Hosting Some Matches in Euro 2028 is Good News – Just Don’t Expect Any Economic Bonanza.

Last week it was confirmed that the 2028 European Championships would be jointly hosted by Ireland and the UK. The announcement hardly came as a surprise given that Turkey which had submitted the only alternative to the joint Irish/UK bid, had withdrawn its bid the previous week. Thus, the decision by UEFA amounted to little more than a rubber-stamping exercise.

The Aviva Stadium in Dublin is set to host six matches, including a quarter final. The joint-bid also envisages that a number of matches would be played at the GAA’s Belfast Casement Park ground. This is despite the fact that it has been closed since 2013 and is in a rather run-down and decrepit state.

The announcement that a number of matches are to be staged in the Aviva was accompanied by the usual claims that this would produce significant economic and financial benefits. Minister for Tourism and Sport, Catherine Martin, reportedly told Cabinet colleagues in April that the gross added value to the economy would be in the region of €189 million. Apparently, Minister for Public Expenditure Reform, Paschal Donohoe, was somewhat unimpressed. He was reported to have expressed concerns that that there is “a plausible scenario whereby the investment that will go into this project … may not come close to realising its estimated gross added value” according to a report in the Irish Times. Experience suggests that he was probably right to be concerned.

There is plenty of evidence indicating that the economic benefits of hosting mega sporting events fall well below the levels predicted in advance. There are multiple reasons for this. Given that the relevant sporting bodies organising such events are looking for financial support from Government to cover the costs, there is an obvious incentive for them to come up with over optimistic estimates of the likely benefits, usually supported by consultants’ reports.

Claims about the likely number of travelling fans generally prove to be over-optimistic. Similarly, estimates about the amount they are likely to spend, and the multiplier effects of such spending are frequently inflated. In addition, estimates of benefits usually ignore displacement effects. These arise because tourists who would otherwise have come are likely to be dissuaded from doing so. This is nothing to do with football per se or concerns about possible hooliganism. It is a generally observed phenomenon across all types of sporting events. People will decide not to come due to concerns that a large number of sports fans means the place is just going to be very busy leading to difficulties securing accommodation, while bars and restaurants are also likely to be busy. According to reports the estimated benefits accruing to the Irish economy, assumed a zero-displacement effect on tourism. In other words, it is assumed that tourists who might decide not to visit Ireland at the time of the tournament will simply decide to come at another time of the year. Apparently, Mr Donohoe questioned this heroic assumption some months back. There is also an additional displacement effect which occurs because some residents who might not have gone abroad decide to go away in order to avoid the crowds.

The cost of hosting the matches was originally estimated at €65m but “when inflation and contingency funds were accounted for, it was determined the figure could rise to just under €93 million.” Given the State’s record at failing to deliver significant infrastructure projects within budget, think of the bottomless pit that is the National Children’s Hospital, a significant cost overrun combined with benefits coming in below predictions and the State could easily record a net loss from co-hosting the tournament.

The economic case in favour of mega sports events is extremely weak at best. Claims of substantial economic and financial benefits should be taken with a large dose of salt. At the same time, however, there are some potential positives. There are possible intangible benefits such as the potential “feel-good” factor that may flow if the Irish team has a good run in the tournament, although at the moment its far from certain that they would even quality. There is some evidence that this could have a short-term positive impact on the economy due to increased productivity. The fact of actually hosting a major sports tournament could also produce a feel-good effect through increased national pride. If we manage to keep a tight rein on costs, something for which the State has a poor track record, then co-hosting the tournament might not have a significant negative effect while it might generate some positive feel-good effect if the boys in green can up their game. Just don’t count on an economic bonanza.

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