Bidding for Sport Mega-Events

Abstract

Sport mega-events such as the Olympic Games and FIFA World Cup, or on a smaller scale the Commonwealth Games or regional events, attract competing bids from nations or cities. These bids are mostly made at tax-payers expense and spending is often large and non-transparent. Our paper addresses the question of why large sums of public money are spent in an attempt to secure uncertain rights to host events which, according to ex post studies, often yield few gains. The paper analyses the economics of the bidding process, emphasising public choice aspects of mega-event bidding to identify the interaction of potential beneficiaries and policymakers interests. We do not directly enter debates about legacies of hosting mega-events, but ask why public money is spent on a bidding process which is even less likely to realize net social benefits. The empirical part of the paper uses past bids from the state of South Australia, a demonstrated bidder for various sports mega (or not so mega-) events with a mixed record of success, as a case study of the economics of bidding.