The New South Wales Government argues that Sydney loses flagship events to other states’ capitals. This leads to fewer visitors and less media coverage. Large investments in transport and venues drain the public purse. They often yield barely profitable returns.
According to our research, the NSW government should consider investing in smaller sporting and community events that use existing facilities. Our study found that 480 Australian community events generated A$550m in revenue.
The events also support over A$10 billion per year in their local communities. They create 100,000 jobs and build local networks and skills.
Parkes Elvis Festival. John Connell & Chris Gibson (2017) Outback Elvis: the story of a Festival, its Fans & a Town Called Parkes. Sydney: NewSouth Publishing
Benefits of grassroots events
Instead of large, one-off events that require massive infrastructure and marketing budgets, there are thousands of small community events held across Australia each month. The events may only draw a few hundred attendees, but they add up to a lot of revenue.
Ballarat, Hobart, and other places that actively promote grassroots events enjoy healthy visitor numbers all year round without overloading the local infrastructure.
They make use of the existing facilities, such as RSLs, showgrounds, and parks. The local community is often hired to provide labor, PA systems, and portaloos, as well as catering. This keeps dollars in the local economy.
Community events are more participatory than mega-events, which subcontract the management to large companies. This improves not only local business networks but also local leadership.
The economics of big events don’t stack up.
There is also overwhelming evidence that investing in major events doesn’t pay off. The benefits promised are often overstated. In the words of a recent review,
The public budget is often disproportionately burdened with additional expenditures.
Read more: Suspended reality: the ins and outs of Rio’s Olympic bubble
Sydneysiders may have enjoyed the experience of hosting the 2000 Olympic Games, but increases in tourism and business investment failed to materialize. Rio de Janeiro is struggling with recession in the wake of its 2016 Summer Olympics. The money spent on the Olympics could have been better spent upgrading hospitals and other infrastructure.
It is for this reason that cities have backed away from hosting large sporting events. All but two cities backed out of the bids when the International Olympic Committee announced the opening of the 2024 Summer Olympic Games.
The fact that there was no other bidder shows that the justifications of lucrative mega-events have become stale both politically and financially.
Misleading numbers
Recently, the NSW government defended its plan for rebuilding stadiums. It argued that revenue generated from major sporting events would easily pay for themselves within a few years. Economists disagree.
These estimates are usually based on visitor surveys conducted at events, where punters are asked to estimate the total amount they spent. This is a bad research methodology.
One of the reasons is that people are consistently incorrect when estimating the amount they spend in real-time. They only discover the true amount after opening their credit card statement.
Visitors may also find it difficult to distinguish between the money they spend at an event and other expenses on their vacation.
Daylesford ChillOut Festival visitors complete surveys. Chris Gibson
Also, we need to subtract the amount of money that would be spent regardless of whether a major event occurs. This includes paid by those who live in the region, those who changed their travel plans to coincide, and those who would have gone to another activity instead.