organizers claim that tangible and intangible benefits are generated in the interest of destinations. These benefits take the form of increasing economic returns, urban regeneration, infrastructure improvement, shared sense of national identity, sense of community or feeling of belonging (Smith,

2014; Bogdanov & Heere, 2015; Chalip, 2015; Smith & Green, 2015; Zimbalist, 2015).

While these benefits are well documented in the literature, they are the exception, not the rule. Moreover, due to the ephemeral lifespan of sport events and the unlikely economic justifications post facto there has been increasing attention towards the long run impact or legacies (e.g. Preuss, 2007). Therefore, destinations must plan not only for the event, but also for the outcomes that occur before, during, and after the event.

On October 11, 2013, Lima, Peru won by 31 votes the rights to host the 2019 Pan-

American Games, the biggest continental competition of the Americas, against Santiago,

Chile (9 votes); La Punta, Argentina (9 votes); and Ciudad Bolivar, (8 votes).

Lima will host this large-scale event for the first time from July 29 to August 9, 2019.

While major events are not new for the capital city of Peru, the Pan-Am Games will be the biggest and most important event ever produced. Twenty-nine months have passed since the selection of Lima as host city. During the first months, the attention of the media focused on the sense of pride created by winning the bid and the potential benefits that Lima could get from event hosting, yet greater concerns have surrounded the event coverage highlighting the responsibilities and challenges that the city must deal with. In detail, the two most important are the delays of the event's lifecycle modes and phases, and the escalated costs for preparing the city for the continental festivity. 3 Consequently, this report seeks to contrast the organizational evolution of the

2019 Lima Pan-Am Games and the potential results the city will render, based on secondary sources of evidence, against the extant literature of how major sport events should be managed in order to maximize impacts that will lead to positive event outcomes. At a fundamental level, this report endeavors to shed light on possible courses of action that the organization could take into attention, considering that the games will take place in three years time. From this perspective, the main purpose of this study is not to criticize the organization of the event, but to highlight potential courses of action to increase the benefits derived from the event to Lima's local community.

The structure of the report is organized in a way that will allow the reader to draw some comparisons based on the current state of the field and the evolution of Lima in the event's lifecycle process. The second chapter reviews the literature concerning the importance of sport events and the impact they have in event destinations. In addition, event leverage and portfolio planning are examined as tools to increase the tangible- economic and intangible-social outcomes derived from event hosting. The third chapter presents the evolution of Lima's planning process and analyzes its current conjunction.

Furthermore, a connection is made between the recommendations of the literature and the implementation of the Lima's plans. Finally, the concluding chapter presents an overview of the findings in an attempt to contribute to the development of the event and to maximize the event's leverage towards the consecution of economic and social outcomes for the city.

4 Chapter 2: Literature Review

This chapter explores the literature concerning four lines of inquiry related to the importance of sport events and their impact on host destinations. While the review differentiates the topics, exploring them independently, fewer distinctions are made between the sport and event management literature.

BEYOND HEDONICS: THE POWER OF SPORT

Sport events have become a tool that fosters economic development for cities

(Getz, 1997; Van den Berg, Braun, & Otgaar, 2000; Green, 2001; Kellett, Hede, &

Chalip, 2008). Event organizers claim that hosting sport events creates tangible and intangible benefits for cities and their communities. On the one hand, most assertions are related to the increase of domestic and inbound tourism (Solberg & Preuss, 2007). On the other hand, sports have the potential to fortify the sense of belonging, foster the development of social capital within the local community, and improve the host destination's brand (Chalip, 2006; Chalip & Costa, 2005). However, in Kellett's (2008, p.

102) words, "critics have persistently challenged the optimistic claims of event advocates" (Kellett et al., 2008). Certainly, the mere fact of hosting events does not guarantee a surplus of benefits over costs.

It is assumed that sport competitions and athletes are the core attractions that motivate event attendance (Pettersson & Getz, 2009), in turn engendering tourism

5 opportunities. However, it is the creation of event experiences by promoting social interactions that allow event organizers to increase attendance (Green, 2001) and capitalize on economic and social outcomes (Chalip, 2004). As Green (2001) suggested, by developing consumer identification and passion through socialization, consumption behaviors could be tailored to attain long-term benefits in the host community, such as nurturing social capital. In addition, to sustain over time the different event outcomes that host destinations could stimulate, "a series of interrelated and recurring events" (Ziakas &

Costa, 2011a) - best represented in the form of a portfolio of events - could increase and prolong the destination's desired goals and intended outcomes in future years (Chalip,

2004). The event management literature is clear in articulating the advantages of an event portfolio strategy: cities could foster economic development while simultaneously increasing the community pride, sense of excitement, and boosting tourism (Walo, Bull,

& Breen, 1996; Chalip & McGuirty, 2004; Chalip & Costa, 2005; Kellett et al., 2008;

Ziakas, 2010; Ziakas & Costa, 2011a, 2011b).

Although there is a large number of studies describing how sport events impact people's quality of life in host communities, the prescribed strategies and tactics to maximize short- and long-term benefits remain generic (Eckstein & Delaney, 2002;

Gratton, Shibli, & Coleman, 2005; Clark & Misener, 2014; Taks, Chalip, & Green,

2015). Since event outcomes are ephemeral due to their temporal boundaries (Ziakas &

Costa, 2011b), a new line of inquiry has been centered on the attention of strategic planning to maximize these outcomes (Chalip & McGuirty, 2004; Chalip, 2006; Ziakas &

Costa, 2011b; Taks et al., 2015). This approach, referred to by Chalip (2006) as 6 leveraging, consists of integrating the host community’s overall product and service mix with the triple bottom line framework, in order to set objectives and capitalize on social, economic and environmental issues (O'Brien & Chalip, 2008; Ziakas & Costa, 2011a,

2011b; Ziakas, 2014; Taks et al., 2015).

IDENTITY, SUBCULTURE AND SOCIAL CAPITAL

To maximize the economic impact on host communities, event organizers have consistently tried to attract a broader audience into events (Green, 2001). Due to the large governmental investments required to host medium- to large-sized events, mostly financed with public funds, the impact they generate to the community is often measured in terms of economic outputs through Economic Impact Analyses (EIA) (Ramchandani,

Davies, Coleman, Shibli, & Bingham, 2015). This valuation technique measures the flow of money into the local economy, exclusively generated from external resources. In other words, it does not measure the redistribution of money within the community, but the creation of new money derived from tourism, business and trade opportunities (O'Brien,

2006; Taks, Kesenne, Chalip, Green, & Martyn, 2011; Taks et al., 2015).

Due to the proliferation of sport events, the increase in entertainment opportunities for consumers, and the importance that EIA has taken in assessing economic outcomes, event organizers have had to incorporate event augmentations to broaden the event's appeal to other target segments (Green, 2001). As Green (2001) suggested, in order to attract more people into events, organizers must find creative ways

7 that go beyond the competition per se, and design augmentations to make events more alluring. These augmentations could be translated into fan opportunities where the event serves as a platform to learn, achieve or socialize (Green, 2001). Based on Green's (2001) work, such augmentations consist of identifying the subculture of the sport portrayed in the event. Her research on the Key West Women's Flag Football Tournament and The

Gold Coast Marathon, two small- to medium- sized events, indicated that sport events

"provide a time and a space in which participants can share and celebrate their identity"

(Green, 2001, p. 7). Similarly, Green indicates that event quality is judged "in far broader terms than the competition itself," which takes into consideration the additional experiences that are part of the event (Green, 2001, p. 8). Her indications suggest that the event will be judged as attractive if "it can be shown to provide opportunities to perform activities publicly that are consistent with a social identity that the attendee values"

(Green, 2001, p.6). In the same vein, several studies have pointed out that the likelihood that event participants and spectators will return to the hosting destination directly depends on the experience during their stay (e.g. Green, 2001; Morgan, 2008; Xing,

Chalip & Green, 2014). While experiential marketing professionals have not reached a consensus on how to create or elicit "transformative," "extraordinary," and "memorable" experiences (Pettersson & Getz, 2009, p. 310), empirical research has demonstrated that if experiences, derived from event augmentations, are directly related to the subculture of the event, event organizers will be able to add celebratory aspects that enhance the short- term and long-term outcomes (Green, 2001; Chalip & McGuirty, 2004).

