Social, economic, environmental and hedonic effects of a Stadium

Stadium development and reconstruction has been a common practice throughout history, and since the turn of the millennium, the relocation of stadiums, due to various economic and bureaucratic requirements, has increased. The fundamental question concerning this report is; what constitutes an 'externality'? A solid definition: "an externality is an effect of a purchase or use decision by one set of parties on others who did not have a choice and whose interests were not taken into account" 1. For this report the 'purchase or use decision' applies to the relocation and expansion of stadia, and the 'effects' on 'others' consist of the costs and benefits to the local area and beyond (national, global etc.

). One might also refer to them as 'spillover costs/benefits'. A stadium's presence has a vast range of effects on those in the immediate locality. Social, economic, environmental and hedonic effects are the main criteria this report will address. My argument follows the lines of there being both positive and negative externalities involved, with the positives being dominant.

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The stadiums used in this report are:

New Wembley Stadium

Emirates Stadium

City of Manchester Stadium

2012 Olympic Stadium (proposed)

New Anfield (proposed)

This report has been compiled with the collection of secondary data from books and websites, complemented by an investigation of all the externalities involved. Indeed, there are limitations to this method; essentially the fact that most of the data collected has originated from websites of the press and, more importantly, the respective stadiums' occupiers and constructors. This indicates a possible bias in the findings.

This method is, however, the only viable one, largely due to the inaccessibility of primary data for reasons of copyright and protection.

Analysis

Stadium construction generally imposes positive social externalities on the area involved. The construction of the New Wembley Stadium was part of an overall plan to regenerate Brent in North-west London. There has been an annual spend of �229million by the council to help rejuvenate local businesses2, providing 7,000 new jobs and attracting 8 million people a year to visit Brent, increasing its affluence and majorly benefitting the local populace.

Similarly, Highbury, in North London, has also seen its profile raised with the construction of the new Emirates Stadium - the relinquished 'Arsenal Stadium' having been converted into apartments. This, as well as the move, has seen the provision of 2,600 new work places, the creation of an award winning interactive recreation centre and a �60million waste and recycling centre - this having seen recycling rates in Islington increase by 14%4 (a positive environmental externality). The Emirates has also put in place a passive and mixed-mode ventilation system to minimise the use of air conditioning5. In general the environmental impact of stadia is surprisingly positive; predominantly because their occupiers establish plans to ensure that they are sustainable and help clean the local environment i.e. Wembley's presence encouraging the implementation of more street litter bins in the surrounding vicinity.

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1 http://economics.about.com/cs/economicsglossary/g/externality.htm

2 www.brent.gov.uk

3 www.brent.gov.uk

4 www. arsenal.com

5 www.soccerpulse.com

In terms of employment, the relocation of grounds such as Highbury means that numerous employees are deemed redundant, concurrently influencing the general social and employment structure following stadium relocation - i.e. growing unemployment and the subsequent need for benefits. Despite this, a reasonable number are given jobs at the new stadium and the vast majority of people employed in the area - for retail, maintenance etc. - keep their positions because of the old stadium's previous economic and social influence.

The City of Manchester Stadium was constructed for the 2002 Commonwealth Games and current hosts Manchester City Football Club. The ground's wealth appears to have brought prominence to the local area of Beswick, a poor area of east Manchester. In 2008, six of the best world sporting events are to be held here. This has been complemented by the decision for Manchester to host the first UK "Supercasino". Before the decision was withdrawn the proposed site was to contain an entertainment complex with a range of facilities - established with an investment of �265million6 - providing '2,700 direct and indirect jobs' 7.

The "Supercasino's" proposal, as well as the construction of the City of Manchester Stadium, has shown a huge increase in the reputation and eminence of this formerly deprived area. Yet, one might conversely argue that its subsequent veto by parliament hints that the area has still not reached its potential on a national, and indeed global, level. As a result of the veto, the proposed investment would not come into being, and neither would the extensive 'regeneration impact' 8 that David Cameron asserted would transpire. This is hence a negative externality.

By this evidence it is apparent that in most cases the impact of stadia on an area's social (and environmental) quality is more positive than negative. The relocation of stadia can bring status, prestige and wealth to area they are situated in. However, this does not mean that costs and negative externalities are not present. Below is a bar chart illustrating the initial construction costs for each ground:

The New Wembley's costs, as shown by the table, are conspicuously high, primarily due to a notorious dispute with the building contractors. This forced the costs to run 50% over budget in 2007 with a pre-tax loss of �53.3million. The stadium also lost �22million in its first year of operation14. The debtors included the Football Association, Multiplex and most importantly, Wembley National Stadium Ltd.

