The Quasi-Government Sector
In most parts of the world, the financial system can be divided into two parts viz. the private sector and the government sector. However, in many parts of the world, there is a third sector called the quasi-government sector. This sector has the characteristics of both the government as well as the private sector. The […]
Disadvantages of Omnichannel Retailing
In the previous article, we have explained the concept of omnichannel retailing. We have also seen how it is different from multichannel retailing and what are some of the benefits of using omnichannel retailing. However, there are many critics who believe that omnichannel retailing is only good in theory. When it comes to real life, […]
Degree of Financial Leverage Ratio
A high debt equity ratio makes the company financed by debt more than by equity. Therefore there are fixed interest payments involved. Hence when the going is good, the company makes a handsome return as a small percentage of change in EBIT creates a large percentage change in earnings per share. However the inverse of […]
Proof of Concept
In the previous articles, we have already read about why entrepreneurs require seed funding and how they obtain this seed funding. In most cases, the end result of seed funding is to implement a theoretical product idea on a smaller scale in the real world. There are product management techniques in place which have been […]
Next Day Funding – Meaning and its Benefits
In the previous article, we have already studied how commercial banks help in providing point-of-sale services to their corporate customers. We have also studied how point-of-sale systems have become strategically important for corporations. However, they are some pain points in the point-of-service system as well. Commercial banks provide another service called next-day funding in order […]
In the previous article, we discussed the concept of sports tourism. We have seen how sports tourism has a wide definition and includes many different types of travel activities. We can say that there is evidence to support the claim that the presence of sports leagues and franchises does lead to an increase in tourism in any particular region.
However, there is another assumption being implicitly made here. The assumption is that tourism is inherently a good thing for the economy. This is believed to be the case since many countries around the world spend money in attracting tourists to their nation for sports tourism. However, this may not necessarily be the case. Many countries have also experienced many negative economic effects of sports tourism.
In this article, we will have a closer look at both the positive as well as negative economic effects of sports tourism in order to enable the reader to have a better understanding of the subject.
There are several benefits of sports tourism. Some of the important benefits have been listed below:
Sports fans are known for their dedication to their teams. Hence, they are generally not price-sensitive. It is, therefore, possible for local businesses in a city to sell high-value branded items with high-profit margins to such fans. Items such as apparel and memorabilia have a high-profit margin. Hence, the state also earns more in the form of direct as well as indirect taxes.
The positive economic impact of sports tourism has been well publicized. However, there is very little mention of the negative economic impact. Some of the details related to disadvantages have been mentioned below:
Hence, it is imperative for the city that is hosting such events to be prepared for such violence. The end result is that the policing costs as well as other expenses related to law-and-order management need to be increased. This causes a drain on the economic resources of the city.
The tourism-related revenue from these venues may not be able to fulfill the requirement of maintenance costs and there might be a huge shortfall which the government may have to pay if they do not want the stadium to be in a state of disarray.
If the event is held in a different city, then the same tourists as well as their tourism dollars end up moving to a different city. Therefore, it can be said that the increase in tourism is temporary and not sustainable over the long run.
For instance, bars, pubs, and other establishments may become a hub for anti-social activity. Also, the prices in the city may become expensive for everyone. As a result, inflation is caused and the purchasing power of the local citizen ends up being reduced. This loss of purchasing power may be several times greater than the additional tax revenue generated by the government.
In general, the operation of more buses, trains, airplanes as well as air conditioners leads to an increase in the pollution caused by the city. It is common for proponents of sports tourism to not take such costs into account while displaying their calculations.
The bottom line is that sports tourism can lead to an increase in economic activity in a region. However, that may not always have to be the case. As mentioned above, there are several ways in which it can impact economic activity negatively as well. Hence, it is important to have a careful evaluation before deciding to use sports tourism as an economic model for a city.
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