8 Previous work on sport events has demonstrated that "their celebratory nature engenders a liminoid space that can foster social value" (Chalip, 2006, p. 109). The term liminality, which Chalip describes in his work, is the social interaction that occurs as a result of the shared experiences of visitors and community residents. In addition, liminality has the potential to produce a sense of community before, during, and after the event, which in turn is called communitas. These two symbiotic concepts, which embody social interaction and the feeling of celebration engendered in the community, have been suggested to foster social capital in several events (Chalip, 2006; Sherry, Karg, & O'May,

2011). Yet, the idea of sport as a means to foster social capital has not reached consensus among scholars. According to Skinner, Zakus and Cowell (2008), the relationship between sport and social capital should be further investigated to determine its directionality. They call into question if "sport builds social capital," if "social capital aids sport," or "if reciprocity exists" (Skinner et al., 2008, p. 270). Nevertheless, the scholars acknowledge the substantial social value inherent to sport by stating, "while there is currently little evidence that sport contributes to social capital through fostering social inclusion and community development, sport does have substantial social value"

(Skinner et al., 2008, p. 270).

Several studies have shown that most sport events, either mega or non-mega, are not profitable (Zimbalist, 2015). However, if they are profitable, their impact towards the hosting community often is nominal (Chalip, 2006). To increase the social value of sport events, Chalip (2006) suggests five strategies to create liminality: (a) enabling sociability,

(b) creating event-related social events, (c) facilitating informal social opportunities, (d) 9 producing ancillary events, and (e) theming. Chalip acknowledges that these strategies could increase the sense of celebration and sense of camaraderie - two elements suggested in previous studies to create liminality (Chalip 2006). This framework is depicted in Figure 2:

Figure 2: Objectives and means for generating and cultivating liminality and communitas. Reprinted from "Towards Social Leverage of Sport Events," by L. Chalip, 2006, Journal of Sport & Tourism, Volume (11), 114. Copyright 2006 Taylor & Francis. Reprinted with permission.

The first three strategies - enabling sociability, creating event-related social events, and facilitating informal social opportunities - aim to nurture a sense of 10 camaraderie by fostering social interactions. Chalip (2006) states that event activities must take place "in and around the venue" (Chalip, 2006, p. 113). Essentially, using a

"venue-based" and "beyond the venue" approach allows event organizers to create a continuous interaction with visitors to foster this feeling. Subsequently, the last two strategies - producing ancillary events and theming - elicit a feeling of celebration.

Further studies have supported Chalip's recommendations highlighting the importance of organizer inputs into the event and its surroundings. McDonald and Karg

(2014) emphasize that by actively inducing participation of sport consumers through ritual behaviors, a sense of belonging could be aroused. Additionally, these consumption rituals have the potential to create value to others - especially those who are not participating in the festivities. Their study, based in the Australian and New Zealand soccer league (A-League), reinforces the concept that sport events are co-created between event organizers and sport consumers (Prahalad & Ramaswamy, 2004; McDonald &

Karg, 2014). In the same vein, Morgan (2008) highlights the creation of social spaces as a sharing platform of personal experiences. The degree to which these experiences add a feeling of celebration relies on the interactions and manifestation of participants and spectators. In this regard, the improvement of the event's atmosphere is a central component. The symbolic value of theming, as a spatial experience, and the emotions elicited by the event atmosphere have demonstrated to be additional factors of value creation that prompts a feeling of celebration (Gottdiener, 1998; Uhrich & Koenigstorfer,

2009; Andon & Houck, 2011). To increase the social value of sport events, the above- mentioned strategies must be congruent with the subculture of the sport portrayed. 11 In sum, subculture and identity are key elements to magnify the impact of sport events (Green, 2001). By adding event augmentations that will increase the attendees’ opportunities to socialize and express their identities through celebrations and camaraderie, liminality can be amplified, communitas engendered and social capital fostered.

CREATING AN EVENT PORTFOLIO

Sport events are used as a development tool by cities in order to increase the awareness of the destination (Jago et al., 2003). The impacts of these events are two-fold: on the one hand, sport events promote tourism by influencing visitations (Getz, 2008); on the other, they can enhance or change the destination's brand through the creation of experiences for sport tourists (Harrison-Hill & Chalip, 2005). The discussion of which type of event (mega events vs. non-mega) maximizes the economic outcomes has produced mixed results (Ziakas, 2007). As a matter of fact, what we know from empirical research is that by hosting single mega events in isolation, host destinations will be unlikely to capitalize on long-term benefits. (Clark & Misener, 2014). With this in mind, a portfolio approach was proposed as a means to create synergies between different events, independently of whether they are sport or cultural events (Getz, 2008). This new approach to event planning allowed other scholars to develop strategies for leveraging the event portfolio with the host community in a way that different outcomes - economic, social, cultural, and others - could be achieved through event hosting (Chalip, 2004).

12 At first glance, the inception of event portfolio planning opened a new array of possibilities where joint strategies could be utilized by destination marketers, event managers, and tourism agents. However, little was known regarding how to integrate these interests. Due to the different nature of events, and the complexity of managing event stakeholders with regard to goal setting, a new line of inquiry suggested adopting a holistic approach to this phenomenon. In their work, Ziakas and Costa (2011a, 2011b) theorize an event portfolio as a "multiple-purpose developmental tool" (p. 413). They suggested that event portfolios should be seen "as a system and their actors ... operating within a network" (Ziakas & Costa, 2011b, p. 415). As they defined it (as cited in Clark

& Misener, 2014, p. 13), the portfolio "was more than just the accumulation of events".

According to the authors, event portfolios offered a system to assemble under a single purpose and vision all the events and their organizers. In their view, social capital develops by reinforcing the collaboration between stakeholders and defining the

"operational structure of the supporting network" (Ziakas & Costa, 2011b, p. 415).

Chalip and McGuirty (2004) offered an early attempt to understand how a combination of events could be embedded within a destination's product and service mix in order to maximize visitation and revenue generation. Although the scholars provided a useful framework consisting of six components comprised of both event and destination elements to be bundled with sport events, the identification of further strategies and tactics, were needed to increase stakeholder. Table 1 reports the findings for potential inclusions in event and destination elements.

13 Table 1: Potential Inclusions in Bundles for Sport Event Tourists

Note: From "Bundling sport events with the host destination" by L. Chalip and J. McGuirty, 2004, Journal of Sport Tourism, 9(3), p. 271. Reprinted with permission.

Although research suggests that an event portfolio approach serves as a development tool by integrating sport and tourism with economic and social developments, the advancement of the field has plateaued (Ziakas, 2007; Ziakas & Costa,

2011a, 2011b; Clark & Misener, 2014). According to Ziakas (2014), "there is a paucity of research on how to develop, manage and leverage event portfolios" (p. 7). Ziakas 14 believes that the contradictions and differences between sport and cultural events, make it difficult to integrate different event genres into a cohesive event framework for portfolio planning. Even though there is no research that discusses a given formula or system to appropriately create an efficient portfolio of events, Ziakas (2014) and Ziakas and Costa

(2011b) suggest a multidisciplinary research agenda to "begin building knowledge in this area and provide recommendations for event portfolio planning and management"

(Ziakas & Costa, 2011b, p. 420).

