In a downturn, why has sport got away scot free?

Sport enthusiasts are still splashing out on season tickets.

The Premier League is the world’s most lucrative football league. In its response to last year’s somewhat critical Culture Media and Sport Select Committee report on the game’s administration, the league sought to stress that its booming revenues are “reflected in the contribution made by Premier League clubs to their local economies, particularly in smaller urban communities such as Blackpool, Sunderland and Stoke”.

One such smaller urban club is Swansea City, who have thrived in the Premier League since promotion in 2011, and whose economic impact was the subject of a recent study by the Welsh Economy Research Unit at Cardiff University, which estimated that the club’s economic activity supported 295 full-time equivalent (FTE) jobs in the area, on top of the 125 employed directly.

Swansea are regarded as one of the best-run clubs in the country, making a profit of £14m on £65m turnover in their first season in the top division. They have swiftly become a middle-ranking Premier League club, usually filling their 20,000-capacity stadium and seeing their income and profile soar again in February with their Capital One Cup triumph.

The WERU report surveyed spectators’ spending habits over three games towards the end of last season, against Newcastle United, Blackburn Rovers and Wolverhampton Wanderers. Extrapolating from this, it estimated that gross spending by visitors to Swansea matches was around £8.13m per season, leading, after deductions, to an initial injection to the Welsh economy of £4.72m and £3.15m Welsh Value Added.

Additional spending generated by spectatorship is considerable, it says: “For home fans that were non-season ticket holders the average reported spend per person was £46.34. Around 63 per cent of this represented purchase of match day tickets, with the next, largest category being food and drink at an average of £9.15 per person.” But it is the Premier League’s sizeable away supports that bring the most additional spending. Visiting fans who worked full-time reported an average spend per person of £79.88. The largest item of expenditure for those working full-time was food and drink, representing nearly 40 per cent of this. Of course, Swansea’s relatively isolated geographical location makes them an untypical case – 44 per cent of away fans were staying overnight.

“It’s the add-in impact of visitors that makes the difference,” said Dr Annette Roberts of the Welsh Economy Research Unit and one of the report’s authors. “And the fact that they spend on areas that are labour-intensive [such as food and drink and retail]. The multiplier effects are higher than they would be for a normal enterprise because of this visitor impact.” And it is retail and food and drink sectors that tend to prosper most from proximity to stadiums. In east London, Glyn Roberts, operations manager of the Tap East pub in the neighbouring Westfield shopping centre is anticipating an increase in trade of about 20 per cent when West Ham move to the Olympic Stadium.

What marks Premier League football clubs out from normal medium-sized businesses is, of course, the phenomenal sums paid to players. Swansea spent £29m on wages last season, of which it is estimated that playing and non-playing staff spent around £4.5m in Welsh goods and services, which have additional multiplier effect impacts of £1.63m supporting 60 FTE jobs. With 12 of Swansea’s 31-strong first-team squad coming from outside the UK, they are more likely to own property and splash their cash elsewhere, as the report acknowledges: “The usual assumption… that additional disposable income is spent in a similar fashion to the average Welsh household cannot hold; players may invest a higher proportion of their income in anticipation of a short career; players may invest in high-value real estate acquisition (either locally or in other places); players are likely to buy high-end consumer goods unavailable in Wales.”

“We assume that much more of this wage will be saved or spent non-locally than average wages in our modelling,” adds Calvin Jones of the WERU. “Of course, this will be true of most professional sports these days so the Premier League is not unique. This has, of course to be counterbalanced with the large numbers attending matches that DO have a regional economic impact, but aren’t captured in Swansea City FC turnover.” Less tangible but still significant, however, are the other effects of Swansea’s success on the city. The city’s university, for example, has seen applications rise 25 per cent in the past year, which vice chancellor Professor Richard B Davies attributed to Premier League football “putting Swansea on the map”.

Rugby union’s socio-economic profile has always been more affluent than that of football, and the flagship Six Nations tournament continues to sell out, this year’s tournament drawing a total of 1,042,965 supporters (69,531 per match). The Six Nations’ allure resides in both its regular and its “event-like” nature. It happens every year, unlike the Olympics, but the matches are rare and important enough to be showpieces. A report carried out for Mastercard by the Centre for the International Business of Sport at Coventry University in 2011, looking at the previous year’s Six Nations, found that the cumulative positive economic impact of the tournament across the competing nations was £420.94m, from total attendance of 1,054,654 (£88.38m in England, £72.5m in Wales, £62.9m in Scotland).

This increased economic activity came from expenditure in bars, shops, restaurants, hotels, transport and spending inside stadiums. The distance travelled by many spectators also generates overnight stays. Such appeal also draws in those without tickets. “To add to those travelling to the match venues, a large number of people watch the games in pubs, clubs, bars or cafes, as well as at home. The projected economic impacts also incorporate a potentially longer-term economic legacy for the hosts, through increased tourism, civic sponsorship and a greater likelihood of repeat visits,” the report says.

Rugby is also followed strongly by men between 20 and 44 with relatively high amounts of disposable income. “While 24 per cent of the adult population are from group AB, 54 per cent of those that play rugby or watch and attend rugby are from the top social grouping,” the report adds. The prolonged economic stasis appears to have had only a limited effect on hospitality income too. Twickenham saw a 35 per cent drop in revenue from corporate packages in 2009, but it jumped again by 60 per cent the following year.