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6 http://www.whathappenedlastnight.net/manchester/casinos-and-gambling.php

7 www.designbuild-network.com

8 http://news.bbc.co.uk/2/hi/uk_news/politics/6312707.stm

9 http://en.wikipedia.org/wiki/Wembley_Stadium

10 http://en.wikipedia.org/wiki/Emirates_Stadium

11 http://uk.eurosport.yahoo.com/18062008/4/olympic-venues-cost-106m.html

12 http://en.wikipedia.org/wiki/City_of_Manchester_Stadium

13 http://en.wikipedia.org/wiki/New_anfield

14 http://www.telegraph.co.uk/sport/football/international/england/2301729/Wembley-stadium-hit-by-pre-tax-loss-of-andpound53m.html

Yet, one must look at the 'others' outlined in the definition; those not directly involved. One interesting point is that the problem is not only rooted in finance but also in reputation, with damage done to the status and perceived reliability of the UK construction industry - including those industries not involved in Wembley's construction. There is also the fear that the burden of financing the stadium could undermine the FA's core function of supporting grassroots football in England. The lack of revenue from match days, and increased council tax, has also had a substantial effect on the local area. This case study makes it evident that a stable financing scheme, free of conflict is imperative. Disruptions and extortionate quarrels can clearly result in absurd amounts of money required to pay the debts, in turn affecting those not directly concerned with the development of the stadium.

Similarly, the release of photographs showing the 2012 Olympic Stadium's anticipated appearance has split opinion with reviews ranging from "Magnificent" to "a bowl of blancmange" 16. Although opinion has no direct impact on the ground and surrounding area in itself - indeed it is totally intangible - the differing judgement supports the point that it might not be an adequate showpiece for the Olympics at its high cost. These were estimated to be �496million in November 200717 - double that of Beijing's - yet in June 2008 the London mayor's Olympic 'watchdog' revealed that the estimated costs had risen to �525million - an increase of �29million within a period of 7 months18.

The original budget for the ground was �280million, hinting that there has been a 77% increase in estimated costs. These expenses are expected to have economic externalities on all levels - locally, regionally and nationally - with high levels of taxation being necessary for rapid completion of the prerequisites for staging the Olympics. Also, there are arguments that if the stadium and event cannot live up to the spectacles of previous Olympic Games, Britain's global reputation as a sporting nation could be damaged. Despite all the negativity it is still not necessarily a negative proposition, considering the prospective impact on the locality. The potential benefits of this stadium's presence are illustrated by that of Beijing's, specifically emphasising the possibility for a substantial growth in retail and tourism.

One final interesting point is that, in general, the presence of a stadium reduces crime in the local area. This is primarily because of the regeneration schemes and economic stability they impose. Conversely, in reaction to the London 2012 Olympics, there are fears that the games may be a potential target for terrorism. Despite these concerns, the city is markedly well-prepared for such activity with the Metropolitan Police Service having gained a reputation for exemplary policing of major public events.

On a different note, the City of Manchester Stadium has instigated the 'kickz' scheme by which, through community schemes football and outreach work, the local council intend to help young people develop the skills required to contribute to the overall well-being of Beswick. Over 400 young people a week are taking part in this programme. Crucially the aim is to reduce crime and anti-social behaviour in the area to create routes into education, training and employment19, in turn, significantly improving the social scene.

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15 http://entertainment.timesonline.co.uk/tol/arts_and_entertainment/visual_arts/architecture_and_design/article2824547.ece

16 http://www.timesonline.co.uk/tol/sport/olympics/london_2012/article2824937.ece

17 http://www.telegraph.co.uk/sport/othersports/olympics/2325164/Olympic-stadium-andpound496m-'only-a-forecast'.html

18 http://uk.eurosport.yahoo.com/18062008/4/olympic-venues-cost-106m.html

19 http://www.mcfc.co.uk/default.sps?pagegid=%7B364D8448-586C-45CF-AE1A-9613CC970CB7%7D

20 http://www.london.gov.uk/mayor/olympics/benefits-crime.jsp

Conclusion

In terms of social externalities, it can be concluded that stadia, in general, provide many opportunities to, usually poor, localities, helping not only with social development and progression, but also contributing to the area's wealth and employment structure. Crime is also markedly reduced, largely due to the orderly nature imposed following local regeneration, as well as specialist schemes such as 'kickz' and Wembley's policy to make Brent more environmentally sound. Despite this, different stadiums also have varying costs, and, as is shown by Wembley, the feud with the contractors alarmingly increased the expenditure and prolonged the date for completion.

This suggests that conflict can be a large hindrance concerning stadium construction, having a substantial affect on the economic structure of a locality. Nonetheless, most stadiums are constructed with few hurdles, and the balance between the costs and benefits, by means of regeneration and monetary gain in the area, is optimal. This is still not a fixed rule, however, taking into account the conflict of opinion regarding the aesthetics of the 2012 Olympic Stadium.

Yet, it is also clear that the subjective opinions of various tabloids and other opinionated niches have no bearing on the actual construction of the stadium. By the evidence collected it can be assumed that both positive and negative externalities are indeed produced by stadium relocation and expansion, yet there are more positive ones than negatives. Stadia relocation not only brings economic, social and regeneration benefits to the areas they are situated in but also to the area they have departed, as is the case with Highbury. Although the costs are high, it could be argued that the benefits to the local area, and of course, to the grounds themselves, are indeed worthy of this.