Due to the variability of outcomes among small and large events, research has shown that by creating a systematic event calendar, including events of different sizes, host communities can foster synergies between events to accomplish tangible and intangible benefits. As well, the review of the literature highlights that by adopting an event portfolio approach, destinations can cross-leverage such events to appeal to a broader audience fostering sustained social, economic, tourism and sport development

(Ziakas & Costa, 2011a, 2011b; Ziakas, 2007, 2014). As Ziakas (2014) acknowledges, the instrumental value of a portfolio of events is of great potential value because it can bring the event stakeholders together in a network, it can "integrate different purposes in a comprehensive strategy and incorporate different events into a coherent whole," it "can sustain the benefits of events that alone have an ephemeral lifespan," and it "can help in the optimal use of a host community's integrated set of resources"(Ziakas, 2014, p. 36).

15 EVENT LEVERAGE

Over the past decade the study of sport and event management has been predominately focused on the economic and social impact of events (e.g. Crompton 1995,

1999; Dweyer, Mellor, Mestelis, & Mules 2000; Fredline & Faulkner, 2001; Kim,

Gursoy, & Lee, 2006). Even though these economic and social impact studies provide useful information after the event, they do not offer any information as to why those outcomes occurred (Chalip, 2006). In this vein, impact studies do not offer enough resources for event planning and management (Bramwell, 1997). For this reason, Chalip

(2004) calls into question how event management is approached and proposes a shift of focus from impact to leverage. This new line of inquiry, classified as event leverage, seeks to identify the appropriate tactics and strategies to produce particular and prolonged outcomes, which in turn can be applied to future events (Chalip, 2006). In Chalip's (2006, p. 113) words: "the ultimate objective is not merely to evaluate what was done, but rather to learn in order to improve future leveraging efforts."

Although the maximization of short-term benefits such as visitation and injection of money into the economy of the host community remains a priority, from a leveraging perspective, these efforts are not left to chance as ex-post outcomes. Instead, they are the result of an ex-ante analysis and strategic planning efforts that also seek to attain long term-outcomes (O'Brien & Chalip, 2007). The main difference in this shift of paradigm, according to O'Brien and Chalip (2007) is that "rather than looking back at event outcomes," the strategic planning of events, known as leveraging, "can derive sustainable

16 benefits from sport events whether from enhanced tourism, business, social aspects or other types of benefits" (O'Brien & Chalip, 2007, p. 297).

Since the purpose of hosting a sport event is to increase the lasting benefits to the respective host community, scholars are paying more attention to event leveraging (e.g.

Green, 2001; Chalip, 2004, 2006; Chalip & McGuirty, 2004; Chalip & Costa, 2005;

O'Brien, 2006, 2007; O'Brien & Chalip, 2007, 2008; Ziakas & Costa, 2011a, 2011b). In this regard, Chalip (2004) suggested a model for host community event leverage aimed at addressing the needs of host destinations to capitalize on economic outcomes (see Figure

3). This model was informed by four previous studies by Chalip and Leyns (2002) from an event evaluation of the Gold Coast Honda Indy in Queensland, Australia. In Chalip's

(2004) framework, the event portfolio is foreseen as a leverageable resource for both short- and long- term benefits (O'Brien & Chalip, 2007). According to his framework, when leveraging on a portfolio of events, there are two opportunities to reach strategic objectives. Firstly, to optimize total trade and revenue in the short run, he suggests capitalizing on event visitors and trade. Secondly, Chalip proposes capitalizing on event media as a means to enhance the host community's image in the long run. However, since the effectiveness of this framework is dependent upon attendance, event organizers should take Green's subculture insight, utilizing augmentations to increase socialization, into account (Green, 2001; Chalip, 2004; O'Brien, 2007). Despite the fact that the framework identifies tactics to generate new money derived from event tourists and to enhance community image, there is scant research on economic leverage and no research on its application within a portfolio of events. 17

Figure 3: A schematic representation of event leverage. Reprinted from Beyond impact: A general model for host community event leverage (p. 229), by L. Chalip, 2004. In B. Ritchie and D. Adair (Eds.), Sport tourism: Interrelationships, impacts and issues, Clevedon, UK: Channel View. Copyright 2004 by Brent Ritchie, Daryl Adair and Laurence Chalip. Reprinted with permission.

Upon realizing the lack of a social component in Chalip's framework, O'Brien and

Chalip (2007) proposed an advanced model for social event leverage that considers event-driven liminality as a key resource to foster a sense of community (communitas).

According to the scholars, liminality is not the same as leverage, but it is a precondition for social leverage. This updated model maintains the base of Chalip's (2004) framework, 18 yet also focuses on social issues through stakeholders and the media. This framework is depicted in Figure 4.

Figure 4: Proposed model for social event leverage. Reprinted from Sport event and strategic leveraging: pushing towards the triple bottom line (p. 324), by D. O'Brien and L. Chalip, 2008. In A. Woodside and D. Martin (Eds.), Tourism Management: Analysis, Behavior and Strategy, Wallingford, UK: CABI International. Copyright 2008 by CABI International. Reprinted with permission.

19 There are two strategic goals in the social leverage model. The first one addresses bringing social issues to the public's attention through four central tactics: (a) aligning the event with targeted social issues, (b) aligning value between targeted social issues and the focal sport subculture, (c) prolonging the visitors stay, (d) and enticing community engagement with the targeted issues. The second objective utilizes event media to stimulate change in targeted characteristics of the community's social agenda. The framework suggests showcasing the issue via event advertising and reporting, and using the event in issue-related publicity to achieve this objective (O'Brien & Chalip, 2007,

2008).

These models have served event organizers in the planning and execution of events to maximize both social and economic outcomes. However, from a conceptual standpoint, there is a need for empirical research to further theorize the utility and application of event leveraging for a number of different scenarios, host cities, types of events, and stakeholders. By articulating and further exploring the social impact of different events within an event portfolio context, scholars will advance understanding of strategic planning which in turn will allow event organizers and destination marketers to foster sustained economic and social benefits.

The benefits derived from a portfolio planning approach are directly related to the degree of leverage between the events and host community, and between the events that make up the portfolio. There is a clear distinction in the literature with regard to strategic planning of event outcomes - known as event leverage - and legacy planning. Taks,

20 Chalip and Green (2015) clearly differentiate legacy planning from event leverage.

According to the scholars,

whereas legacy planning focuses on the event and the outcomes it might render for the community, event leverage focuses on the community and the ways it can integrate each event into its marketing and management strategies.

The essence of this argument clarifies that sport events and the outcomes that they engender cannot be left to chance. Indeed, to accomplish the different objectives set by the community's stakeholders, a strategic planning approach is needed.

ECONOMIC IMPACT ANALYSIS VS. COST BENEFIT ANALYSIS

As it has been argued, sport events have the potential to generate multiple impacts on host communities. These impacts range in areas such as economic, social and environmental, to tourism, urban regeneration, sport participation, and infrastructure

(Taks & Misener, 2015). However, organizers and scholars have paid more attention to the economic impact of medium- to large-events due to the significant government investments required for hosting (Ramchandani et al., 2015; Taks & Misener, 2015).

Since the costs associated with organizing these events are derived from public funds, local authorities, consultants and organizers justify hosting through economic impact analyses (EIA) to showcase the economic benefits that the city will receive. It has been recently argued that these estimations are formulated in a manner that will generate positive outcomes and that the results will overestimate the gains associated with event

21 hosting (e.g. Siegfried & Zimbalist, 2000; Taks et al., 2011; Kesenne, 2012; Taks, Green,

Chalip, Kesenne, & Martyn, 2013; Zimbalist, 2015).

