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Game-Changer: Euro 2024 Set to Score Economic Goals Across Europe

Game-Changer: Euro 2024 Set to Score Economic Goals Across Europe
Фото: El.kz/Artem Chursinov 14.06.2024 16:00 2573

The Euro-2024 tournament will start in a few days. Twenty-four national teams from the old continent will compete in Germany. Unfortunately, the football players of Kazakhstan stumbled one step before the final stage. However, we can say that the interest of Kazakhstanis in this four-year flagship competition has not decreased. Therefore, footbal fans probably know well who can perform in the ball game and who can shine with their talent. In this regard, we would like to dedicate today's article not to football, but to the economic impact of flagship competitions such as Euro-2024.

Germany, a nation with a deep-rooted football heritage, will host Euro 2024 across ten cities, including Berlin, Munich, and Frankfurt. Each city is prepared to welcome fans with open arms, showcasing not only their world-class stadiums but also their unique cultural offerings. The tournament promises thrilling matches, unforgettable moments, and the emergence of new football stars.

 

Revenue Generation

UEFA expects to generate 2.5 billion euros from Euro 2024 through various revenue streams. A substantial portion of revenue comes from selling broadcasting rights to networks and streaming platforms globally. Major brands and corporations pay premium prices for sponsorship opportunities, enhancing their visibility during the tournament. With matches held in multiple cities, ticket sales are a major revenue source. Fans from around the world travel to Germany to witness the action live. Exclusive hospitality packages offer premium match experiences, adding to the revenue. Sales of official merchandise contribute significantly to the overall earnings.

UEFA leaders promise that 1.2 billion euros will be allocated to member states for development programs from 2024-2028.  The total prize money for UEFA EURO 2024 has been confirmed at €331 million, maintaining the same level as for UEFA EURO 2020. The distribution key for the prize money will also remain consistent with the previous tournament.

Under the confirmed distribution system:

Participating Fee: Each team will receive €9.25 million for participating in the tournament.

Match Bonus: Teams will earn €1 million for each win and €500,000 for each draw during the group stage.

Qualification Bonuses: Round of 16: €1.5 million;

Quarter-finals: €2.5 million;

Semi-finals: €4 million.

Finalists: The runners-up will receive an additional payment of €5 million.

Champions: The European champions will receive an extra payment of €8 million.

The maximum amount that the champion team can achieve, if they win all three of their group matches, is €28.25 million. This prize distribution system ensures significant financial incentives for teams to perform well throughout the tournament. With the same prize money level as the previous championship, UEFA continues to promote high competition standards and reward excellence in European football.

UEFA forecasts that nearly half of the income from EURO 2024, about €1.2 billion ($1.3 billion), will constitute profit, intended to fund operational expenses, development grants over the next four years, and replenishment of its reserves. The organization anticipates significant costs associated with organizing the tournament, including substantial prize money for the 24 participating teams and compensation to clubs for their players' participation.

More than 600 clubs, predominantly from Europe but also including some from around the globe such as Saudi Arabia, are poised to benefit from UEFA payments totaling €240 million ($261 million). These payments are intended to compensate clubs for releasing their players.

Of this fund, UEFA has allocated €140 million ($152 million) to cover expenses related to players released for the finals tournament. Additionally, €100 million ($109 million) will be distributed based on call-ups for all teams that participated in two editions of the Nations League and Euro 2024 qualifying matches.

Following Euro 2020, which featured a total fund of €200 million ($218 million), the distribution saw Chelsea receiving the largest payment of €5.1 million ($5.5 million), closely followed by Manchester City with €4.5 million ($4.9 million). English clubs collectively shared €47 million ($51 million) from this distribution.

 

Financial Returns from Previous Tournaments

Euro 2016, hosted by France, stands out as a prime example of the tournament's financial success. The event generated a total revenue of €1.92 billion, marking a significant increase from the €1.3 billion generated during Euro 2012. Television broadcasting rights constituted the largest share of revenue, accounting for approximately €1.05 billion. This staggering figure illustrates the immense global viewership and the lucrative nature of broadcasting deals associated with the tournament.

