Making A Spectacle

ON SEPTEMBER 14TH, thousands of spectators gathered on the Champs-Élysées to celebrate the end of an unforgettable Olympic summer. The “Parade of Champions” marked a triumphant conclusion to a remarkable event that showcased France’s creativity, expertise, and vision.

The Paris Olympics left a lasting impression not just on the athletes and visitors, but also on the city itself. Iconic landmarks like the Eiffel Tower, Place de la Concorde, and Versailles Palace played host to Olympic competitions such as beach volleyball, skateboarding, and equestrian events. These unique settings highlighted the potential of urban spaces to be transformed and revitalized for major sporting events.

Hosting a successful Olympics requires significant investment and planning, similar to preparing a venue for a large-scale celebration. Just as a homeowner might undertake extensive renovations to welcome guests, cities hosting mega sporting events often embark on ambitious infrastructure projects to create a legacy.

A golden opportunity

The development of mega sporting events is aptly encapsulated by the Olympic Games’ motto: *Citius, Altius, Fortius*—faster, higher, stronger. This motto reflects the continuous expansion of such events, which have evolved into some of the largest projects globally. No longer merely elite sporting competitions, they have become tourism magnets, destination marketing platforms, and catalysts for urban development. Whether it’s visitor numbers, television audiences, sponsorship revenue, or the scale of sports and tourism infrastructure, the indicators all point in one direction: up.

Take this year’s Summer Games, for example. It was one of the world’s most important sporting events, with over 10,000 athletes representing more than 200 countries, 329 individual events in 32 different sports, over 10 million tickets sold to spectators, and a global television audience in the billions. Or consider the FIFA World Cup, where the figures are similarly impressive—add 682 stickers for a Panini album—and the financial outlay equally staggering. Total spending on sports and general infrastructure averages USD 10 billion for the Summer Olympics, excluding outliers such as Beijing, which spent USD 45 billion on it.

For a country, no other sports policy decision rivals the significance of choosing to host a mega event like the Summer Olympics or the FIFA World Cup. Typically, hosts and bidders highlight the potential social and economic impact to justify their decisions. Nevertheless, hosting such events involves substantial financial commitments, raising the fundamental question: are mega events worth it? The answer is that it depends on who you ask.

Recent data revealed that French service sectors in August expanded at the fastest pace in more than two years, boosting Europe’s second-largest economy as visitors from around the world flocked to Paris for the Olympic Games. The Purchasing Managers’ Index (PMI) for the services sector rose to 55 in August from 50.1 in July. This is well above the 50 level that separates growth from contraction, as well as consensus expectations of 50.3.

For countries, however, the calculus extends beyond mere fiscal considerations. Studies show that there is no significant impact—direct or indirect, in the short or long term—on economic activity, which is surprising given the sheer amount of money involved in mega events. Notably, Los Angeles remains the sole host to turn a profit since the modern Olympic Games debuted in 1896, achieving this feat in 1984. It will be interesting to see if the city can replicate this success when it hosts the next Summer Olympics in 2028.

Be that as it may, the allure for countries (or for governments, at least) lies instead in the symbolic significance and prestige associated with hosting them. But at the end of the day, the money must go somewhere. And away from the arena and the pitch, the big winners of any mega event are the tourism industry, construction companies, food and beverage companies, the sportswear industry, TV broadcasters, and, of course, the official sponsors.

And the market continues to grow. The income from broadcasting and sponsorship increased over fivefold between the 1998 FIFA World Cup in France and the 2002 World Cup in Japan/South Korea to reach over USD 2 billion. That figure then more than doubled for the 2018 World Cup in Russia.