By definition economic impact refers to "the net economic change in the income of host residents that results from spending by visitors from outside the community"

(Howard & Crompton, 2004, p. 183). In other words, economic impact measures the creation of new money injected into the local economy by non-residents and disregards the recirculation of money from community residents. Howard and Crompton (2004) alleged that consultants are inclined to factor in the community's expenditures; otherwise, the political usefulness of economic impacts studies would be insignificant for public funds expenditures and hosting justifications. In this regard, some studies "have changed the terminology from economic impact to economic activities, total annual spending, gross economic impact, economic surge, gross economic output, total contribution to the economy" (p. 198), among other terms.

Zimbalist (2015), also criticizes how economic impact studies are used as promotional tools even before events take place. This ex-ante method is used by organizing committees or their respective consultants to run predictions and assumptions through input-output modeling to estimate the future economic impact. Taks et al. (2011) argued that this method takes into consideration multipliers analysis, which are inappropriate to predict the impact of short-term events. Similarly, Matheson (2009) suggests that these reports exaggerated the economic benefits derived from events, particularly due to the inflated multipliers. As Zimbalist (2015) highlights, the application of EIA through input-output modeling, run in ex-ante studies, triggers spurious results 22 because "nothing specific to the event has yet happened that can be measured" (p. 34).

Likewise, the EIA run in ex-post studies are considered inappropriate given that they do not distinguish costs over benefits (Taks et al., 2011). Therefore, Cost Benefit Analyses are gaining major acceptance among scholars and sport economists since the cost of hosting is being factored into the estimated net benefits for host communities (Taks et al.,

2015).

According to Howard and Crompton (2004), when the costs are incorporated into an Economic Impact Analysis, the nature of the study changes to a Cost Benefit Analysis

(CBA). A CBA distinguishes benefits over costs. This type of study weighs the benefits generated by the event against the costs of providing them. It also takes into consideration the opportunity costs, which may be forgone by utilizing these resources to other projects (Zimbalist, 2015). To illustrate the difference between analyses, Taks et al.

(2011) compared the economic impact against the cost-benefit of the four-day long 2005

Pan-American Junior Athletics Championship, hosted in Windsor, Canada. The findings revealed a discrepancy of seven million dollars between EIA and CBA. Whereas, the EIA generated, approximately, a net impact of eleven million dollars as a result of hosting, the

CBA revealed a negative benefit to the City of Windsor of almost two and half million dollars. In their research the scholars acknowledged the challenges and limitations of the investigation. However, the results demonstrated, empirically, the different outcomes generated between these economic assessments applied to the same event.

23 Chapter 3: Discussion

Sport and sport events have been utilized as a venue for political action since the inception of the modern Olympics. Their importance in international relations play a pivotal role in displaying a country's superiority, the power of the state or its political- economic system (Rosner & Low, 2009; Kobierecki, 2013). These attributes, in addition to the potential economic benefits that could be gained from hosting, incite countries to bid. The are considered a major sporting event in the Americas. On the one hand, they allow countries across the continent - from Canada to Argentina - to compete in all 28 Olympic sports plus other optional ones designated by the organization.

On the other hand, they offer an opportunity to showcase the best athletes that will be competing, only a year later, in the Olympic Games. In 2015, the Toronto Pan-Am

Games passed the game-torch to Lima. Peru's capital city will host the eighteenth continental edition in 2019.

This discussion provides an overview of Lima's planning and implementation processes and tries to draw some insights from the literature. The purpose of the analysis is to highlight potential avenues to increase the benefits derived from the event to Lima's local community. This discussion does not look to criticize but to rather make recommendations based upon the state of the field.

24 AFTER THE OLYMPIC DREAM

It all started on May 21, 2008 when former Peruvian president, Alan García

Perez, announced that Peru would bid for the Games of the XXXI Olympiad - 2016

Summer Olympic Games - as part of the celebrations of the country's bicentennial independence anniversary. This decision, which was supported by the presidency of the council of ministers, was criticized by the media because, in part, the bidding deadline for the 2016 Games had already passed 9 months prior to García's announcement ('García:

Perú', 2008). The government's decision to bid for this mega-event was based on the putative impact it could bring to the country. Likewise, as claimed by former Minister of

Foreign Trade and Tourism, Mercedes Araoz, the political optimism as a potential bidding city was high since Peru's competitive capacities were increasing against benchmarks in the region; there were improvements in the country's risk index, as well as greater investment grades; and in general, the government was making progress in the construction of infrastructure ('Perú fracasa', 2008). Despite Peru's booming economy, driven by the extraction of raw materials, national authorities did not take into account that hosting a major sport event requires hard infrastructure changes related to urban functionalism. In this regard, in 2008 the country lacked structural requirements such as primary infrastructure - stadiums, arenas and special facilities as well as secondary infrastructure - athletic and media villages, training facilities, and parklands - needed for sport event cities (e.g. Solberg & Preuss, 2007). Despite Peru's abrupt Olympic-dream- start, former president of the Peruvian Institute of Sport (IPD), Arturo Woodman,

25 declared that if the initiative was not successful, the country would look forward to the

2020 Games.

A week after the announcement and having received a denial from the

International Olympic Committee to bid for the 2016 Games, former Peruvian president,

Alan García, again declared that Peru would bid to host the 2020 Summer Olympic

Games and he encouraged the population to think big and without fear. At the same time, former IPD president, Woodman, stated that García requested that if the bid for the 2016

Games was not feasible, Peru must host the 2015 Pan American Games (''García: Perú',

2008). It is worth mentioning that in 2007, a year earlier, Lima already presented its aspirations to consolidate a bid to host the 2015 Pan-Am Games to PASO, the Pan

American Sport Organization ('Perú presenta', 2007). In this regard, a second stakeholder appeared in the media. After Woodman and García's declarations, the Peruvian Olympic

Committee stated that the 2016 Games were not on the agenda and the country hoped to host the XVII Pan American Games in 2015 ('Perú fracasa', 2008). Additionally, it is important to highlight the misuse of the sport-bidding lexicon among politicians.

Technically, in the Olympic and Pan-Am settings, countries bids for cities, not for the country itself. On May 22, 2009, Lima presented its bid in the XXII General Assembly of

PASO in Montevideo, Uruguay, generating favorable impressions to PASO members

('Lima presentó', 2009). However, on November 6, 2009, the bidding process came to an end in Guadalajara, Mexico. PASO members awarded Toronto the rights to host the 2015

Pan-Am Games with 33 votes in favor, followed by Lima, with 11 votes, and in third place Bogotá, with 7 votes ('Toronto logró', 2009). 26 Peru's desire to be in the continental scene was not undeterred after the 2015 Pan-

American Games were awarded to Toronto. Four years later and with new officers in charge, on February 9, 2013 the Peruvian Olympic Committee presented Lima's bid to host the 2019 Pan American Games at PASO's extraordinary assembly in Jamaica. The main competitors were Ciudad Bolivar (Venezuela), La Punta (Argentina) and Santiago

() ('Lima oficializó', 2013). Among Lima's highlights, the bid emphasized the geo- strategic location of Peru's capital, being the only candidate city to be surrounded by the ocean. Moreover, the bid guaranteed the execution of all 28 sports included in the

Olympic program, in addition to other acmes such as an ideal climate temperature for sport competition (approximately 60 ºF within the months of competition); high-capacity flow through Lima's international airport (13 million tourist per year); expertise in hosting more than 33 international events over the last ten years; and Lima's designation as the gastronomic capital of America, with more than 65 thousand restaurants

(Ferreyros, 2013).

