The 2012 Olympics marked the third time that the capital city of Britain hosted the internationally renowned games. To-date, London is the only city in the United Kingdom to have hosted the Olympic games. The London Olympic bid was announced as the winner of the bidding process on 6 July 2005.
The event took place from 27 July 2012 to 12 August 2012 and saw more than 16,000 athletes from all over the world participating in the games. The organizing committee (London Organizing Committee of the Olympic Games) began its tenure in October 2005. In April 2006, the Olympic Delivery Authority (ODA) was established, and this paper shall focus on the workings of this body.
The ODA was with the construction of the venues and infrastructure to be used in the event. The games used a mixture of pre-existing and new constructions to host the games and guests. Some of the new constructions have been preserved for their sporting use while others have been repurposed for other uses.
These constructions employed several thousand British citizens to enable a timely delivery of the venues to LOCOG. The Olympic games created jobs long before the games were underway. These employees of ODA were paid fair labor wages and given benefits entitled to any construction worker in Britain.
The Olympic Delivery Authority also employed consultants and suppliers from within the country to supply the construction sites with necessary materials such as cement and construction bricks. All these items were produced locally in Britain. This meant that the construction and allied industries saw a great increase in revenues and profits due to the Olympics. This in turn led to the excess money bleeding into the greater economic sectors, which was an overall positive for the British GDP.
The economist estimated that a total of £9.325 billion was spent on the games. Of this, £5.975 billion was paid for by the Central government, £2.175 by the National Lottery, £925 million by the Greater London Authority ad the final £250 million by the London Development Authority.
Although the nine billion plus amount looks huge, the returns were so high even pessimistic economists were pleasantly surprised. The country say a £750 million increase in consumer spending, £1.14 billion increase in economic output and £229 million in increased incomes of UK families. All this just in the seven week games period. Imagine the returns over a longer period of time.
It was estimated by a certain Parliamentary Committee that an additional 17,900 jobs would be created from 2012 to 2015 every year due to the Olympic games. That’s a total of more than 71,600 jobs created over the time period. And for the unforeseen benefits, the Olympics caused 71,600 less people that claim unemployed benefits from the government. This frees up valuable resources of the government, financial and otherwise, for it to use in the development and progress of the country.
In 2005, the U.K. government sponsored a PricewaterCoopers study that showed an immediate return of £3 billion for the country. This is almost one third of the initial investment, showing that the games would obviously cover the costs but rather even contribute to the economy.
Three weeks before the official start of the games, the Prime Minister visited members of the GB team and spoke to them about the games. In his speech, he said, “I expect to see benefits to the British economy of over £1 billion. I am confident that we can derive over £13 billion of benefit to the UK economy over the next four years as a result of hosting these Games.”
The Prime Minister also hosted the Global Investment Conference as well as seventeen separate Global Business Summits. The government took advantage of having so many entrepreneurs and businessmen from all over the world and took the initiative of bringing them together with British businesses to encourage economic cooperation.
One of Britain’s banks, Lloyds, released a study for its stakeholders that predicted a return of £16.5 billion by 2017. This does not take into account the additional revenue from the tourism industry that was spurred by the games. If that is taken into account, the number rises by almost £2 billion. (http://www.lloydsbankinggroup.com/)
The business opportunities created by the XXX Olympic Games were several and varied. Be it the café in Portland or the taxi drivers in the Greater London area, every business was positively affected by the games. From multi-million corporations like Vodafone or Lipton to small corner stores in the inner areas of London, the international games increased revenue for them all.
The London Business Network estimates the total number of “tourists” directly related to the games amounted to approximately 16,500 athletes, 4000 technical officials, 4000 Olympic movement officials and 21,000 members of the accredited media. It said that over 95% of these were from abroad. (http://www.bankofscotlandbusiness.co.uk/)
In addition, the LOCOG announced that over one million tickets were allocated for foreign nationals. A proportion of the tickets allocated to sponsors were also given to foreign citizens. This suggests that approximately 1.2 million foreigners attended the Olympics games.
So in total more than 1.25 million visas were sold all over the World by British High Commissions. In addition, research indicates that most of the foreigners used local airlines such as British Airways to arrive at the host city. So even if we assume that the foreigners spent no money at all in the country, an assumption that is absurd, it is safe to say that they still contributed a huge amount to the government.
Oxford Economics, a reputed economic think-tank in the country, estimated that London 2012 generated a net total of 10.8 million additional visitors to the United Kingdom between 2005 and 2017. It said that the visitors have and will continue to spend approximately £1.7 billion per year. And as far as the year of the games, 2012, is concerned, the economy will see these foreigners spend approximately £2 billion.
The Olympic games have also had a positive impact on the general happiness of the British people. Crowds joined in on the fun, the GB team won several gold medals and came third on the table, and the Royal Family was part of the celebrations. All these other indicators should that the people of Great Britain were happy to host the Summer Olympics.
A study by Graham, Eggers and Sukhtankar (2004) using panel data for Russia found that happiness had a statistically significant impact on future household income. That is levels of happiness in one period appeared to have an effect on observed household income in a later period. The authors state that this result:
“…supports the evidence from the psychology literature that happier people earn more income or, more broadly speaking, perform better economically. It is certainly plausible that the same positive cognitive biases such as self-esteem, control, and optimism that affect normal happiness levels may also have positive effects on people’s performance in the labor market.” (http://www.lloydsbankinggroup.com/)
The Olympics also caused an increase in household consumption. Be it a higher electricity bill or higher entertainment costs due to buying of tickets or something more. This means that there was an increase in revenue for businesses in several industries. It also means that consumer confidence was high, which is a very good sign considering the state of the economy only four years ago in 2008. London 2012 helped accelerate consumer confidence back to the pre-recession levels, something that cannot be put aside as mere coincidence.
And all these benefits are not confined to London. These benefits move far beyond the boundaries of the Greater London area. Each of the North West, South West and Scotland will enjoy gains of employment in excess of the equivalent of 5000 years of employment. Even Northern Ireland, where the impact is weakest, will enjoy 850 years of employment.
In conclusion, it is obvious that the business opportunities created by London 2012 were several and varied, as stated earlier in the paper. The positive impacts and influences of London 2012 on Great Britain have been very much publicized by the government, and rightly so. The Olympics were a boon to Britain, and to claim otherwise would be against the data that has been collected.