A summer in even-numbered years means the start of a season of large-scale sporting events, such as the Olympics, the FIFA World Cup, or the UEFA European Championship. Sometimes, like this summer, multiple such mega sporting events take place in one season. Add to that major concert tours such as Taylor Swift’s the Eras Tour and ticket sales, merchandise, broadcasting rights, and marketing deals are worth billions, as is investment in infrastructure. Mega events are big business, and companies across a range of sectors benefit from such events.
Faster, higher, stronger
The development of mega sporting events is nicely described by the Olympic Games’ own motto: ‘citius, altius, fortius’ – faster, higher, stronger. The Olympic motto reflects the continuous expansion of such events, which have evolved into some of the largest projects globally. No longer mere elite sporting competitions, they have become tourism magnets, destination marketing platforms, and catalysts for urban development. Whether it is visitor numbers, television audiences, sponsorship revenue, or the scale of sports and tourism infrastructure, the indicators all point in one direction: up.
Last July was probably the first time people outside of the financial industry ever heard of the US Federal Reserve’s Beige Book, as the central bank’s report on current economic conditions mentioned the strong positive impact of Taylor Swift’s concerts on local gross domestic product as a whole. Now add millions of tickets sold and stretch the spectacle out over a few weeks, and you begin to see the substantial socio-economic impact of mega sporting events.
How much does the Olympics cost?
The Summer Olympics is one of the world’s most important sporting events, with over 10,000 athletes representing 203 countries, 329 individual events in 32 different sports, over 10 million tickets sold to spectators, and a global television audience in the billions. Total spending on sports and general infrastructure averages USD 10 billion for the Summer Olympics, excluding outliers such as Beijing, which spent USD 45 billion on it.
Winners away from the arena
For countries, the calculus extends beyond mere fiscal considerations. Studies show that there is no significant impact – direct or indirect, in the short or in the long term – on economic activity, which is surprising given the sheer amount of money that is involved in mega events. The allure for countries (or for governments, at least) lies instead in the symbolic significance and prestige associated with hosting them. But at the end of the day, the money has to go somewhere. And away from the arena and the pitch, the big winners of any mega event are the tourism industry, construction companies, food and beverage companies, the sportswear industry, TV broadcasters, and, of course, the official sponsors.
And the market continues to grow. The income from broadcasting and sponsorship increased over fivefold between the 1998 World Cup in France and the 2002 World Cup in Japan/South Korea to reach over USD 2 billion. That figure then more than doubled for the 2018 World Cup in Russia.
Swiftonomics
In addition to sporting events, large concert tours are also taking over Europe this summer. While the economic impact of mega events depends on a variety of factors, it is generally estimated that every USD 100 spent generates about USD 300, including spending on transportation, hotels, and food. Concertgoers for artists such as Taylor Swift far exceed these typical spending patterns, attracting the attention of economists, who have labelled the phenomenon ‘Swiftonomics’.
For the US economy, Swift’s Eras Tour has had a strong positive impact. The tour’s total contribution to US economic activity in 2023 was around USD 5.7 billion. If Taylor Swift were an economy, she would be bigger than that of 50 countries. If she were a corporation, her net promoter score (a metric used to evaluate customer experience) would make her the fourth most admired brand. And her loyalty numbers resemble those of subjects to a royal crown, according to one study.
However, Swiftonomics is a global phenomenon. Singapore, a recent destination of the Eras Tour, saw an increase in bookings on travel platforms of 275% for the concert period, with inbound flight bookings rising by 186% and hotel bookings by 462%. Regional airlines added 13,000 extra seats and many additional flights. Add to all that the purchasing of merchandise and the increased demand for restaurants and you get a sense of the power of Swiftonomics in motion.
The concert economy
Despite its name, the phenomenon is not restricted to just one artist. The average spend by people attending a Beyoncé concert was even higher than that of Taylor Swift, with Beyoncé’s recent tour of Sweden even blamed for driving up inflation.
Adele, for her part, is taking a different approach to a European ‘tour’ by concentrating her performances in a single city: Munich. The singer will perform in a bespoke 80,000-seat pop-up stadium, after which it will be dismantled. Adele’s approach benefits from economies of scale, ensures a more cost-efficient use of resources, and has a greater economic impact on a specific region.
What does this mean for investors?
All of this makes the ‘concert economy’ – a more neutral term for ‘Swiftonomics’ – a significant contributor to gross domestic product for regions like Singapore or Munich and an attractive opportunity for businesses catering to the needs of concertgoers.
Additionally, companies including official sponsors, the tourism industry, construction, food and beverage, the sportswear industry, and of course TV broadcasters stand to gain from these upcoming mega summer events.