Four years after the disillusion of the 2015 Pan-Am Games, Lima embarked on a historic endeavor upon being elected, for its first time, the host city for the 2019 Pan-Am

Games. On October 11, 2013, Lima won by 31 votes the rights to host the continental event over Santiago (9 votes), La Punta (9 votes), and Ciudad Bolivar (8 votes) ('¡Lima será', 2013).

27 LIMA, FROM PLANNING TO IMPLEMENTATION

After five years of daydreaming, the biggest continental competition was secured.

During what should have been a smooth transition into the different phases and modes of the event's lifecycle, Lima faced a number of difficulties, jeopardizing more than once the execution of the Games. In this regard, we will describe three major components that have generated delays and confrontations between event stakeholders: the first was the delayed transition from a bid committee into an organizing committee; the second was the lack of a planning system materialized into a Master Plan; and the third was the absence of plans and considerations for the 2019 Pan-Am Games from incumbent and incoming Peruvian Presidents as well as Lima Mayors.

The organizational evolution of organizing committees is well grounded in the sport-event management literature (e.g. Getz, 1993; Yarbrough, 2000; Burbank et al.,

2001; Masterman, 2004; Parent, 2008). According to Parent and Smith-Swan (2013) the planning mode is composed of two critical phases: the bid and transition. As soon as the city wins the event's bid, the transition from a bid committee to an organizing committee should take approximately six months but should not exceed more than eight. The

Organizing Committee of the 2019 Lima Pan American Games (COPAL) was established through supreme resolution, sixteen months after the city was awarded the hosting rights on March 4, 2015. The transition took more time than expected because several issues related to the organizing committee arose. In January 2014, three months after the election of Lima, a first Organizing Committee was established and composed of six members: one representative of the presidency of the council of ministers; one from 28 the Peruvian Institute of Sport; one from the Congress; one from the Metropolitan

Municipality of Lima; one from the Regional Government of Callao; and one IOC member - Peruvian Ivan Dibós. This committee was presided over by the Peruvian

Olympic Committee. Despite that this Organizing Committee was recognized by PASO, the Peruvian government disowned their establishment for several reasons ('Gobierno desconoce', 2015). The first reason claimed by the government was that the Peruvian

Olympic Committee could not preside over the Organizing Committee because their function was to oversee and supervise, not to lead. The second reason was due to allegations of embezzlement. According to Congressman Daniel Abugatás, the government was not going to spend more money on the Pan-Am Games until the

Peruvian Olympic Committee justified the S/. 200 million soles, approximately US$65 million dollars that were given to advance the works ('Lima 2019', 2015). In addition, he recommended prosecuting the Peruvian Olympic Committee and the Peruvian Institute of

Sport due to the notorious mismanagement, indications of collusion, and embezzlement, spending more that S/. 350 million soles (~US$115 million dollars) since 2011 (Munive,

2015). Upon these declarations, the Peruvian Olympic Committee president, Jose

Quiñones, announced his resignation ('José Quiñones', 2015). However, the Peruvian

National Federations did not accept Quiñones's resignation and so he remained in office

('Ratifican a', 2015). With regard to the Peruvian Institute of Sport, these accusations did not transcend beyond media coverage because Francisco Boza had already resigned his position as president of the sport governing body, two months earlier, when it was revealed his implication with a fugitive former-government advisor to modify the 2013 29 Budget Law in the Parliament to use extraordinary resources for the 2013 Bolivarian

Games held in Trujillo, Peru ('Francisco Boza', 2014). However, Boza still serves as a general secretary at the Peruvian Olympic Committee ('Executive Committee', 2016). In the eyes of America, the image of Peru and its ability to organize the 2019 Pan-Am

Games shook the foundations of PASO. In this regard, in February 22, 2015, the government, through the Ministry of Education, declared that the organization of the

2019 Pan-American Games was of national interest and formalized the creation of the

Organizing Committee of the 2019 Pan-American Games (COPAL). According to the ministry's resolution, the COPAL was going to be established by two representatives of the Ministry of Education (one of whom would chair the committee); two representatives of the Metropolitan Municipality of Lima; the president of the Peruvian Olympic

Committee (COP) and one other COP representative; one representative of the Ministry of Economy and Finance; one representative of the Ministry of Transportation and

Communications; one member from the Ministry of Housing, Construction and

Sanitation; and a last member from the Regional Government of Callao. In addition, the resolution stated that COPAL could incorporate a member of the International Olympic

Committee only as an observer - this, in allusion to Ivan Dibós, the only Peruvian IOC member. It was also stated that COPAL members, in addition to the technical secretary, who was going to be assumed by the Peruvian Institute of Sport, were ad-honorem duties

('Gobierno declara', 2015). Ten days after the publication of the ministerial resolution and sixteen months after the election of Lima as host city, the bid committee finally transitioned to an organizing committee. 30 The complexity of the multiple activities required to host a Pan-American event calls for a systemic approach to planning. In this regard, the first role of COPAL was to elaborate and approve the Pan-Am Master Plan. This plan is considered the road map of the event where the event's objectives, means, costs and infrastructure fit cohesively into the city's vision to promote its development.

During the establishment of the first Organizing Committee in January 2014, which the government did not endorse, a first Master Plan was elaborated in conjunction with the Spanish firm based in Peru: Ayesa S.A. This first Master Plan was presented to the cabinet council for approval on July 25, 2014 ('Preguntas Frecuentes', 2014).

However, this Plan was never approved due to the fact that the government did not recognize the Organizing Committee. This Plan considered the development of the games in two urban rings, the center of the capital and the port area of Callao - a constitutional province part of the metropolitan area of Lima - which were presented in the bid and approved by PASO, yet later disregarded by the new Organizing Committee. According to Quiñones, the city's investment presented in the Plan represented a minimum of

US$800 to US$1.5 billion dollars ('Lima invertirá', 2014).

As soon as COPAL was established in February 22, 2015 and their members selected in March 4, 2015, COPAL's president, Luis Salazar, stated "(...) Peru has a tight timeframe for implementing the plan" ('Panamericanos 2019', 2015). In declarations to national press, Salazar indicated that all the sporting infrastructure, real estate works and communication plans were pending with four years and four months left. Additionally,

COPAL was going to be able to develop a Master Plan upon the confirmation of the 31 sports that were going to be part of the Pan-American program. At that point in time, the

Organizing Committee had two proposals for sporting infrastructure. One from the

Peruvian Olympic Committee and another from the Peruvian Institute of Sport. Despite that both proposals partially suggested common venues, there was significant difference in the budgets: US$700 and US$400 million dollars respectively ('Panamericanos 2019',

2015).

In September 2015, Congressmen Alberto Beingolea warned that the amount allocated to the sport sector for the fiscal year 2016 was going to be reduced. Beingolea who has been denouncing the lack of support from the central government emphasized the possible reduction to the Peruvian Institute of Sport's budget from S/. 194 million soles (~ US$60 million dollars) in 2015, to S/. 168 million (~ US$52.5 million dollars) in

2016. However, Salazar argued that everything was under control and there was no risk of losing the candidacy. Moreover, when he was consulted about the costs of the Pan-Am

Games he specified that the costs were not precise because the Master Plan was not ready. Nonetheless, the estimates were between S/. 1,000 and S/. 1,500 million soles (~

US$300 to US$500 million dollars) (Arcasi, 2015).

