Sport and the Economy

SPORT AND THE ECONOMY Júlia Bosch The definition of sport as an economic sector Over recent decades, social recognition of the importance of sport has been strengthened both by the extensive coverage of major sporting events in the media and by ordinary people practicing and taking part in sports. The social significance of sport has economic ramifications insofar as activities in the sector lead to the production of goods and services, generating income and creating employment. The standard categories used in systems of economic accounting do not always correlate with sectors that are of special economic or social interest. This is the case with sport, which is not an economic sector in the sense of the term used in economic accounting that is based on the official national classification of economic activities; instead, it is a sector that cuts across categories to encompass very different activities, from sportswear or sports equipment manufacture (industrial sector) to sports facility management (service sector), while also including sports education or the betting industry (also within the service sector). As a result, what is known as the Vilnius Definition of Sport1 was drawn up at a European level, distinguishing between a strict definition that encompasses all 1 Agreed on by the EU Working Group on Sport and Economics at a meeting held in the Lithuanian capital in 2007. 1 the goods and services necessary for the practice of sport (clothes and equipment, facility management, etc.), and a broader definition, which includes the stricter sense as well as all those goods and services that are related to sporting activity but provided by sectors other than the sports sector (media, transport, tourism, etc.). Thus, evaluating the importance of sport within the economy requires us to define its different facets, to specify the sources to be used and the way existing or derived information should be handled, and to generate original data where necessary. The question of the importance of sport can be approached from two different perspectives: a valuation of its principal macroeconomic measures (production, intermediate consumption, value added and employment, among others), and an assessment of the economic impact of sports events on the country. In the first case, an estimate is made of the economic value of the range of activities that are directly or indirectly linked to sport, based on an analysis of the profit and loss accounts of the various producers of sport-related goods or services previously identified. In the second, studies of the economic impact of sporting events focus on finding out what effects the holding of a specific event (the Olympic games, world championships, marathons, etc.) have on the economy of the host city. In economic literature, one of the instruments most frequently used to conduct this kind of study are Input-Output Tables, which measure the effects of the interdependence of different economic sectors. As is evident, the two perspectives are complementary. The economic weight of sport in Catalonia and the province of Barcelona Two relatively recent studies, which are updates of previous studies, have evaluated the economic importance of sport in Catalonia and the province of Barcelona from the point of view of supply, based, firstly, on identifying suppliers of sports-related goods and services and then analyzing their profit 2 and loss accounts (statements of income and expenditure), which provide the economic information necessary to estimate the economic aggregates of the sector2. Taking into account the economic weight of the city of Barcelona as against Catalonia and the province, 31.2% and 40.5% respectively, in terms of gross value added, and the fact that the productive structures in question are extremely similar, the information presented in these studies is useful in evaluating the economic importance of sport to the city of Barcelona. For the whole of Catalonia, the macroeconomic measures of the sports sector estimated for 2013 are as follows: €3,869m in total actual output and €2,074m in gross value added (GVA), a figure that represents 1.2% of the total GVA of Catalonia in the same year. For the province of Barcelona the figures are €2,954m in actual output and €1,612m in GVA, one percentage point higher relative to the total (1.3%) than in the case of the whole of Catalonia3. To put these numbers in context, it is worth noting that the textile sector accounts for 1% of total GVA, pharmaceutical products and manufacture of transport equipment 1.3%, and the chemical industry 2.2%, according to data from Idescat (The Statistical Institute of Catalonia) on GVA per sector for 2013. Both in Catalonia as a whole and the province of Barcelona, more than 87% of total GVA is generated by producers in the private sector (sports clubs and associations, etc.), while the rest is generated by the public sector (companies dependent on the Government of Catalonia, provincial government and city councils, etc.)4. The preponderance of the private sector is a logical result, if we take into account the fact that the principal actors in the world of sport are sports clubs, without forgetting the significant amount of sport-related 2 Bosch, J., García, J. and Murillo, C. (2015), El pes econòmic de l’esport a Catalunya el 2013, mimeograph, Consell Català de l’Esport, Generalitat de Catalunya. Bosch, J., García, J. and Murillo, C. (2016), Avaluació del pes econòmic de l’esport a la demarcació de Barcelona el 2013, Col·lecció Eines, Sèrie Esports no. 1, Diputació de Barcelona. http://www1.diba.cat/llibreria/lstDetall_Publicacions.asp?Opener=Diputacio&ID=58847 3 By a simple rule of three, we can estimate the sport-related GVA of the city of Barcelona to be around €650m. 4 For more detail on the producers in the sports sector that were considered in these studies, see also Bosch, J., García, J. and Murillo, C. (2018), “El sector econòmic de l’esport a Catalunya”, Revista Econòmica de Catalunya, Col·legi d’Economistes de Catalunya, June 2018. 3 goods and services produced by private companies. By contrast, the public sector is decisive in providing individual citizens with the facilities necessary for the practice of sport, a task it fulfils through investment in sports infrastructure and transfers (current and capital). At the same time, the total number of people employed in the sports sector in Catalonia in 2013 was almost 74,000, and in the province of Barcelona, 47,991, figures that represent, respectively, 2.5% and 2.2% of the total population in employment in each territory. Although these figures in themselves show that sport is a highly significant activity from an economic point of view, it is worth noting that the studies cited assessed only a small proportion of the sectors included in the broader definition mentioned above. The principal reason for the exclusion of these other sectors is the impossibility of isolating those parts that relate strictly to sport. The economic impact of sporting events Hosting the Olympic games, a world championship in a particular sport, or any other sporting event of significant size, can have major effects for the host city in terms of its economic development, both in generating economic activity and in creating employment. Thus, any sporting event entails, on the one hand, a series of necessary expenses before it can be set in motion and, on the other, an influx of competitors and visitors from outside the city who will spend money on accommodation, meals and other goods and services, all of these expenses representing an injection of income and generating local production and employment. Studies of the economic impact of sporting events respond to the need of host 4 cities to know what repercussions these events have on the local economy, especially if the city government has been directly involved in their organization, or has provided subsidies or municipal facilities for the event. No one can be unaware of the importance the 1992 Olympics had for Barcelona, not only beforehand, with the injection of public and private investment in improvements to the city, but also for the way they placed the city on the world stage, bringing a boost to tourism that still endures 26 years on. But sporting events with a less global reach also have an economic impact on the city, such as the Formula 1 and MotoGP or the Godó tennis tournament, which bring an influx of visitors to Barcelona every year. Other examples include the economic impact of the World Swimming Championships that were held in Barcelona in 2013, the Zurich Barcelona Marathon of 2015 or the water polo Final Six held at the Atlètic-Barceloneta Swimming Club, also in 20155. The total impact on production of the World Swimming Championships was over €210m, while that of the marathon was almost €3m and that of the Final Six, more than €1.2m. 5 Bosch, J. (2013), Impacte econòmic dels 15ns. FINA Campionats del Món de Natació de Barcelona 2013, mimeograph, Organising Committee, Spanish Swimming Federation. Bosch, J. (2015), Impacte econòmic de la Zurich Marató de Barcelona 2015, mimeograph, RPM Racing and ASO. Bosch, J. (2015), Impacte econòmic de la Final Six de Waterpolo 2015, mimeograph, Atlètic-Barceloneta Swimming Club. 5 .

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