The business of spectacle

Mega events are a big playing field for companies, or, to change the metaphor, a giant catwalk on which to market their brand. After all, a brand is more than just a name or a logo. It is a symbol, an identity. It represents history, ambition, and a promise. Or aesthetics, performance, and beauty—all attributes of athletes. And sometimes of handbags. Or sneakers. Artists, Hollywood celebrities, and politicians are using the stage to market their own brands. Tom Cruise jumped from the Stade de France in Paris during the 2024 Olympics closing ceremony—for free, while Louis Vuitton Moët Hennessy (LVMH), the world’s largest luxury goods company, invested €150 million to be the premium partner of the Olympic & Paralympic Games Paris 2024. The company might not have been on any podium, but it was always there and, in terms of subtle visibility, won pretty much everything that was up for grabs. When Céline Dion stood on the Eiffel Tower and billions of spectators listened to her in awe in front of their screens, she was wearing Dior, part of LVMH since 1984. Lady Gaga dancing on the stairs by the Seine, surrounded by pink feathers? Sure, in Dior.

And it’s not just sporting mega-events. Concerts of artists like Taylor Swift, Beyoncé, or Adele are drawing people, providing an economic boost to the cities or regions where they are hosted, with local businesses seeing an uptick in demand from the influx of customers. While the economic impact of mega events depends on a variety of factors, it is generally estimated that every USD 100 spent on any one of them generates about USD 300 in other expenses, including spending on transportation, hotels, and food. Concertgoers for artists such as Taylor Swift far exceed these typical spending patterns, attracting the attention of economists, who have labeled the phenomenon “Swiftonomics.”

In June 2023, the Federal Reserve Bank of Philadelphia mentioned the musician in its Beige Book, attributing the “strongest month for hotel revenues in Philadelphia since the onset of the pandemic” to Swift’s Eras Tour. The tour’s total contribution to U.S. economic activity in 2023 was around USD 5.7 billion. If Taylor Swift were an economy, she would be bigger than that of 50 countries. If she were a corporation, her net promoter score (a metric used to evaluate customer experience) would make her the fourth most admired brand. And her loyalty numbers resemble those of subjects to the royal crown, according to one study.

Time magazine named Taylor Swift “Person of the Year” in 2023. Since 1927, the U.S. magazine has chosen a person who, in the opinion of the editors, has shaped the year—for better or for worse.

And for the U.S. economy, Swift’s Eras Tour has certainly been for the better. Swiftonomics is a global phenomenon. Singapore, a recent destination of the Eras Tour, saw an increase in bookings on travel platforms of 275% for the concert period, with inbound flight bookings rising by 186% and hotel bookings by 462%. Regional airlines added 13,000 extra seats and many additional flights. Add to all that the purchasing of merchandise and the increased demand for restaurants, and you get a sense of the power of Swiftonomics in motion.

Despite its name, however, the phenomenon is not restricted to just one artist. The average spend by people attending a Beyoncé concert was even higher than that of the “Swifties” (as Taylor Swift fans are known). Adele, for her part, took a different approach to a European “tour” by concentrating her performances in a single city: Munich. The singer performed in a bespoke 80,000-seat pop-up stadium that was used for ten concerts in August, after which it was dismantled. Adele’s approach benefits from economies of scale, ensures a more cost-efficient use of resources, and has a greater economic impact on a specific region. All of this makes the “concert economy”—a more neutral term for “Swiftonomics”—a significant contributor to gross domestic product for regions like Singapore or Munich and an attractive opportunity for businesses catering to the needs of concertgoers.

Pinnacle of human aptitude

But ultimately it is not all only about the business. As Albert Henriques, CEO of Bank Julius Baer Monaco, highlights: “The Olympics embody the pinnacle of sporting achievement. Courage, dedication, willpower, and talent shape each athlete to become the best in their sport. Their drive to shine on the day exemplifies the culmination of human motivation, achievement, and inspiration. At Julius Baer, we share the same passion as we strive to support our clients in making the most of their wealth while staying true to our culture of passion, care, and excellence.”

 

Marc Blunier is Head of Investment Promotion & Solutions, Bank Julius Baer & Co. Ltd.