Thirty months after the election of Lima as host city and 13 months after the establishment of the Organizing Committee of the 2019 Lima Pan American Games, there was still no Master Plan for the continental competition. Furthermore, several projects that were portrayed in the bid and in the first Master Plan were either relocated or are not going to be ready for the Pan-Am Games. Such is the case with line two of the

Lima Metro, which was considered a key infrastructure for the transportation of athletes 32 and will not be ready until mid-2020 (Prialé, 2015); the relocation of the Gran Coliseo de

Lima, a twelve thousand seat coliseum, dismissed from the Rimac district because of discrepancies with local traders and residents (Fermi, 2015); and the never ending relocation of the Pan-American Village, which was finally announced on March

11, 2016 (Reyes, 2016). In view of Lima's delay, PASO's coordination commission, which visited the host city on February 2016, directed COPAL to hire event experts as soon as possible ('ODEPA pide', 2016). Lima has reached a critical point in the event's lifecycle where the benefits of hosting could be diminished by the increasing costs. After chasing the Pan-American dream for almost eight years, there is no specific figure regarding the hosting costs for the city and the country. In Peru's 2015 bid, the projected investment was US$259.60 million dollars. In the 2019 bid, the number rose to

US$741.25, and according to the latest predictions the investment could increase to

US$1.5 billion.

The reasons why governments are willing to host major sport events are grounded in the conception that events have the ability to modernize cities very fast, due to the increasing expenditure in hard infrastructure. As COPAL member Woodman noted, "if one works well on these events, host cities will improve regardless, since more is invested in them than in the infrastructure and sport organization" ('Panamericanos 2019',

2015). However, Juan Carlos Zevallos, former president of the Regulatory Agency for

Investment in Public Transportation Infrastructure (OSITRAN), emphasized that there was scant analysis in the investment needed for Lima in regard to the Pan-Am Games. He added that the city would require more than US$20,000 million dollars in basic 33 infrastructure to host the 2019 event (Cruz, 2013). Since the Pan-American Games are going to be hosted in three years time, current authorities will not be in office to deliver the games. With this is mind, it is worth analyzing the plans of future Peruvian presidents and Lima mayors.

The next Peruvian president, who will take office from July 28, 2016 until July

28, 2021, will deliver the Lima Games. The general elections will take place on April 10,

2016. Within the top 10, out of 19 candidates running for president, only 40% of them mention the continental event in their Government Plans (Huerto, 2016). Even more, three weeks before the presidential elections, according to the latest polls, only one out of the top 4 candidates, Pedro Pablo Kuczynski, talks about the Pan-Am Games. Kuczynski who has on average 15% of the votes, will virtually go to a second round in June 5, with

Keiko Fujimori who leads the polls with 33% ('Así van', 2016). On the one hand,

Kuczynski's plan offers different insights on how to promote sport participation (e.g. construction of sport facilities; 'Sport Bonds' program; construction of bikeways; increasing physical education hours per week in public schools; and investing in the 2019

Pan-Am Games) ('Plan de Gobierno 2016', 2016). On the other hand, Fujimori's plan only portrays sport as a formative tool to prevent delinquency, not including the Pan-Am

Games at all ('Plan de Gobierno de', 2016). Figure 5 shows the 2019 Lima Pan-American

Games' election and event dates with regard to the presidential timeline.

While the lack of interest in the Pan-Am Games from most presidential candidates is alarming, but not surprising, the Municipal and Regional candidates' interest is more uncertain. Lima's municipal election will take place on October 2018, almost a year 34 before the Pan-Am Games. The elected Mayor and municipal officials will take office in

January 1, 2019 - seven months prior to the inauguration. Since there is no factual information concerning the candidates or their municipal plans for the 2019 mandate, it is worth analyzing the current mayor's municipal administration. Luis Castañeda, Lima's incumbent mayor took office on January 1, 2015. Despite knowing that the Pan-Am

Games were awarded to Lima in October 2013, he failed to include any information in his government plan with regard to the planning of the continental event. In addition, he was further criticized after receiving PASO's flag in the closing ceremony of the 2015

Toronto Pan-American Games and then stating on one of his social media accounts "the city of Lima received the baton for the next Bolivarian Games" ('Twitter: Luis', 2015).

Even though Castañeda will not be the mayor of Lima during the Pan-Am Games, according to Bisso (2015), he is not free of the responsibilities related to preparing Lima to host the competition. Indeed, during his mandate, Castañeda will need to continue the reform of the public transportation and the necessary road infrastructure required for the event. Critics have claimed that his plans are not clear and that he has no intentions to follow the Metropolitan Urban Development Plan of Lima and Callao 2035, established by former mayor Susana Villarán (Belaunde, 2015; Leyton, 2015). Figure 6 shows the

2019 Lima Pan-American Game's election and event dates with regard to the municipality timeline.

35

Figure 5: 2019 Lima Pan-American Games' election and event dates with regard to the presidential timeline

Figure 6: 2019 Lima Pan-American Games' election and event dates with regard to the municipal timeline

36 LIMA: PERU'S EVENT DESTINATION

Lima is Peru's host city for excellence. In recent years, Lima has experienced a boom of events, which range from music festivals, culinary expositions and conferences on a wide array of topics. Since the 1940s, Lima has hosted the majority of international major sport events that the country has bid for (refer to Table 2). Despite that Peru has twenty-five regions and twenty large cities, the capital of Peru has repeatedly been chosen as the preferred host city due to the following: it holds one third of the national population - 9.8 million citizens ('Día de', 2015); it is the political, cultural, financial and commercial center of the country; it has the furthest development in infrastructure; and with regard to transportation, it is the most accessible from around the world ('Comité

Olímpico', 2013).

Table 2: Major Sport Events held in Peru

37 Table 2: continued

38 Even though Lima has experienced an accelerated growth in hosting major sport events, the variety of such events could be considered narrow with regard to the disciplines and volume of athletes required for the Pan-Am Games. From the thirty-seven major sport events hosted since 1947, eleven clusters of sport disciplines could be constructed (see Table 3). On the one hand, ten clusters, comprising twenty-nine sporting competitions, are made of events that have been, either juniors, under-20s or common disciplines for which Lima has basic infrastructure. On the other hand, the remaining eight events, which belong to the multiple-discipline cluster, have been mostly Bolivarian

Games and . The majority of these events have been beach games, which were hosted with temporary infrastructure, or youth games, which have lower standards with regard to the infrastructure required to host a Pan-American competition. Additionally, both regional multi-sport events, Bolivarian and South

American Games, are events involving only six and fourteen countries, respectively. The infrastructure standards required for Lima 2019 must consider a 38 discipline-program with forty-one countries participating (see Table 4).

39 Table 3: Lima major sport event grouped into clusters

40 Table 4: 2019 Pan-American Program

41 Table 4: continued

The infrastructure utilized for Lima's 1990 South American Games and 1997

Bolivarian Games will certainly be utilized as the bedrock for the 2019 competition.

42 However, as these venues will be between twelve and twenty nine years old by the competition's date, major updates and renovations are required.

TOWARDS EVENT LEVERAGE AND PORTFOLIO PLANNING

There is an eminent interest in Peru's sporting authorities to host major sport events. However, after reviewing Lima's organizational evolution towards the Pan-

American Games and the lack of interest of political authorities, there is still much work to do. From a sport management perspective, there are alarming issues that the

Organizing Committee (COPAL) has not yet taken into account. The most alarming one: no clear strategy exists for the event. This is the main reason why the transition from a planning mode to an implementation one becomes difficult to perform.

When a city hosts a major sport event, such as a hallmark, large-scale or a mega event, the transferred knowledge received from previous events is very important to outline the course of action of the future host. In this case, when a past event generates outcomes, these best practices are imitated and attempted to be copied in the next event in order to achieve the same desired results. A good example is the case of the 1992

Barcelona Olympic Games (e.g. Payne, 2006; Zimbalist, 2015). However, there is a big difference between hosting a major sport event and generating desired outcomes. That is to say, the correlation between hosting and generating outcomes does not imply causation. In the case of Barcelona, the city used the Olympics as a vehicle to implement a preexisting plan created in the late 1970s. The Olympics per se did not ignite

43 Barcelona's traction, as many believe, it was the strategy developed by the city that used the Games as a means to implement the Plan. In the case of Lima, the knowledge transferred from the 2015 Toronto Pan-American Games is necessary but not sufficient.

