Economic Flows in a Global Sports Economy

LEPAKSHAIAH S V

Assistant professor in Economics

Government Law College, Hassan

Dist-Hassan

State – Karnataka

Pin Code- 573201

Lepaksha.9@gmail.com

Abstract

The relationship between sports and the economy dates back to the first antique Olympic Games when athletes were compensated in either goods or species. In the 19th century, gambling on sporting outcomes and the development of first professional sports paved the way for a sports economy. The attractiveness of sporting events to the press emerged in the early 20th century, when sport events have began to be broadcast on radio. The result of all this has seen an increasing economic significance of sport measured by its economic weight compared to GDP.  A variant is expansion of a market-based sports economy towards former communist countries in which sports activities and associated economic flows were state-run and state-owned. National pride, international competition in sport, and other non economic factors tend to attract talents, human capital, money and finance into the sport sector in all countries Macroeconomic aggregate, defined as the gross domestic sport expenditure, is published. It sums up the amounts spent by residents and households in sporting goods and services with state government sport budget, sport expenditures by local authorities, sport sponsorship expenses, and TV broadcasting rights raised by sport event organizers.

Introduction

At was however, not until after the Second World War that the genuine globalization of the sporting economy took off. The said globalization was triggered by three key trends. there is no accounting of the sports economy at a global level and national accounting of the sports economy is really developed only in a few developed market economies. Most of the economic data related to sports which are circulated by mass media are simply rough estimates. Therefore, the first concern for those economists interested in the sports economy should be to find ways through which data collection and data creation on all aspects of globalization in the sporting industry can be improved. The first of these trends was the extension of annually paid holidays for individuals. This led to the engagement by the society in many leisure activities in all developed market economies, and sports was now consumed in many forms, such as: sport practice, sporting press and sport shows.

Major features of a globalized sports economy

Globalization of sport events reaches its highest point with genuine global sport events such as the Olympic Games and football (soccer) World Cups. Nowadays, their economic significance is more precisely delineated.5 To the contrary, the economic spill-over of global sporting events in the host countries too often remains the fallacy of sensational and publicized over-evaluation taking its roots in methodological tricks or even crude mistakes. One example is the ex-ante announcement that the rugby World Cup 2007 would have led to a Euro 4 billion economic spill-over to the French economy. An ex post evaluation, underpinned by more sound methodological elaborations place this value at Euro 1.4 billion. It is common knowledge that, since London was awarded the rights to host the 2012 summer Olympics, from one global sport event to another, the economic impact of global sport events is repeatedly affected by the same methodological biases. Why? A candidate city waits for a study exhibiting an economic gain from hosting a global sport event in order to win the bid against other candidate cities. And this applies to all candidates. Consequently, all consulting companies are eager to provide the expected results.

Economic flows in a global sports economy

Trade in sports goods is partly globalized. Chain stores in sports such as Decathlon and others have spread throughout a large number of countries. Besides, foreign markets are supplied with exports from home countries where aforementioned distribution networks and sports goods producers have based their headquarters. Economic research on international trade in sports goods remained unheeded for a long time. A pioneering paper had shown that France benefited from an excess trade balance in sports goods. This was explained by the French net imports of ‘trite’ sports goods – goods which one can use in different sport practices such as sportswear, sport suit, some sport footwear – being more than compensated for by France’s net exports of ‘equipment-intensive’ sports goods The production of sports goods has globalized although we still lack detailed knowledge in relation to this and the underlying international economic flows which triggers this, i.e. the phenomenon of FDI. The breakdown of available data regarding FDI is not detailed enough to precisely detect foreign investments undertaken in the sports goods industry. If one wants to assess the role of FDI and MNCs in globalization of the sports economy, Finally, globalization of the sports economy is exploited by all those who are involved into the worst financial misdoings, embezzlements, money launderings, etc., in which global sports are drifting. Here researchers, and of course citizens, face a genuine terra incognita. We tried to put up an economic analysis of globalized financial misbehaviors, although this has yet to be well elaborated.19 One basic limitation is that juridical expertise must go hand in hand with the economist competences in order to tackle such issues as match fixing and referee corruption; both of which are growing at the same pace as illicit international betting and gambling on sport events which have accelerated by resorting to NICTs. For example, Asian punters can bet on incredible or aberrant (thus entirely unpredictable) match outcomes in a European Champions League contest and, at the same time, can invest in bribing one goalkeeper, other players or the referee participating to this contest; this is of course to facilitate the reach of an absolutely unpredictable (but extremely profitable to these punters) match outcome. A real economic research on this area is yet to start since it is not really feasible as a result of hidden information about illicit behaviors.

Globalization as geographical spread of the sports economy

Economic globalization of specific sporting practices and services offered to sport participants is less advanced. A limited though increasing number of sport disciplines fits with development outside their country of origin: skiing, mountain climbing, sailing, cantoning, trekking, rally raid and so on. The result is a consumption of sport services (sport equipment rental, instructors, coaches, guides) abroad, i.e. an international spread of sport consumption. At this point, economic globalization of the sports economy overlaps with globalization of tourism.

Globalization of professional sports

The economic globalization of professional sports obviously underlies globalization of sport shows and events. Its pace is accelerating more in European sports than in typical North American sports. Unlike European football, Baseball and American football had not yet conquered 204 countries in the world, despite some marketing and media strategies by the Major League Baseball and National Football League oriented towards European markets. An assumption to be further confirmed with empirical evidence is that globalization of professional sports is differentiated between the two shores of the Atlantic due to their different organization and regulation. In North America, we witness a closed league system contrasting with a European open league system, becoming MNCs; professional clubs are already organized and managed as such. Financial crisis that European football is muddling through38 raises some doubt about whether better governance and better financial management are now required in the industry of professional sports as in any other globalised industry. The legacy from amateur sport managed by voluntary workers and financed by benevolent patrons has faded away in European high level sport leagues and clubs.

Conclusion

All the dimensions involved in globalization of the sports economy, in particular the fragment of professional sports, shows how promising this area is for a research on sports economics. We tried to put up an economic analysis of globalized financial misbehaviors, although this has yet to be well elaborated.19 One basic limitation is that juridical expertise must go hand in hand with the economist competences Even if the latter is now covered by the Handbook of Sport Economics.

References

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