From creating a unified sense of purpose and forging eternal bonds to improved health and increased social capital, sports goes beyond providing us with entertainment. Sports is a billion-dollar industry in developed countries, making it a key driver for their socio-economic growth. Top sporting events such as European football rack in billions of dollars in annual revenue, while mega events such as the Olympics lead to high capital infusion into hosting countries.
Unfortunately, the economic impact of sports is yet to reach such heights in developing countries in Africa and the Americas. This is despite these countries possessing some of the best sports talents in the world. This piece examines the economic benefits of sports in developing countries and what the governments can do to improve the industry.
Sports activities generate much revenue, especially when a country emphasizes the prosperity of its sports industry. Talk about providing employment, creating tax revenue, sparking infrastructural development, and promoting foreign exchange.
Sports personnel pay government taxes directly from their wages through income tax. They may also further contribute to government revenue through VAT and other expenditures within the country, including road tolls.
Additionally, part of the entrance proceeds earned by sports clubs during matches and other events is taxed, especially when using the nation’s sports facilities. The same is true for any other income-generating activities conducted by sports clubs.
Betting sites and related corporations, too, pay governments much money in taxes, often going upwards of 20% of their profits. The sum is significant, considering that millions of sports fans are punters in any given economy. For example, Nigeria has a gambling population of about 60 million, betting an estimated $5.5 million daily ($2 billion annually).
With more funds in their baskets, governments in developing economies are better placed to provide infrastructural facilities, address market failures, and support the economy’s growth.
Billions of dollars flow to developing economies globally, partly from sportsmen, sportswomen, and officials who work in foreign countries. This international remittance is especially true for developing economies where most talented players leave the country searching for better salaries abroad. The money often starts trickling back to the country right away, beginning with the sale of the player.
Other examples of foreign exchange generation are the sale of sports kits to other countries and hosting international sports events.
Sports personalities and fans often visit in large numbers during major international events, spending lots of money on accommodation, meals, and tourism when not engaged with matches. For example, Egypt registered a record $83 million revenue for hosting the finals of the biennial African Cup of Nations in 2019.
At the highest level, sports will generate income through television broadcasting rights and commercial sponsorships and endorsements. This income will trickle down to the clubs and sports personnel.
For instance, some of the highest earning sports personnel have endorsement deals with brands such as Nike and Adidas to the tune of billions. Besides, partnerships with sports betting companies and online casinos often bring in millions of dollars. This could be through casino-sports sponsorship deals, as with most European football teams, or by allowing these online gambling sites to show live sports events on their websites.
These incomes can have multiplier effects on the economic growth of a country — the paid wages and salaries are used in the consumption of goods and services. Moreover, increasing revenue from sponsorships attracts more people to participate in sports, improving performances and attracting large followers.
Sports indeed thrive best under adequate infrastructure, but the flip side is filled with infrastructural development that only came about as a result of the sports to begin with. Governments have been known to use sports events to influence the development of new sports and city infrastructure.
For example, Ivory Coast built a new stadium for the 2023 AFCON, whose finals the country will be hosting. Moreover, Ghana planned to build a national Olympic stadium ahead of the 2023 13th African Games.
The government has a front-seat role in any country’s sports industry. The policies and decisions it makes regarding sports infrastructure, club funding, and talent nurturing directly impact the country’s sports industry in the coming years. Some things governments in developing countries should do to improve their sports industries include:
The government must establish strong ties with countries that either do well in sports or share the vision of better days in the industry. Among the strategies to use are:
The first thing any government geared towards a flourishing sports industry should do is ensure there are solid institutions for promoting sports policies and facilitating education about the importance of the sports sector in the country.
Such a government would also be wise to work closely with the media industry, improving access to sports information and publicizing the country’s positive attitude towards sports.
Developing countries should work closely with the private sector to invest significantly in sports infrastructure. However, since facilities such as arenas and stadiums are often expensive, the responsibility will often lie more on the government than on private investors.
Consolidation of resources would be fundamental, too, because the nation’s resources may be already strained. The maximum impact will be felt by sticking to select sports with great potential rather than distributing meager resources amongst all the games available in the country.
The benefits of sports to any developing country are indisputable. They form an interdependent relationship where sporting activities contribute to social-economic growth while the economy contributes to a healthier sports industry. At the heart of it all is a supportive government that takes initiatives to improve the sports industry through better policies, funding, and establishing international ties.
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