If COPAL centers its attention to legacy planning, for the event and the outcomes that it might render for the community, no sustainable competitive advantage will be created for

Lima. Au contraire, the staging of the 2019 Pan-American Games must rely on the strategic planning of outcomes — leveraging, focusing on community issues to maximize economic, political, social, or cultural effects. Therein, an overarching strategy is needed to put the Pan-Am Games at the service of the city of Lima.

To maximize the outcomes to be obtained from the event, such as increasing sport participation, developing sport infrastructure, increasing tourism, and strengthening the country's brand, two major plans must be elaborated: a Marketing Plan which connects the Pan-Am Games to the city, utilizing them as a catalyst for change; and an

Infrastructure Master Plan. The conjunction of these plans, which will depict a macro strategy, could be then implemented following Chalip's (2004) economic leverage framework and O'Brien and Chalip's (2008) social leverage framework.

The foundation of the economic leverage framework (refer to figure 7) is grounded on the diversification of the tourism product. Analyzing Lima's history of sport events, it is difficult to devise a portfolio planning approach. Instead a miscellaneous collection of events is noted. Even though there is a consistency between the hosting of multi-sport events, such as the three Bolivarian Games since 2012, which also includes the beach and youth competitions, these games were granted to Lima as a package. 44 Additionally, according to the event portfolio theory small-scale events have the potential to reinforce the benefits of large-scale events. However, the events hosted in Peru's capital have not been cross-leveraged to maximize the overall contribution.

Figure 7: A schematic representation of event leverage. Reprinted from Beyond impact: A general model for host community event leverage (p. 229), by L. Chalip, 2004. In B. Ritchie and D. Adair (Eds.), Sport tourism: Interrelationships, impacts and issues, Clevedon, UK: Channel View. Copyright 2004 by Brent Ritchie, Daryl Adair and Laurence Chalip. Reprinted with permission.

45 Within the event leverage framework, Chalip identified four means by which event organizers could maximize event visitation and trade. By enticing visitor spending, lengthening visitors stay, retaining event expenditures, and enhancing business relationships the host city would generate immediate leverage. However, it is worth noting that the above-mentioned means are directly dependent on event attendance: the greater the visitation the greater the benefits will be to the local community because of the injection of new money. In this regard, to maximize immediate leverage it is important to take into consideration Green's (2001) insights by incorporating event augmentations. These augmentations will enable COPAL to broaden the event's appeal and reach other market segments. In addition, by identifying the subculture of the sport portrayed, in this case a multi-genre event, and designing activities that would be translated into fan opportunities to participate and engage with the event, event organizers would be able to increase visitors spending and lengthen their stay. Referring to figure 7, by adding augmentations such as bundling Lima's cultural events into the agenda, offering event dinners or parties in several heritage sites, or by performing event activations consistent with the Pan-American sport values, immediate economic leverage could be attained.

To maximize the benefits derived by the city in the long run, event organizers must focus on event media to attain long-term leverage. In this respect, two tactics were suggested by Chalip (2004) to enhance the host destination's image: showcase the host city to the region through event advertising and reporting, and use the event in regional advertising and promotions. According to Chalip and Costa (2005) the brand of an event 46 destination represents more than just the location's name or associated logo. It represents the "overall impression that the destination creates in the minds of potential tourists, including physical attributes, services, attractions, names, logo, reputation, and the benefits that those provide the visitor" (p. 219). In this vein, Lima could showcase the event via advertising and reporting, following Chalip's (2004) suggested three forms of media to communicate the event's attributes: (i) advertising aimed at building consumer interest, (ii) journalists' reporting on the event, (iii) sponsor's use of the event in advertising and promotions.

The first form of media consists in building consumer interest towards the event.

This tactic has the potential to build a linkage between the images associated with Lima and its community, and those of the Pan-American Games in a way that generates mutual benefits for community and event organizers. A fundamental aspect of this association relies on identifying the characteristics that visitors find attractive from the city and its community.

The second form of media referenced by Chalip, relies on the identification of compelling reasons for journalists to talk about the city. In this regard, Chalip (2005) mentioned that if no compelling reason existed, there was no reason to expect media coverage to the destination city. COPAL could replicate the Visiting Journalists Program implemented by the Australian Tourism Commission (ATC) for the Sydney 2000

Olympics. According to Lenskyj (2002) the ATC created the program to generate favorable publicity about Australia as a tourist destination. As a result, between 1998 and

2000 more than three thousand media writers and broadcasters were invited to Sydney 47 generating almost $2.3 billion dollars worth of publicity. The program aimed to familiarize journalists by providing visits before, during, and after the Games; and in finding stories that could generate compelling reasons to visit the country.

The third form of media is through the sponsor's use of the event advertising and reporting. According to Chalip and Costa (2005) "the mere presence of an event at the destination can have little impact or even negative impact on the host destination brand"

(p. 224). For this reason they suggested a form of co-branding between destination marketers and event marketers. The co-branding effect consists in pairing the event's brand with the destination brand in order to transfer desired associations. Considering

Lima's forthcoming major event, COPAL could incorporate images of the city into the

Pan-Am Games advertising and promotions. Likewise, the Commission for the

Promotion of Peruvian Exports and Tourism (PROMPERU) could incorporate Pan-

American images into Lima's advertising and promotions strategy. By strategically pairing the brands, Lima could extend the benefits beyond the event's completion date.

The foundation of the social leverage framework (refer to figure 8) is grounded on the liminality generated through the sport event. It has been argued that major sport events generate a sense of community and patriotism (e.g. Waitt, 2003), creating liminal spaces and manifestations of communitas. In order to maximize and prolong the social benefits derived from the event a strategic approach is required. Consequently, the development of a marketing plan is important to the city.

The marketing discipline focuses on the exchange of tangible and intangible products or services. Since the purpose of marketing is to create value among 48 participants, this plan must identify the target market, define a value proposition - considering how the Pan-Am Games fits into Lima's plans and how it differentiates from other major events - and design the set of activities that will enable COPAL to execute the plan. Thus, the articulation of strategy and tactics is required to attain predetermined goals, even before designating the location of the sport infrastructure. The Infrastructure

Master Plan, which Lima has not yet formalized in a document, will respond to the specifics of the marketing offering, allowing the organizing committee to project the costs of the event.

49

Figure 8: Proposed model for social event leverage. Reprinted from Sport event and strategic leveraging: pushing towards the triple bottom line (p. 324), by D. O'Brien and L. Chalip, 2008. In A. Woodside and D. Martin (Eds.), Tourism Management: Analysis, Behavior and Strategy, Wallingford, UK: CABI International. Copyright 2008 by CABI International. Reprinted with permission.

At a fundamental level, the creation of value is accomplished by participating and connecting with the sport event. Without the engagement of the different publics, this process would be truncated. In this vein, from an event leverage perspective, one could say that liminality is a precondition of value creation. Likewise, as stated by O'Brien and

50 Chalip (2007) liminality is also a precondition for social leverage. To amplify and create liminoid experiences, based on O'Brien and Chalip's (2008) framework, event organizers should foster social interactions and prompt feelings of celebration. These tactics must be conceived when designing the event's offerings in the Marketing Plan.

As well, within the value creation process, the articulation of polysemic structures is essential in the communication channel of the marketing mix variables (tactics). These structures embedded in narratives, symbols, and genres, which are multiple forms of experiences, have two effects in the promotion of sport events. Firstly, they can enhance the event's attractiveness by creating multiple stories for a varied audience segment.

