I.R. Kireeva                                           
Kazan Federal University

Keywords: international sports events, mega-events, financing, effect from staging, heritage.

Introduction. As the Russian economy switched to the innovative, socially oriented type of development, it assumes setting-up and faster spreading of effective economic-organizing mechanisms of the sphere of physical culture and sport for the people to lead a healthy lifestyle, engage in physical culture and sports on a regular basis, get access to extensive sports facilities and contribute to the Russian status in the world of sport.

International events that have a major effect on functioning of all national economy sectors of the host country and its regions enhance competitive ability of a public-law entity. Staging of international sports events influences the economy long before and after the event. In recent years, Russia regularly applies for major international sports events, the Russian Federation has really strengthened its positions as an organizer of the largest world sports events, which is evidence of the internationally recognized stable socioeconomic and political climate in Russia.

Significant financing is required for the preparation and organization of mega-events, which influences the development of real estate, labour, stock and tourism markets. These events are focused on the involvement of foreign citizens, large-size construction projects, transport infrastructure and on general regional development. Preparation and staging of world sports events can be considered as an equivalent to many federal programs of regional development.

The analysis of financial indicators of the preparation and staging of world sports events helps understand how to sponsor and take all the opportunities from major international and all-Russian events, comprehensively evaluate financial and economic conditions in the regions, bring in private companies and their funds to implement federal programs.

The purpose of the study was to analyse the financial results of staging international sports events for regions.

Results and discussion. Staging of mega-events means bringing-in investments to regions, building-up their heritage, strengthening political status, cultivating civism and sports motivation. The influence of mega-events on the development of Russian regions cannot be determined without taking into consideration of the characteristics of the regional development in Russia as against other countries. The characteristics are as follows:

- big differentiation of regions of the Russian Federation as compared with other countries in terms of natural climatic conditions as well as availability of sports facilities in regions, and financing of physical culture and sport. Therefore, regional differences in host countries of mega-events – Olympic Winter Games – are not so great over the last 60 years (Norway, Austria, Italy, Canada, Yugoslavia, France and the USA). Hence, investments in the development of the Russia’s infrastructure will differ a lot in their structure and scope;

- Construction financing features. In our country, major investments accrue to budgetary funds that are paid back much slowly versus private investments.

As any long-term project, preparation and staging of international sports events show direct and indirect influence from operating expenditures connected with development of the region and its financial and economic indicators. The direct effect means changes in the sales volume of those companies that provide the participants and personnel of mega-events with goods, work places and services. Such indicators as gross regional product, employment and expenditures incurred by participants can be used to calculate the direct effect on the regional economy.

The indirect effect refers to increase in sales of goods, works and services in those segments closely related to suppliers (e.g. public utilities such as water, gas power supply and others for mega-event suppliers). The indirect effects are:

-  Multiplicative effect of sports on other sectors or interindustry balance (input-output method);

- Growth of fixed assets thanks to investments in sport;

-  Growth of income caused by consumer spending build-up due to sports wage increase and so on. [3]

On the one hand, the efficiency of the budgetary financing usually wrong assessed within a narrow and relatively short-term range of results and, on the other hand, it stabilises the employment in the region, develops service culture, and gives new opportunities for using the facilities during the events.

It should be noted that the amount of financing is difficult to estimate. Consideration is given to the financial flows divided into expenditures and sources of their backing.

Additional employment opportunities are provided before, during and after staging international sports events:

- Temporary: Construction personnel, secondary hotel and transportation services, volunteers;

- Permanent: Servicing personnel (hotels, cafes, restaurants etc), technical staff.

Table 1. Financial flows at different stages of organizing and staging of mega-events [6]

The region has a certain post-event potential:

- Involvement of domestic and foreign tourists willing to visit the venue;

- Development of adjacent industries: production of sports equipment, souvenirs, food, services and others.

Television and radiobroadcasting, sponsorship, ticket program are the major sources of income. Television and other mass media broadcast events worldwide; advertising activities are carried out; organisers and advertising companies are stimulated to make profit from the event and sponsors – through selling their products. Let us consider sponsored program returns on the example of the Olympic Games (Table 2).