Sponsorship agreements also played a pivotal role in the financial returns of Euro 2016. UEFA secured partnerships with various corporate entities, resulting in sponsorship revenue totaling €481 million. These partnerships provided brands with extensive exposure across multiple platforms, including stadium signage, broadcast advertising, and digital media, amplifying the tournament's financial impact.

Ticket sales contributed substantially to the revenue generated by Euro 2016. The tournament attracted a total attendance of 2.43 million spectators, with an average stadium occupancy rate of 89%. This translated into ticketing revenue of approximately €312 million, underscoring the significant financial contribution of fans attending matches in person.

Hospitality packages offered premium experiences for fans, with options ranging from VIP seating to exclusive dining and hospitality services. Euro 2016 witnessed robust demand for hospitality packages, resulting in additional revenue of €123 million.

Licensing agreements for official merchandise further augmented the financial returns of the tournament. Fans flocked to purchase jerseys, scarves, and other memorabilia, with total merchandise sales exceeding €100 million.

The financial success of Euro 2016 paved the way for subsequent editions of the tournament to capitalize on its commercial appeal. The tournament's ability to attract global viewership, secure lucrative sponsorship deals, and generate substantial revenue from ticket sales and hospitality packages reaffirms its status as one of the premier football events in the world.

The economic benefits of hosting a major competition like the Euro are complex and not always straightforward. While such events boost tourism and benefit sectors like hospitality and retail, the overall impact on the economy can be mixed. Financial experts are skeptical that Euro 2024 will significantly boost the German economy. According to the German Institute of Economics, the 2006 World Cup had little impact on the national economy, and a similar situation might occur with Euro 2024.

With 2.7 million tickets up for grabs during the four-week event spanning from June 14 to July 14, hosting cities such as Berlin, Munich, and Cologne are bracing for an influx of both domestic and international visitors. Norbert Kunz, Managing Director of the German Tourism Association, anticipates a surge in travel activity, fueled by football fervor and the allure of live event experiences. He suggests that 2024 might witness a tourism record, propelled by enthusiastic football fans.

The brewing industry is poised for a similar upswing. Holger Eichele from the German Brewers Association notes a historical trend: during past major football tournaments like the 2006 World Cup, beer consumption spiked significantly. This forecast comes as a boon following a challenging period for the industry, marked by a 4.5% decline in sales in 2023, continuing a downward trajectory.

However, Michael Groemling of the German Economic Institute urges caution, citing the World Cup in 2006 as a case study. While such events generate enthusiasm and spending, they might not translate into sustained economic growth. Many consumers may seize the occasion to splurge on items like new televisions or extra beverages, contributing to short-term consumption boosts rather than long-term economic expansion.

 

The Cost of Hosting

In the wake of the Euro 2024 soccer championship, attention turns to the cautionary tales left behind by previous Olympic Games and World Cups, where extravagant stadiums morphed into financial burdens and symbols of overspending. These "white elephants," once hailed as symbols of national pride and sporting prowess, now stand as stark reminders of the risks associated with hosting mega-events.

From Athens to Rio de Janeiro, cities that once basked in the international spotlight now grapple with the legacy of underutilized venues and mounting debts. The Athens Olympic Park, built for the 2004 Summer Games, sits largely deserted, its once vibrant stadiums now silent and empty. In Brazil, the Maracanã Stadium, which hosted the 2014 FIFA World Cup final, has struggled to find regular tenants since the tournament's conclusion, despite undergoing costly renovations.

These examples underscore the challenges of repurposing stadiums designed for specific sporting events into sustainable, multipurpose facilities. Without adequate planning for post-event usage, these structures often become financial burdens on host cities, draining resources that could be allocated to more pressing social and economic needs.

Hosting global sports tournaments is becoming increasingly expensive. Significant funds are required not only for organizing the event but also for maintaining large-scale sports complexes afterward. This often leads to underused "white elephants"—stadiums and facilities that become financial burdens.

Greece's hosting of the 2004 Olympics stands as a stark reminder of the potential pitfalls of mega-events. Despite the initial excitement and anticipation surrounding the Games, the country's expenditure of 8.5 billion euros ultimately contributed to economic turmoil and the abandonment of sports complexes.

