As a Brit living in America, I was pleased to see the Olympics succeed in London. But as an economist, I have to say that the financial benefits are limited. We have already seen that the alleged tourism bonanza was a mirage. The boost to GDP is a drop in the bucket – £10bn spread over seven years equals about one-tenth of 1 per cent of GDP per year – and the development benefits to east London are not likely to be significant, given the size of east London’s problem.
Still, one thing we can all agree on is that Team GB’s medal count was impressive, particularly when you consider the progression over the past six Olympics. We won 20 medals (five gold) in 1992, then 15 (with one gold), 28 (11), 30 (9), 47 (19) and now 65 (29). This is a step change in performance, and it is due largely to government intervention initiated by John Major. The Conservative prime minister insisted that the National Lottery, which he created in 1994, should give a significant percentage of its revenues (5.6 per cent back then) to “sporting good causes”.
The National Lottery has transformed the administration of British sport. In 1997, the rather lame and well-intentioned Sports Council was bulked up to become UK Sport, a well-funded and ruthless body committed to winning. UK Sport currently distributes roughly £100m a year, about half of it to governing bodies that use the funds to foster “grass-roots” sport. The rest goes to elite athletes for their training programmes. The key point is that the elite athletes and their federations get the support only if they get results – if they fail, their funding is cut off. This brutal approach has been wildly successful; expect delegations to flock from around the world to learn the British secret. Even the Australians are envious.
The mid-1990s will be remembered as the point when British sporting culture changed for ever. In essence, the National Lottery provided the funding to transform British sport from amateurism to professionalism. To understand how peculiar this change is, one has to understand a little sports history.
In the modern world, there have been two models of sport. The first, which emerged in Germany and Scandinavia at the beginning of the 19th century, was primarily focused on preparation for military service. The father of modern gymnastics was a German nationalist, Friedrich Ludwig Jahn, who witnessed the defeat of the Prussian army by Napoleon at the Battle of Jena in 1806 and concluded that this resulted from a lack of fitness. As well as inventing gymnastic equipment such as the horse, he promoted associations for young men to practise gymnastics. Their increased physical prowess contributed to the German revenge over the French at Sedan in 1870. The French soon followed suit and, by 1900, governments across Europe were promoting various sports for their martial virtues (in France, even cycling was endorsed with wartime in mind).
Even after the Second World War, the conscripted armies of Europe and elsewhere placed an emphasis on the benefits of sport. As the welfare state grew in the 20th century, governments came to promote sports for broader social purposes. In the 1700s Jean-Jacques Rousseau argued that the public practice of sport would foster a sense of citizenship and responsibility.
The second model of sport evolved in the Anglo-Saxon world. If military gymnastics is purposeful, then cricket is essentially purposeless. In Britain, sports such football, golf or tennis developed as private pastimes (it is doubtful that the Duke of Wellington ever said the Battle of Waterloo was won on the playing fields of Eton – the attribution was first made by a Frenchman three years after the Iron Duke’s demise). Individuals formed their own clubs, and then voluntarily gathered under governing bodies such as the MCC or the FA.
Even when professionalism came to sports such as football, the involvement of the state was almost completely absent. When protesters argued in the 1960s that the government should prevent the MCC from sending a touring side to play in apartheid South Africa, the government could say with some justification that it had no leverage whatsoever.
The American system evolved as a variant of the British model. Non-Americans tend to notice the professional sporting organisations – Major League Baseball, the National Football League (NFL) and the National Basketball Association (NBA) – but the most important organisation in American sport is the National Collegiate Athletic Association (NCAA). Attendance at college football matches is three times larger than at the NFL, and college basketball attracts twice as many people as the NBA. A large number of athletes, both American and non-American, train in US colleges. Most professional athletes played in college first.
Imitation of strife
The NCAA jealously guards its amateur status, and the college athletic departments have budgets that would put most European football teams to shame (Michigan’s athletic department budget is about the size of Aston Villa’s – and there are dozens like it). All of this is done without the direct intervention of the federal government. Indeed, the suggestion that it might have a role in funding sports is met with horror in the US.
While the American system evolved in imitation of the sporting rivalry between Oxford and Cambridge, that model never developed in the UK. Arguably, British universities’ reliance on state funding after the war made them less interested in developing a sense of sporting loyalty, something that, in turn, generates alumni giving in the US. Equally, it may be that there is just too much sport in Britain to sustain a viable collegiate system.
Whatever the case, Britain has moved decisively in the past 20 years towards the state-funded model, and, judging by the British response to the London Games, people are happy with it. State sport, just like the National Health Service in the opening ceremony, has become something to celebrate.
Stefan Szymanski is professor of sports management at the University of Michigan. His research on the evolution of modern sport can be downloaded here