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The role of Government in Sport:  is there a special case for intervention?

Date: 23 October 2000
Our ref: 744

“Government attitudes towards sports seem to vacillate between regarding them as no different from other economic activities and regarding them as a special case.  However, the degree of intervention is considerable both in relation to amateur and professional sporting activity”

This is one of the major conclusions of a paper to be given by Professor Peter Sloane, Dean of the Faulty of Social Science and Law and Professor of Economics at the University of Aberdeen, at the third and final event of a series of discussions of topical issues in sport organised by the Institute of Economic Affairs in London.

Sport is one of the most rapidly growing sectors of the economy.  A recent report by the Leisure Industry Research Centre at the University of Sheffield has revealed that consumption of sporting goods and services grew from £8.82Billion in 1995 to £11.1Billion in 1998, an increase of some 26% .  Within this, pay television subscriptions grew fastest of all , rising from £388Million to £746Million over the same period, representing a growth rate of over 92%.  The number employed in the sports sector rose from 348,000 to 369,000 over this three year period.  Spending on sport in 1998 accounted for 1.72% of GDP and 2.6% of consumer expenditure.

Professor Sloane maintains:  “The scale of government intervention in sporting activities is substantial, not only in amateur but also professional sports.

“However it is clear that attempts to regulate professional team sports exceed the level of intervention in the generality of private sector activities.”

Professor Sloane will deal with three main issues in his talk:  government support for amateur sport; government support for stadium construction and the hosting of major sporting events; and government regulation of professional sports including competition policy at national and European levels.

“Sport has become a live issue in policy terms and has gone right to the top in Cabinet discussions ”, concludes Professor Sloane:  “This is clearly indicated by the fact that Prime Minister Blair has intervened in the recent European Commission decision that it is unlawful to request transfer fees, even within the official contract period.  The Prime Minister has asked that the Commission re-think this decision and the German Chancellor has taken a similar stance.”

Professor Sloane lists a further three major conclusions:

* Government clearly regards amateur sport as a “merit good” which justifies subsidies in one form or another.  Little attempt has been made, however, to estimate the benefits arising from different types of expenditure and to consider whether the distribution of resources between various activities is optimal.  It is also doubtful whether targeting is sufficiently accurate to ensure that government efficiency objectives are met

* Governments seem to believe that there is considerable value added in the hosting of international sporting events and are prepared to devote resources to assist the bidding process.  This may, in part, explain their willingness to provide resources for the construction or reconstruction of national stadia.  In Britain, however, we have not faced the issues as in the USA of public funds beings used to attract professional clubs to relocate in particular cites which currently lack them.

* Current policy is ill-defined in terms of the appropriate stance of competition policy makers towards professional sports leagues.    Should competition policy make special provision for them, as is the case in the USA?  There are arguments in favour of special treatment for professional team sports given their distinctive nature.  In return, such sports may have to accept a degree of regulation and the price they may have to pay is a more equal sharing of income between large and small clubs.

Joining Professor Sloane to debate these major issues are Mihir Bose, a sports journalist with The Daily Telegraph and Nigel Hawkins, a City Analyst specialising in sports with the Broker, Williams de Broe.  Chairing the event is John Timms, Managing Director of Bell Pottinger Sponsorship and Sport

This is the third event organised by The Institute of Economic Affairs on the subject of “The Economics of Sport – a Series of Discussions of Topical Issues in Sport”.  Distinguished authors and commentators in the field were invited to give their views on three important topics.  Dr Robert Simmons of the University of Salford lead the discussion on Employment Rights on 11 October with Professor JR Shackleton, Head of the Westminster Business School and Rob Hughs, Sports Writer with the Sunday Times also taking part.

Broadcasting Rights was the topic of the second event held on 18 October when the keynote speaker was Dr Stefan Szymanski, and industrial economist at Imperial College of Science, Technology and Medicine.   Also taking part where Dr Samuel Cameron, University of Bradford and Dr Cento Velanovski, Managing Partners of Case Associates.


Further information from:

Christine Cook, Executive Director of Public Relations, Tel:  01224 272013
Anne Colyer, Institute of Economic Affairs, Tel:  020 7799 8900

Professor Sloane will be available for interview at 2.00pm on Tuesday 24 October in the board room, F61, first floor,  Edward Wright building, Dunbar Street, University of Aberdeen.   Refreshments will be provided.   If you are unsure of the location, please come to the Visitor Reception, University Office, Regent Walk, Aberdeen and ask for Angela Begg who will escort you to the boardroom

University Press Office on telephone +44 (0)1224-273778 or email