 

Effective Hosting Strategies

Barcelona's hosting of the 1992 Olympics stands as a shining example of how strategic investment and urban development can transform a city and leave a lasting positive legacy. Unlike some other host cities that focused solely on building sports complexes, Barcelona took a holistic approach, allocating funds to infrastructure and urban renewal projects that revitalized the city and positioned it as a major tourist destination.

Rather than viewing the Olympics as an end in itself, Barcelona saw the event as an opportunity to catalyze broader urban development initiatives. The city invested in projects such as the renovation of historic neighborhoods, the creation of new parks and public spaces, and the expansion of public transportation systems. These investments not only enhanced the city's aesthetics and livability but also laid the groundwork for sustainable economic growth beyond the Games.

The success of Barcelona's approach is evident in the city's thriving tourism industry. In the years following the Olympics, Barcelona has emerged as one of Europe's most popular tourist destinations, attracting millions of visitors annually. The influx of tourists has spurred growth in sectors such as hospitality, retail, and cultural attractions, contributing significantly to the local economy and creating jobs for residents.

Moreover, the improvements made to Barcelona's infrastructure and public spaces have enhanced the quality of life for residents and created a more vibrant and dynamic urban environment. The legacy of the 1992 Olympics continues to benefit the city to this day, demonstrating the potential for global sports events to be catalysts for positive change when approached with foresight and strategic planning.

 

The Costliest Sports Event

Qatar's lavish spending on the 2022 World Cup, totaling a staggering $229 billion, underscores the challenges and controversies surrounding mega-event hosting, particularly in democracies where public accountability is paramount. The bulk of this expenditure was directed towards city infrastructure and the construction of state-of-the-art stadiums, designed to showcase Qatar's ambition and wealth on the global stage.

However, despite the massive investment, concerns persist over the long-term viability and utilization of these facilities. Post-tournament, only a handful of stadiums see regular use, raising questions about the sustainability of such large-scale projects. The mismatch between the exorbitant spending and the ongoing benefits derived from these stadiums highlights the difficulty of justifying such investments, especially in democratic societies where public funds must be carefully allocated and accounted for.

Moreover, Qatar's hosting of the World Cup has been marred by allegations of human rights abuses, including the mistreatment of migrant workers involved in construction projects. These ethical concerns have further heightened scrutiny of the country's expenditure on mega-events and underscored the need for greater transparency and accountability in the bidding and hosting process.

The case of Qatar serves as a cautionary tale for democracies considering bidding for and hosting mega-events. While such events offer opportunities for economic development and global recognition, they also pose significant risks and challenges, particularly in terms of financial accountability and social responsibility. As countries weigh the potential benefits against the costs and risks, careful consideration must be given to ensure that public funds are used effectively and ethically to benefit the broader society.

 

The Future of Hosting Major Tournaments

The shift towards shared responsibility in hosting major sports events reflects a pragmatic approach to managing the high costs and logistical challenges associated with such endeavors. Rather than burdening a single host nation with the entirety of the financial and organizational responsibilities, multi-country hosting arrangements distribute the workload and expenses more evenly, while also promoting regional cooperation and unity.

Examples such as the upcoming Euro Championships in 2028 and 2032, which will be jointly hosted by Great Britain and Ireland, as well as Italy and Turkey respectively, illustrate this trend. By pooling resources and expertise, these partnerships enable host nations to showcase their cultural heritage and sporting infrastructure on a global stage, while also mitigating the financial risks and uncertainties that come with solo hosting.

Similarly, the 2026 and 2030 FIFA World Cups will see collaborative efforts between multiple countries, including Canada, Mexico, and the USA in 2026, and Spain, Portugal, and Morocco in 2030. These cross-border alliances not only spread the economic benefits and tourism opportunities across different regions but also foster diplomatic relations and promote international cooperation.

In addition to the practical advantages, multi-country hosting arrangements also align with the evolving values of inclusivity and diversity in the world of sports. By involving multiple nations in the hosting process, these events become more representative of the global community and offer a platform for cultural exchange and mutual understanding.

Overall, the trend towards shared responsibility in hosting major sports events reflects a recognition of the complexities and costs involved, as well as a commitment to collaboration and inclusivity on the world stage. As such, these multi-country partnerships are likely to become increasingly common in the future, shaping the landscape of international sports events for years to come.

 

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