Economics of Commonwealth Games

– Vishal Soni

Major international sporting events, such as the Olympic Games, FIFA World Cup, and  Commonwealth Games, are occasions not only for sporting competition at the highest level but also for diplomacy, place branding, and promoting trade, investment, and tourism in the host location. The quadrennial Commonwealth Games are the most significant regular opportunity for the 72 Commonwealth countries and territories to demonstrate their collective identity to the rest of the world. Birmingham 2022 is the most attended edition of the Commonwealth Games in the UK. Over 1.3 million tickets were sold for the competition, and BBC Sport’s coverage of the Birmingham 2022 Commonwealth Games was streamed a record-breaking 57.1 million times during the 11-day event. This was over six times the amount of streams seen in previous years, with a total of 9m for the Gold Coast 2018 Commonwealth Games and 8.2m for the Glasgow 2014 Commonwealth Games.

The Commonwealth Games are the largest multi-sport competition outside of the Olympics. Since their inception as the British Empire Games in 1930, the Games have evolved in parallel with the Commonwealth’s identity, from imperial organization to post-colonial federation to voluntary association of independent and equal sovereign states united by shared values, culture, and interests.

The 2022 Commonwealth Games, officially known as the XXII Commonwealth Games and commonly known as Birmingham 2022, were hosted by Birmingham, England, between 28 July and 8 August 2022. Like the previous renditions of the Games, this sports mega-event, together with business networking initiatives like the Business and Tourism Programme (BATP), an initiative designed to create a long-term economic legacy from the Birmingham 2022 Commonwealth Games, bolstering bilateral ties between the UK and Commonwealth markets.

Although the Commonwealth is not a formal trading bloc, the 53 members enjoy a formidable trade advantage. Historical ties, familiar administrative and legal systems, the use of essentially one language, English, as the means of communicating with foreign partners, have contributed to solid trade relationships among its members. Commonwealth countries, on average, tend to trade around 20 percent more and generate 10 percent more investment with each other. There are also considerable untapped economic opportunities: intra-Commonwealth trade in goods and services are expected to reach close to $700 billion by end of 2022.  It is within this context that sport makes an important contribution to strengthening the social, cultural and commercial bonds of the Commonwealth.

Commercial trends in the global sports industry:

The global sports market is expected to grow from $354.96 billion in 2021 to $501.43 billion in 2022 at a compound annual growth rate (CAGR) of 41.3%. The growth is mainly due to the companies rearranging their operations and recovering from the COVID-19 impact, which had earlier led to restrictive containment measures involving social distancing, remote working, and the closure of commercial activities that resulted in operational challenges. The market is expected to reach $707.84 billion in 2026 at a CAGR of 9%.

Looking at India’s budget allocation, we observe that Last year (for 2021-22), the Union budget had allocated Rs 2,596.14 crore to sports, which was less than Rs 230.78 crore allocated in the previous financial year. There has been an increase of Rs 305.58 crore in the sports budget. The increase in budget was done keeping in mind the upcoming Commonwealth Games and Asian Games. The amount allocated to the National Youth Empowerment Program has also been increased this year ( from 108 crores to Rs 138 crore). The Khelo India program’s budget has also increased from Rs 879 crore to Rs 974 crore. Thus we observe how big the sports industry has become.

Sports diplomacy and the Commonwealth Games:

The aim of maintaining bonds between the countries and territories of the British Empire was visible from the beginning of the Commonwealth Games. It is believed that when the Commonwealth of Nations began to lose its position in global politics, the significance of the Commonwealth Games began to grow. This leads us to conclude that, as in other forms of positive sports diplomacy that aim to bring countries closer together, an activity directed at increasing sports bonds could also indirectly affect political ties. This mechanism is also used in public diplomacy when non-political exchanges and communications produce positive emotions towards a particular country in a targeted society.

