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The real cost to the UK’s HR industry

December 9th, 2010

hr-logoThe real cost to the UK’s HR industry of the BBC’s Panorama programme on the World Cup

Losing out on the 2018 World Cup was a tragedy for the UK’s jobs market. Had we won, the HR sector would have been in for a recruitment bonanza as job creation soared.

You don’t need to be Einstein to guess that an additional influx of hundreds of thousands of people to England for a month or more would have had a positive impact on the economy and the retail sector.

But we can see the proof from looking at previous large-scale sporting tournaments.  Most of the research on the boosts to jobs that cities can expect from winning large sporting tournaments surrounds the Olympics and we can look at these figures to gain some sort of insight into what we’ve missed out on.

The economic impact of the 1984 Los Angeles Olympics on Southern California was $2.3bn and supported 73,375 jobs. The Seoul Olympics in 1988 generated an economic impact of $1.6bn with 336,000 new jobs. Atlanta in 1996 produced an economic impact of $5.1bn with 77,026 jobs created.  Sydney in 2000 generated an economic benefit of $4.7bn with 114,966 jobs created. The most successful Olympic Games to date was Athens in 2004, which produced an average economic impact of $13.05bn with 372,700 new jobs.

Naturally, a lot of the jobs associated with staging the Olympics would have been in the construction industry (the biggest winner) and – as our bid team pointed out so unsuccessfully – as we were “ready to host the World Cup tomorrow” – they wouldn’t have been generated if we’d got the 2018 World Cup.  But the jobs created by sporting events aren’t all down to building new stadia.

The UK’s HR professionals would have struggled to expand workforces in hospitality, leisure, retail, and marketing. For instance, the boost Rome earned in 2009 from staging the UEFA Champions League final resulted from a short term positive commerce flow through fan spending in bars, clubs, hotels, city attractions, and bookmakers.

And a study conducted following the Sydney Olympics found that a quarter of this economic benefit, or $1.2bn, could have been attributed to the retail sector throughout Australia during the Games. We would have seen massive job creation there. The manufacturing of merchandising alone for the World Cup would have been worth a fortune – 5% per cent of all tourist spending at Sydney went on merchandising.

The UK retail market is expected to fare pretty well from the London Olympics. The hospitality category is the biggest winner within retail. Hotels are the main beneficiary within the broader retail sector, benefitting to the tune of £371m, with London generating just over half of this and the greatest impact being felt during the legacy period following London 2012. An additional £232m is expected to come to the restaurant sector because of the Olympic Games, with London forecast to receive 72% of this.  Customers are expected to spend an additional £232m in bars due to the Olympics with this fairly evenly distributed throughout the UK.

Brands within other retail sectors such as finance, transport and tourism markets are also forecast to receive a substantial economic benefit. This is due to increased activity and spend within the UK and the increase in tourist numbers because of the interest London 2012 is expected to generate throughout the world. The World Cup isn’t on quite the same scale as the Olympics – but it’s clear the impact would be significant.

And it’s not all elementary occupations (as the Government so charmingly classifies entry-level jobs in the retail and leisure sector). There would have been more money spent by international brands in the UK and the UK’s advertising and marketing industries would have gone nuts. It’s not just the official sponsors who would have ploughed money into London if we’d won.  Rival brands would have deliberately attempted to undermine the effectiveness of official sponsors by piggy-backing advertising campaigns around the World Cup. Research conducted from the 1988 Winter Olympics in Calgary found that 11 of the 20 identified official sponsors were not official sponsors.  Only in four of the seven product categories did the respondents recall the official sponsors more often than the ambushers.

Thanks to what Sepp Blatter himself describes as the “FIFA brotherhood” that convened in Zurich yesterday we can kiss that enormous adrenaline shot to the jobs’ market goodbye.

But it’s not all bad news.

There will still be some uplift generated despite the bid going to Russia. During Euro 2004 (which was held in Portugal), research from London Retail Consortium found this ‘feel good factor’ boosted sales and activity generally in London, in areas such as food, drink, flags, t-shirts and souvenirs. Food and drink sales were boosted by £160m and the retail sector as a whole benefited by an extra £200m – or £80m a week. And we can look ahead to hosting the UEFA Champions League Final next year and the Olympics in 2012 – which will do plenty to keep HR’s busy.

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