The CIBS report also cites a key driver of sport consumption in recessionary times – its capacity to act as an escape from gloom. The report identifies “people and organisations who deliberately seek to engage with the Six Nations in some way in order to displace the pessimism associated with harsh economic conditions. Amongst some organisations such as advertisers etc, there will be a feeling that the tournament constitutes a safe haven and good value for money given the exposure and profile it provides... Indeed, further evidence suggests fans, broadcasters and commercial partners seek safe havens during times of economic hardship.”

Cricket internationals have similar characteristics in both their regular and big-event nature, as is illustrated by the increasingly intense competition among venues to win the right to host Test matches and One Day Internationals. Australia’s visit in particular has long been big business. An economic impact assessment of the Ashes Test at Headingley, Leeds, during their last tour here in 2009 claimed that the city’s economy benefited to the tune of more than £1.2m per day.

The report, commissioned by Yorkshire County Cricket Club and Yorkshire Forward, the former regional development agency for Yorkshire and the Humber, found that during the three days of the Test more than 32,000 additional people visited the city, accounting for around £3.7m additional spend in the local economy. Another county, Nottinghamshire, commissioned a similar study into the benefits of hosting matches at the World Twenty20 the following year, which claimed that £12.1m of value added was generated in the East Midlands.

The Marylebone Cricket Club, owner of Lord’s, also points to a report it carried out six years ago (PDF) on the impact of one Test, against the West Indies in 2007, which argued that the match had a positive economic impact of between £9.5m and £10.8m, supporting the equivalent of between 133 and 151 FTE jobs. That all these venues are jockeying for hosting rights to matches should be acknowledged, but the sums generated are noteworthy nonetheless

Wimbledon tennis has no such anxieties. The 2012 tournament brought in record profits of £37.7m for the Lawn Tennis Association, and though criticisms of the patchy development of the grass roots of the sport remain, Wimbledon is a prime example of major sporting events’ tendency to be recession-proof.

The success of Andy Murray and the rising profile of up-and-coming British players such as Heather Watson and Laura Robson has helped keep interest high – the event drew 484,000 spectators in total last year, many thousands of whom travelled to the area from outside and queued overnight or in the early hours of the morning.

What cannot be assessed for certain is where or whether this money would be spent without these regular major events. Yet it is clear that Britain’s sport enthusiasts, where they can, are still splashing out on season tickets and days and nights out. It is no easy cure for tough financial times but sport’s capacity to raise not just revenue, but profile and a certain feel-good – or sometime feel-bad – escapism means it will continue to make an economic impact where other sectors may toil.

This article first appeared on economia

Photograph: Getty Images

This is a news story from economia.

Ukip's Nigel Farage and Paul Nuttall. Photo: Getty
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Is the general election 2017 the end of Ukip?

Ukip led the way to Brexit, but now the party is on less than 10 per cent in the polls. 

Ukip could be finished. Ukip has only ever had two MPs, but it held an outside influence on politics: without it, we’d probably never have had the EU referendum. But Brexit has turned Ukip into a single-issue party without an issue. Ukip’s sole remaining MP, Douglas Carswell, left the party in March 2017, and told Sky News’ Adam Boulton that there was “no point” to the party anymore. 

Not everyone in Ukip has given up, though: Nigel Farage told Peston on Sunday that Ukip “will survive”, and current leader Paul Nuttall will be contesting a seat this year. But Ukip is standing in fewer constituencies than last time thanks to a shortage of both money and people. Who benefits if Ukip is finished? It’s likely to be the Tories. 

Is Ukip finished? 

What are Ukip's poll ratings?

Ukip’s poll ratings peaked in June 2016 at 16 per cent. Since the leave campaign’s success, that has steadily declined so that Ukip is going into the 2017 general election on 4 per cent, according to the latest polls. If the polls can be trusted, that’s a serious collapse.

Can Ukip get anymore MPs?

In the 2015 general election Ukip contested nearly every seat and got 13 per cent of the vote, making it the third biggest party (although is only returned one MP). Now Ukip is reportedly struggling to find candidates and could stand in as few as 100 seats. Ukip leader Paul Nuttall will stand in Boston and Skegness, but both ex-leader Nigel Farage and donor Arron Banks have ruled themselves out of running this time.

How many members does Ukip have?

Ukip’s membership declined from 45,994 at the 2015 general election to 39,000 in 2016. That’s a worrying sign for any political party, which relies on grassroots memberships to put in the campaigning legwork.

What does Ukip's decline mean for Labour and the Conservatives? 

The rise of Ukip took votes from both the Conservatives and Labour, with a nationalist message that appealed to disaffected voters from both right and left. But the decline of Ukip only seems to be helping the Conservatives. Stephen Bush has written about how in Wales voting Ukip seems to have been a gateway drug for traditional Labour voters who are now backing the mainstream right; so the voters Ukip took from the Conservatives are reverting to the Conservatives, and the ones they took from Labour are transferring to the Conservatives too.

Ukip might be finished as an electoral force, but its influence on the rest of British politics will be felt for many years yet. 

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