Literature Review – Theoretical Perspectives

The literature analysing the impacts from major events has grown significantly over the years. Most of the academic research has concluded that the economic benefits for the host region tend to be moderate and significantly lower than expected (Zimbalist, 2015).

Although many consultancy reports predict the opposite, these reports are often of poor methodological quality. Because of this, several contributions by academics have questioned the use of methods, as for example economic impact studies, which has been criticized for overestimating the benefits (Crompton, 1995; Késenne, 2005; Matheson, 2009; Porter, 1999; Porter & Fletcher, 2008).
According to Fourie & Santana-Galleo (2011), the impacts will depend on factors such as the type of event, the participating countries and whether it is hosted during the peak season or off-season.

Some empirical studies have documented that hosts of the Summer Olympics enjoyed increased economic activities during the preparations. However, since cities that lost the awarding and hence only became applicants enjoyed the same benefits, this raises doubts whether it was the Games that caused the effects (Rose & Spiegel, 2011; Tien, Lo & Lin, 2011; Kasimati & Dawson, 2009).

The Winter Olympics, however, do not seem to have any significant impacts on a national level, neither on tourism nor on other trade (Spilling, 2000; Teigland, 1999; Fourie & Santana-Galleo, 2011; Tien, Lo & Lin, 2011). Although some studies have shown that they can cause some impacts in the host city, these impacts are usually less than the ex-ante predictions. The conclusions summarizing the research from the 1994 Lillehammer Winter Olympics probably reflect the view of many researchers.
If the main argument for hosting a mega-event like the Winter Olympics is the long-term economic impacts it will generate, the Lillehammer experience quite clearly points to the conclusion that it is a waste of money. However, this does not mean that there are no other arguments for hosting a mega-event. The Lillehammer Olympics was a great experience, although not in “economic terms” (Spilling, 2000).
Jakobsen, Solberg, Halvorsen & Jakobsen (2012) found that staging the Olympics had virtually no effect on foreign direct investments inflows, whereas the FIFA World Cup might have a small positive impact on foreign investment, particularly in the years leading up to the event in smaller nations.
Kim, Gursoy & Lee (2006) showed that Korea’s economic benefits from hosting the 2002 World Cup were rather a big disappointment for local residents, a pattern that also applied to the 1988 Olympics in Seoul. According to Lee & Taylor (2004), however, the World Cup tourists provided a much higher yield compared to ordinary foreign leisure tourists.
Maennig & du Plessis (2009) found that some sectors of low importance to the German economy profited from the 2006 FIFA WC in Germany. This research documents mixed results for the hotel and tourism sector, but also that hoteliers to some extent were able to compensate for the lower occupancy by raising prices.

Similar to other studies, they showed that the employment effects were minimal (Kasimati & Dawson, 2009; Feddersen & Maennig, 2013).
An ex post analysis of the 1994 World Cup in the US indicates that host cities experienced cumulative losses of $5.5 to $9.3 billion as opposed to ex ante estimates of a $4 billion gain touted by event boosters (Baade & Matheson, 2004). This corresponds with an analysis of the labour markets, which found no statistically significant change in employment or unemployment in host cities compared to cities that did not host the World Cup games (Baumann, Engelhardt & Matheson, 2011).
Some studies have documented increased awareness of the host city or nation, but also a quick “back to normal” pattern (Ritchie & Smith, 1991; Oldenboom, 2006). Other studies have documented none, or mixed results concerning changes in image (Chalip, Green & Hill, 2003; Gripsrud, Nes & Olsson, 2010; Mossberg & Hallberg, 1999; Rivenburgh, Louw, Loo & Mersham, 2003).
Recently, a number of studies have documented that mega events tend to be significantly more expensive than initially budgeted (Molloy & Chetty, 2015; Andreff, 2012; Baloyi & Bekker 2011; Flyvbjerg & Stewart, 2012; Müller, 2014). Another tendency is that many venues constructed for major sports events have a capacity that exceeds the post-event demand – the so-called “white elephants” (Alm, 2012; Preuss, Solberg & Alm, 2014).
Despite these results, Preuss & Solberg (2006) documented overwhelming support for the events among local residents.

Their research was based on data from 117 opinion polls at 84 different locations (cities and nations), which in total represented 54 events. Surprisingly, they found a negative correlation between income and support for the event. It has also been documented that local residents, to some degree are willing to fund the events by earmarked taxes (Andersson, Rustad & Solberg, 2004; Atkinson, Mourato, Szymanski & Ozdemirogly, 2008).
This research will investigate factors that influence peoples’ attitudes towards such events. The starting point was the literature that has analyzed the demand for sport spectacing. This means that we investigate for similarities between the demand for sport and the demand for sports events. In other words, to what degree they are influenced by the same variables. In addition, we also use other control variables, as for example if the respondents expect the events will generate economic benefits for the host destination.