Table 2. Comparative analysis of partner companies and sponsored program returns in the Olympic Games [5]

Amount and streams of the expenditures are an integral part of the calculation. Table 3 provides the expenditure data for the Olympic Games over the period of 1980-2014. For the comparability reasons, this category includes: expenditures associated with Olympic Games (for instance, contributions to organizing committee, safety, ceremonies, administrative and miscellaneous expenses); construction of Olympic facilities (stadiums, courses, media centre, Olympic villages) and their infrastructure. Non-Olympic costs such as expenditures connected with the construction of roads, airports, hotels, restaurants, tourists’ facilities and other are not included into the Olympic costs for comparability of the data. However, reference data for the Olympic Games 2004, 2208, 2010 and 2014 with these costs are provided (total expenditures for the Olympic Games).

Table 3. Total expenditures for the Olympic Games 1980-2014 [2] in USD at 2012 values

Attraction of budgetary funds for infrastructure of the region has an effect on the growth intensity of private investments into this region, which will make up for the risks of lowering the financing of public-law entities with the commissioning of infrastructure and sports facilities. Such replacement of budgetary sources with the private ones is an essential factor of economic activity of the regions when implementing investment projects. The analysis of the composition of investments trade wise shows that the priority is given to civil works, power sector, utility infrastructure, where the budgetary financing is preferred in Russia.

The world sports events form the potential for development of host cities and regions. The organisers pay a lot of attention to preserve the heritage (material, social, institutional and other after-effects and changes significantly influencing living of other generations) of the mega-events in all fields. There are two mainstreams identified in the heritage: material and non-material. The material heritage includes: sports facilities, equipment and gears; rebuilding of urban infrastructure (traffic, airports, railway stations, medical facilities, general improvement and landscaping of parks, public gardens and small parks etc.); the non-material heritage includes: popularisation of sports and healthy lifestyle; increased tourist and investment appeal of the city, region and country; building-up the sports managing personnel reserves; progress of volunteer service; innovation technologies (information systems) used in the course of mega-events and others [1, 4, 8]. However, mega-events may have a possible negative heritage: high expenses for keeping sports facilities; rise in process for goods, works and services in the region; environmental deterioration and others [7].

Therefore, the significant sports events may influence on the host city or country in different ways provided that their nature and level of their influence depend on the level of development of host country. If the event is planned properly, it may stimulate the infrastructure development; therefore, it will bring more benefits to less developed areas, rather than those with developed infrastructure. For example, Olympic Games, Commonwealth Games or World Championship are a part of the long-term development at the local and regional level in the European and Asian countries. Eventually, the residents and local entrepreneurs in the cities that host the significant events get long-term benefits in the case when the public-law entities focus on building and re-building of the infrastructure in accordance with the existing long-term growth plans for the region. A significant event serves as a catalyst, which impulses the social and economic growth and sometimes helps raise missing funds. The significant sports event subject to the accepted programs of local, regional and national development can speed up the construction of infrastructure for a decade and more, and enhance the living standards of the native population, increase the competitive ability of the host country in the world arena and ensure its economic benefits over time.

In the developed regions, where the land is scarce initially at the time of application and planning (and it will be highly demanded in the 7-10-year period of selection and preparation to the Olympic Games), and the labour and resources are inflexible, the conduction of the Games may lead to extremely ineffective usage of the land and put the pressure on the wages and resource prices thus accelerating the inflation.

In addition, there is a strong possibility that the economic expectations of the investors will not meet the actual situation after mega-events. First, the large-size sports construction projects are isolated. Second, the argument of high financial performance of investments into such projects is frequently groundless following which the investor shows less interest to the region. Supporting even the largest sports events has less effect on the company recognition and the potential clients’ attitude towards them. In this context, the problem of sudden withdrawal of capital immediately after major sports events becomes actual, which drops the investment attractiveness of not only the host region, but throughout Russia too.

Conclusions. It is important to understand the financial structure of the entire event for many reasons:

- To be able to predict its degree of influence on the region comparing with other construction projects for similar mega-events;

- To project the results to other federal region development programs;

- To know how to finance and how to employ the possibilities of significant international and all-Russia events;

- To assess the development of Russian business and its engagement and interest in sports as a marketing platform;

-  To analyse the potential of involvement of private companies into federal programs and methods of attracting them – tax remissions, state sponsorship of innovative solutions or concessional lending.

In summary, it should be noted that despite all the benefits that the international sports events may bring to the region, there is a high risk of regional economy stagnation after the events. Therefore, the regional authorities in Russia should constantly develop new investment policy benchmarks and make new development projects in order to avoid such risks to occur after the event.

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Corresponding author: kar-indira@bk.ru