The Commonwealth Games are organized to foster rapprochement between countries with a shared past. The all-encompassing emphasis on friendliness during the Games appears to be directed at eliminating nationalistic attitudes sometimes evoked during sports competitions. The other objective is to broaden the identity of the people of the Commonwealth of Nations and encourage a feeling of closeness and kinship. This is another reference to the public diplomacy seen in the diplomatic mechanisms of the Commonwealth Games.

The Commonwealth Games’ objective of bringing the participating countries closer can be derived from their organizers’ formal documents, the desired friendly atmosphere, and the extensive symbolism of the event. The Queen’s Baton Relay appears to be particularly worth mentioning. It resembles the Olympic torch relay, whose traditions date back to 1958. The relay route always starts in Buckingham Palace. In contrast, the last participant of the relay hands the baton to the Queen or her representative during the opening ceremony of the Commonwealth Games. The Queen’s Baton Relay became a symbol of the unity and diversity of the member states of the Commonwealth of Nations.

Economic impact on Birmingham (The Host) :

Birmingham has been ranked as the 10th best city for small businesses, according to a report examining the top 100 most populated cities for enterprise in Europe. Birmingham is the only UK city in the top 10, based on the variety of firms, business density, level of support and incentives, and the amount of available commercial space it maintains.

The West Midlands has an economy of £126 billion; it is home to almost six million people and over 450,000 businesses. With a largely successful business environment in Birmingham, the Commonwealth Games have allowed the opportunity for more than 6,500 businesses to sign up with authority regarding working on new opportunities to deliver the event.

Not only will the Commonwealth Games positively impact businesses in Birmingham city, but it has also opened more doors in the job market. There were 4,500 jobs created annually until 2022 in preparation for the Commonwealth Games, supporting engineering and construction companies alongside the hotel, tourism, transport, and sports sectors.

Birmingham is estimated to have undergone a £1.2 billion economic uplift due to hosting the Commonwealth Games and an additional £500 million in a one-off construction benefit. The current Gross Value added (GVA) in the West Midlands is approximately £126 billion, which means that the region has experienced a 1.6% increase in the GVA from hosting the Commonwealth Games.

With a £778 million investment to stage the Games, the event has proved to be a catalyst for transformation across the West Midlands. The event has attracted new investment and funding, creating jobs and apprenticeships for local people, new business opportunities, and accelerating projects.

An additional £46 million were spent on tourism and infrastructure development throughout Birmingham in preparation for the 2022 Commonwealth Games. Unlike London or Edinburgh, Birmingham can’t attract millions of tourists every year, so the games will be a unique opportunity for Birmingham to attract millions of tourists to the city.

By placing Birmingham on the map, the Commonwealth Games have created an international platform for trade and tourism as the UK prepares for Brexit. Birmingham currently accounts for 10% of the UK’s international exports. The 2022 Commonwealth Games will create further global opportunities between the nation and the key global markets, such as China, the USA, Europe, and the Middle East.

Sports is a valuable asset that contributes to strengthening the Commonwealth’s economic, social and cultural bonds. The reach and impact of the Commonwealth Games exemplify this. Together with sport, trade, and investment contribute to progress on broader Commonwealth priorities, such as peace and security, prosperity, and sustainable development.

References:

• https://knowledge.wharton.upenn.edu/article/economic-gains-will-the-commonwealth-games-in-delhi-deliver-what-they-promised/
• https://www.businesswire.com/news/home/20220308005867/en/Global-Sports-Market-2022-to-2031—Featuring-Maruhan-Life-Time-Fitness-and-Liberty-Media-Among-Others—ResearchAndMarkets.com
• https://indianexpress.com/article/sports/sport-others/budget-2022-central-government-announces-hike-in-sports-budget
• https://sciendo.com/abstract/journals/pcssr/73/1/article-p36.xml
• https://taxcare.org.uk/post-brixit-business-birmingham-2022/
• https://thecgf.com/news/new-report-reveals-commonwealth-games-consistently-provides-over-ps1-billion-boost-host-cities