Let the (economic impact) games begin!

We are just days from the opening ceremony of the 2012 London Summer Olympic Games, and as we lead up to the Games there has been a great deal of discussion about the economic impact of the games.  Over at NPR, they have blogged about the economic impact of the games, with Goldman Sachs noting that a large number of Olympic Games have made a profit.  They do have a footnote which says:

“In accounting for the cost of hosting an Olympics, most countries (including the UK) have treated the cost of constructing facilities and infrastructure, together with security and other ancillary costs, as being separate from the cost of running the Games themselves. The London Games are expected to make a profit (in the sense that revenues will exceed the cost of running the Games) but this will still leave the government with a significant (£8-9bn) bill from construction, security and other costs.”

Yeah, so if we don’t include costs, there is a profit.  I’m sure there are a lot of companies which wish they could get away with such a spin.  Others have been getting into the debate, I may be one of the few Americans who watches C-SPAN where they play the Prime Minister’s questions from the UK on television every week (which I encourage everyone to watch, if you love spirited debates), but many have known current Prime Minister David Cameron for his focus on trying to cut costs in the UK government.  Yet, he has come out and said the Olympic Games:

They should be great for our economy. We shouldn’t see them as some sort of expensive luxury in tough times.

The PM is noting that i may bring a $20 billion boost the UK economy.  Many disagree, with some analysts noting that the construction phase has been completed, and that sector of the economy doesn’t seem to be doing too well with the games about to begin.  Not to mention the cost will be approximately about $200 per person just to host the Olympic Games in London this year.

The back and forth about the economic impact of the London Games has begun, my guess would be from past research and what we are seeing in terms of costs, that this will be another games that will not be bringing positive economic impact to London or the UK.

Tumultuous Times in Scotland

Scotland isn’t really the hotbed of football (soccer) it perhaps once was, but in the last few months Scottish football has been shaken to its core as one of its two most famous and successful clubs, one part of the duopoly that is the Glasgow domination of Scottish football, Rangers, has gone bankrupt. Faced with a huge unpaid tax bill, the only option left to what remained of Rangers was to declare bankruptcy and start again.

The interesting news this last week is where they have to go to start again. They initially applied to be admitted straight into the SPL (Scottish Premier League), the top flight, but this was rejected by the members of the SPL. Even members of the first and second divisions rejected the application too. Rangers have been accepted to the Scottish Third Division, a full four divisions below where they graced pre-bankruptcy.

Stats abound, but perhaps the most amusing lists average attendances for Rangers and their new opponents in the forthcoming season:

Rangers’ average attendance is a full 46,000 more than their forthcoming opponents, none of whom can boast an average attendance even in four figures. Scottish football acts as a pyramid system and hence within four years, Rangers should expect to be back in the SPL. But in the meantime it’ll be an interesting time for them.

This whole sorry, sorry saga highlights not just financial mismanagement but much more. Some SPL clubs were inclined to allow Rangers back in; after all, one of their biggest paydays each season was when Rangers visited. However, the animosity amongst the fans of most clubs led to their owners voting against Rangers. This must be a classic case of financial and sporting objectives clashing – financially the decision was a no-brainer, but to just allow a club formed from the dust to enter the highest division in Scottish football? Then what will be the consequences of Rangers being absent? Rangers and Celtic have shared between them the vast majority of SPL championships over the years, in fact no other team has won the Scottish league since the early 1980s. Will Celtic simply win the next four league titles, or will other teams step up and begin to compete with the previously dominant Glasgow giants?

Whatever happens, it does promise to be a fascinating few years in Scotland…

Man Utd to IPO… in the U.S.

Manchester United, one of the worlds biggest brands and highest valued sport franchises has decided that they will pursue an Initial Public Offering to raise $100 million  in the U.S.  This isn’t probably that strange of a thought, as the team is owned by Americans, the Glazer family to be specific, who also own the Tampa Bay Buccaneers.  However, I can see that many individuals will be quite unhappy in England, as there has already been a lot of backlash against Premier League teams being bought up by foreign investors.  Now with stock being sold on the U.S. stock exchange, I believe that there will be another wave of criticism.

Another question arises in, whether it would be worth the money to buy stock in Manchester United.  Certainly the franchise has a high value, but many football clubs in Europe have been running large debts, and it doesn’t seem like a sure thing that this stock will make quick money for anyone.  As a long-term investment it may make sense.  That said, I already know several people who live in the U.S. who are rather excited, as they love the prospect of being able to own a piece of their favorite club.

The Glazer’s were also hoping to sell of a good chunk of stocks on the Singapore markets as well, however the volatile nature of the Asian markets has caused the $1 billion Singapore IPO to be put on hold for another day.  CNN notes that this comes after Formula One also put a halt to their IPO in Asian markets because of too much uncertainty.

NFL Seeks To Increase Attendance

In an article written by Kevin Clark on the Wall Street Journal website, the National Football League has announced some interesting changes for the 2012 season.  First, the league will soften its stance on local “blackout” restrictions.  Owners have agreed to drop the blackout level to 85% of capacity.  The new rule will allow teams to set their own benchmarks as long as it is 85% or higher.  To combat teams from setting the blackout levels low, the NFL will ask teams exceeding the mark set to share more of the revenues.  Blackouts are a rare occurrence; the 2011 campaign only saw 16 games blacked out locally.  Teams and their sponsors usually bought any remaining tickets to allow the games to be shown on television.

The NFL seems to be very concerned about attendance at games dropping as people opt to stay home to watch from the comfort of their own living rooms.  According to the article, attendance at NFL stadiums is down 4.5% since 2007.  The article claims a few teams have exhausted their season ticket waiting lists.  20 of the 32 NFL Clubs have season tickets available for the upcoming season.  One team mentioned, the Indianapolis Colts, had a 16,000 person waiting list as of 2010.  They currently have around 2,000 season tickets available for the upcoming season.  Obviously losing Peyton Manning and the poor showing in 2011 did have an effect on Colts ticket sales.

The NFL will be trying some new ideas to enhance the atmosphere at the stadium.  Some of the measures the NFL are implementing to enhance the in-stadium experience are free Wi-Fi, relaxing some of the restraints on manufactured crowd noise, allowing fans access to the same replays as referees during a video review and mandating all stadiums have access to the NFL Red Zone channel.  Another app is in the works that would allow fans to hear on field commentary from certain players.

Will these new features have the desired effect? It remains to be seen.  As the cost of attending a sporting event continues to rise, all leagues will have to do something to curb the appeal of fans staying at home to watch on their HD televisions.