International events: seven reasons to bid (even if you lose)

As lessons have been learned and passed on from one event to another, there are now a number of examples of cities that have won the right to host a major sporting event and then gone on to plan for and deliver long-term benefits. Barcelona, Vancouver and London to name a few are all examples where positive legacies prevail. Cities such as these have all strategically set objectives and used their event to ‘fast-track’ development projects to varying degrees to achieve physical legacies. But just how strategic this planning was prior to bidding is less clear.

With perhaps the exception of Glasgow and the 2014 Commonwealth Games, there are fewer examples of cities that have strategically planned for such outcomes prior to any decision to go ahead and bid/host an event. The concept of bidding, losing and then still achieving physical and other legacies, in other words, aiming to strategically gain legacies just by bidding, is relatively new but gaining recognition. The Mayor of Boston, Martin J. Walsh, recently said in relation to the city’s 2024 Olympic bid: “Whether you oppose or support the Games, whether you are a business leader or a community activist, whether you live in Boston or work here, we can all agree that having a two-year, public conversation about the future of our great city is a good thing”.

The introduction of the recent IOC Olympic Agenda 2020 reforms, including specific measures to help reduce the costs of bidding, is a recognition that if bidding becomes unattractive due to sunk costs being too high, it might reasonably be assumed that fewer cities will be prepared to bid in the future, leaving only a relatively small number of the world’s major cities with the capacity to stage the spectacle that is the Olympic Games.

In the meantime, however, the cost of bidding has continued to escalate. Tokyo reportedly spent $150 million on its 2020 Olympic bid and Boston 2024 has a stated budget of approximately $75 million over the next 32 months. The almost unprecedented drop-out of Stockholm, Munich, Krakow and Oslo from the 2022 Winter Olympic Games bid process was largely attributed to the perceived cost of bidding and hosting relative to the likely legacies, which in turn led to a lack of public confidence and support. In February, Edmonton withdrew its bid to host the 2022 Commonwealth Games, citing financial reasons and leaving Durban as the only remaining bidder.

Bidding and not winning is both a short and long-term risk for bidding cities as well as the rights owners involved. A bidding city that does not win loses its investment in making the bid and may only see that as a longer-term investment if a future and ultimately successful bid is made, as in the case of Pyeongchang, which bid three times for the Winter Olympics before it finally won the right to host the event in 2018.

It is possible, however, to identify a number of distinct benefits enjoyed by a candidate city whatever the outcome, and therefore maximise the potential for a return on investment if and when the bid is lost. Researchers in the Economic Analysis and Policy Group at the University of California have found that unsuccessful bids to host the Olympics have an impact on trade every bit as significant as the effect of actually hosting the Games. This suggests that the Olympic effect on trade, as an example, is attributable to the signal a country sends when bidding to host the games, rather than the act of actually hosting such an event.

The benefits directly attributable to the bid process include:

• International city branding: bidding for any global event immediately raises the international profile of the city and puts it on the map. This is especially significant for emerging destinations.
• Identifying aims, objectives and goals: formulating a bid forces candidate cities to identify their own metrics for success.
• A long-term plan: bidding for but not winning an event can yield constructive criticism of a city’s proposals that allow and encourage it to successfully bid another time, such as in the case of Pyeongchang.
• City development: bidding for a global event encourages the adoption of new benchmarks for city development, changing the rules of engagement and prompting real progress in city development. The imposition of multiple external deadlines actually helps the city to achieve disciplined and rapid progress and yields valuable lessons in time management.
• Working together: bidding for a global event means that city, regional and national authorities have to work together to plan the full range of logistics.
• Physical legacy: bidding for a global event requires that venue development plans be drawn up well in advance, setting out budget projections and long-term usage, and often that sites and land must be assembled and prepared before the final bid outcome is known.
• Urban transformation catalytic effect: most importantly, the ‘catalytic’ effect on urban transformation that is derived from hosting a global event is, to a large degree, experienced from the earliest moments of bid formation, as indicated by the research on trade impact.

Against the backdrop of a global economy that is still struggling to gain momentum, the escalating costs of bidding for major events and the challenge of building public support, cities can still benefit from the bid process. Bidding to fail is unlikely to be a supportable policy but there is evidence to suggest that with the right approach, the bid process can be a catalyst for significant long-term legacies, regardless of the outcome.

Andy Preece (andy.preece@aecom.com) is director (sport) with AECOM Economics. Based in London, Andy has helped cities, local organising committees and international federations evaluate, bid for and plan for multi-sport and single-sport major events.