The bonanza of the Baku European Games
Faig Baghirov*These days the world’s attention is directed at Azerbaijan and its capital, Baku, which is hosting the First European Games. Above all, the sporting event provides a golden chance for athletes representing different countries and cultures to come together and harvest the fruits of their hard work and thus realize their dreams of gaining global fame.
The First European Games also carries a great economic importance. The organization of the games has a direct impact on the host country’s economy, including its macro-economic indicators as well as sustainable economic stability.
To be precise, the tourism sector stands to benefit the most from the organization of the First European Games. Due to the First European Games, a large number of tourists are expected to visit Azerbaijan. Based on international standards, a tourist’s weekly average expenditure is $1,000. Taking into account that the games will last for two weeks, each tourist visiting Azerbaijan will spend $2,000. Tourists coming to Azerbaijan are not expected to stay in the capital alone, but visit the regions of the country as well, thus using various services and generating a source of additional income for local citizens. Accordingly, the tourism sector will be able to gain direct revenue from the games.
Others that will benefit from the games are small and medium entrepreneurs. Thanks to the event, a number of visitors from different countries will boost the demand for various services. Obviously, most of these services are offered by small- and medium-sized enterprises. A larger number of tourists will translate into a bigger number of users of different services, including of cafes and restaurants. The transport and banking sectors will benefit as well.
The infrastructure costs constitute the lion’s share of the outlay allocated for the games. In other words, a large amount of funds has been spent on infrastructure and facilities with the purpose of improving Baku and other regions of Azerbaijan.
Naturally, this infrastructure is not going anywhere after the games. Azerbaijan has already reached an agreement to host several spectacular sporting events in the near future, with Formula One, the Islamic Solidarity Games and 2020 European Football Championship semi-final matches being just some of the bright examples. That means the advanced infrastructure created for the First European Games will allow Azerbaijan to organize future major sporting events with little spending and create an opportunity to achieve significant gains.
The long-term use of the infrastructure is the first to merit mention, but it is important to note the resultant foreign capital flow into Azerbaijan. The development of sophisticated infrastructure will definitely increase the country’s level of competitiveness and make the Azerbaijani economy, particularly its non-oil sector, more attractive to foreign investors. Foreign investments landing in the non-oil sector will, in turn, promote the expansion of domestic production and the increase of exports of non-oil products. In other words, thanks to the promotion brought by the games, Azerbaijan will find new momentum to attract foreign investment.
The broadcasting of the First European Games through a variety of media channels will provide another source of revenue. It is in the interest of local and foreign companies to carry out their own promotional campaigns during the games, as a portion of the advertising revenue of the companies involved in these games will be spent on the games themselves. At the same time, the sale of tickets, as well as broadcast and advertising revenues, will add to the generation of revenues from the event.
*Faig Baghirov is the ambassador of the Republic of Azerbaijan to Turkey.