A new report has found that Brits support the Olympic bid so much that they would be happy to pay up to £22 per household to carry the cost of hosting the 2012 Games.
The authors, Susana Mourato and Stefan Szymanski from Imperial College London, Giles Atkinson from LSE's Geography and Environment Department, and eftec ltd. (Economics for the Environment Consultancy), asked people from London, Manchester and Glasgow to estimate their willingness to pay to host the Games after considering the intangible impacts that this event might provide. These included having a sense of national pride, promoting healthy living, crowding and increased safety and security risks.
The findings showed that annual mean 'willingness to pay' was £22, £12 and £11 (or £220, £120 and £110 over 10 years) in London, Manchester and Glasgow respectively - implying that the UK as a whole would be willing to pay roughly £2 billion.
'Advocates of major sporting events such as the Olympics say there are significant economic benefits, both directly and indirectly, attributable to hosting these events,' said Professor Szymanski. 'Direct benefits include additional tourism and associated spending, and the stimulus to the construction industry associated with the infrastructure investments. Indirect benefits include the change brought about in the image of the host city, the stimulus to urban redevelopment and so on.'
'The straight economic benefits are likely to be small but nonetheless, hosting these events frequently commands substantial public approval,' said Dr Mourato. 'We found a relatively substantial willingness to pay among households in London, amounting to £22 per year per household over a ten year period, producing a net benefit (or net present value) of about £500 million.'
'More surprisingly, however, the willingness to pay of households in Manchester and Glasgow, cities located some distance from London, although smaller, was still substantial, and suggests a willingness to pay on the part of UK households outside of London of around £1,500 million', added Dr Atkinson
According to the bid documents, there will be a capital cost of the Olympic facilities amounting to about £2.5 billion, after netting out proceeds from the sale of the Olympic village, plus any additional costs associated with transport infrastructure that would not have been necessary absent the Olympics and any unanticipated cost overruns.
London residents responding to the survey indicated they would bear the cost through an increase in Council Tax. Residents of Manchester and Glasgow, however, would prefer the payment vehicle for this charge to be a ten year contribution to a voluntary fund.
'As the net cost of the facilities was around £2.5 billion, our findings suggest that even if the direct economic benefits are quite small, London's bid is justifiable on cost-benefit grounds,' Dr Atkinson said.
For more on the impact of the Olympics, see the Department of Culture, Media and Sport website at www.dcms.gov.uk
Contact Dr Giles Atkinson on 020 7955 6809, email: firstname.lastname@example.org
Contact Dominique Guerin-Garnett, Press and PR Manager, Tanaka Business School, Imperial College London, on 020 7594 9154, email@example.com
Notes to editors
Intangible benefits were assessed on:
uniting people/ feel good factor/ national pride, excitement during event and shared memories after event
improving awareness of disability: defined as experiences of the 12-day Paralympics
motivating/ inspiring children: defined as inspiring children to play sports
legacy of sports facilities
promoting healthy living
cultural and social events
Intangible costs looked at:
increased risk of petty theft
increased safety and security risks
local disruption during construction
excessive media coverage of Olympic events
Respondents were asked whether or not they were willing to pay something towards the costs of staging the Olympics. If respondents gave a positive response to this question, their 'willingness to pay' (WTP) was elicited further by means of a payment ladder where respondents were asked to select the amounts they would be willing to pay (between £1 and +£100).
Interviews were based on focus groups; sample size was 558 for London, 138 for Manchester and 146 for Glasgow.
The Government plans to fund the sports facilities infrastructure through a combination of increased taxes for Londoners, lottery funding and grants from public funds.
This paper is pending publication. It draws on research funded by the Department of Culture, Media and Sports (DCMS) and is included in the "Olympic Games Impact Study" published by DCMS. The findings, interpretations and conclusions are those of the authors, and are not to be attributed to DCMS or any bodies associated with the London 2012 bid.
About eftec www.eftec.co.uk
About Imperial College London and Tanaka Business School www.imperial.ac.uk/tanaka
15 December 2005