Secondly, they serve as leverage tools to address social issues, build networks and empower community action (e.g. Chalip, 1992; Harrison-Hill & Chalip, 2005). Lima has not yet articulated a storytelling that could be communicated from these structures.

Considering the above-mentioned premises, the creation of liminality will generate two leverageable opportunities for social development: the communitas engendered in the host destination, and the attention of event media and sponsors. To foster the creation of communitas in the host destination and attain social benefits from sport events, COPAL should seek to focus target social issues to the event stakeholders' attention. This objective could be achieved by four means: (i) aligning the Pan-Am

Games with targeted social issues; (ii) aligning values between targeted social issues and focal sport subcultures; (iii) lengthening visitors stay in Lima; and (iv) enticing engagement with targeted social issues. The fact that COPAL must construct and remodel

25 competition- and 30 training venues, enables an opportunity to align the Lima Games 51 with social issues. These infrastructure projects could serve as a tool for urban regeneration in suburbs with serious social issues, such as youth criminality, homelessness, drug addiction, populations considered socially excluded, and suburbs that lack basic sport infrastructure. These venues not only could serve as a vehicle to promote sport participation and improve the living conditions in strategically designated areas, but would also improve community cohesion and promote attitudinal change in regard to the

Pan-American Games. A clear missed opportunity to foster social development was the construction of the Gran Coliseo de Lima, a volleyball and arena dismissed from Cantagallo district due to discrepancies with local traders and residents. This coliseum was considered, by the bid committee and COPAL, as the jewel of the crown as far as infrastructure is concerned. However, due to disagreements between COPAL and the population of the Cantagallo area, the coliseum would not be included in the new

Infrastructure Master Plan (Fermi, 2015). Hence, a regeneration and social opportunity could be lost.

To maximize the social benefits derived in the long run, COPAL must also rely on the attention of event media. Like the economic framework, the social leverage one must link social issues to and from the event, embedding stories into narratives to address social issues and generate benefits, long after the closing ceremony of the 2019 Lima

Pan-American Games.

52 Chapter 4: Conclusion

Sport events have been increasingly utilized as a means for economic regeneration for cities. As well, major sport events are being further employed as means to achieve political, cultural and economic recognition for host destinations. Since there is limited or contradictory evidence regarding the profitability of sport events, event advocates claim that important intangible benefits are derived from hosting. While destination marketers believe that these intangible benefits are embedded within the event by merely hosting it, the community will benefit from event outcomes, scholars have demonstrated that a strategic planning approach is needed to obtain these desired results.

In this vein, a paradigm shift from impact to leverage in event and tourism management has been recently argued. This shift will enable host cities to sustain event outcomes, well beyond their completion date.

Nowadays, sport products, such as major events, are less regarded as finished objects. Instead they are conceived as a process in which customers can immerse and provide inputs to tailor the consumption experience (e.g. Firat, Dholakia, & Venkatesh,

1995) The foundations of this co-creation process rely on understanding the identity and subculture of the sport portrayed. By adding event augmentations, aligned with the values of the sport and the social identity of consumers, a bigger market segment could be attracted to the event, thus major outcomes could be derived from the event. Since event outcomes are ephemeral due to the temporal boundaries of sport events, the academic discourse indicates that events in isolation are not favorable for destinations; rather, a 53 portfolio of interrelated events should be utilized to prolong and increase the destination's desired goals and intended outcomes. Given that events significantly contribute to tourism and to the image of the host community, it is thoroughly grounded in the event management literature that cultivating a feeling of celebration and engendering a sense of community are fundamental steps to leverage both economic and social outcomes.

Although scholars have proposed several frameworks that help us understand how to create event-driven liminiality, there is much need for empirical research that help us advance the understanding of the field to create lasting benefits; not only for economic and social, but also for political and environmental issues. By gaining more understanding and performing empirical research on medium to large events, scholars will be able to build a general framework in which tactics and strategies can be applied across events, irrespective of their nature. By further assessing the event portfolio strategy from a longitudinal standpoint the academic community will get valuable insights on how events should be cross-leveraged.

Lima's biggest sport event will be held in less than three and a half years. Ad portas of the election of a new presidential candidate the tensions have heightened, again, between the event owner, PASO, and the event organizer, COPAL, due to the short time remaining to implement the Infrastructure Master Plan. According to Munive (2016)

COPAL announced on April 10, that the Infrastructure Master Plan was finally ready 31 months after getting the bid. However, Lima's organizing committee must wait until the elected president takes office on July 28 to submit the plan to the presidency of the council of ministers to receive approval. PASO's authorities will visit Lima in August 54 2016, when the new governmental administration is fully established. The delays in the infrastructure progress have generated greater concerns from other stakeholders as well.

In this regard, the discussion has focused on the economic impact that the city could forfeit if Lima looses the candidacy in PASO's forthcoming visit. According to the president of Lima's Convention and Visitors Bureau, Carlos Canales the 2019 Pan-

American Games will generate ten thousand jobs and an economic impact of US$250 million dollars to the City of Lima, mainly from tourism ('Juegos ¿está, 2016; 'Juegos

¿corre, 2016). Once again, ex-ante predictions are being used to run assumptions through input-output modeling in order to estimate the future economic impact. As it has been previously argued, this method takes into consideration multipliers analyses, which are inappropriate to predict the impact of events. Additionally, the statements made by

Canales do not distinguish costs over benefits, specially considering that the estimated operative costs of the Pan-Am Games range between US$800 and US$1.5 billion dollars.

Lima's Pan-American organizational evolution has been faced by a number of difficulties that have generated delays and confrontations between event stakeholders.

The most important are the delayed transition from a bid committee into an organizing committee, which took sixteen months after the election of Lima as host city; the lack of a planning system materialized into a Marketing Plan and Infrastructure Plan - the former is non-existent, the latter has not yet been approved by the Peruvian government, which is financing the required sport infrastructure with taxpayer's money; and the absence of plans or considerations from the incumbent Mayor of Lima, as well as the incoming

Peruvian presidential candidates. In particular, the delay in the development of plans has 55 generated greater concerns since it evinces that the Pan-Am Games are not being utilized for urban regeneration and in the development of hard infrastructure related to improving

Lima's urban functionalism. Moreover, an impact mindset can be perceived in most declarations from COPAL members, given that they continuously argue that they will have the infrastructure ready for the event, since there is still time. In order to improve the desired outcomes and prolong the benefits derived from the Games, the organizing committee must adopt an event leverage perspective. This mindset should be centered on the strategic planning of events outcomes where the efforts are not left to chance as ex- post effects. Instead, they are the result of an ex-ante analysis and implementation.

In view of the fact that Lima hosts most of the special events held in Peru, an event portfolio strategy is recommended for the Peruvian capital. By cross leveraging different event genres and articulating the advantages of an event portfolio strategy, Lima would be able to enhance the city's image or brand, diversify its tourism product and foster its development, and tackle seasonality. The contextual dynamic of this approach will need to take into consideration how events are strategically incorporated into Lima's mix of tourism products and services, in order to reinforce, enhance or change the destination's brand by associating the images, values and attractions of major sport events.

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66 Vita

Gianfranco Esposito was born in Lima, Peru. After completing his work at Colegio Santa María Marianistas, Lima, Peru, in 2003, he entered Victoria University - VU in Melbourne, Australia. In June, 2005, he received an Associates Degree (Certificate IV) in Sport Development from VU. During the years 2005 to 2010 he attended the

Universidad Peruana de Ciencias Aplicadas - UPC, in Lima Peru. He received a double degree - Bachelors of Business Administration and International Business - from UPC in July 2010. During the following year, he received the professional titles of Licentiate in Business Administration and Licentiate in International Business from the same institution. In July, 2014, he entered the Graduate School at the University of Texas at Austin.

Address: [email protected]

This manuscript was typed by the author.

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