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Large sports events can be good, but do they have to cost so much?

Researchers at the NTNU Business School have taken a careful look into why many large sports events often cost more than expected. They have some ideas about how these overruns can be avoided.

If we turn the dial back to 1997 and the last time Trondheim hosted the World Ski Championships, there was a fair amount of skepticism before the event. But what a festival it was.

Trondheim also hosted the major sailing regatta Cutty Sark and the city celebrated its 1000th anniversary that same year.

All of this contributed to upgrading areas of the city, and an increased use of the city by residents, says Harry Arne Solberg, a professor at NTNU's Business School.

This year's World Ski Championships look to be a huge public celebration, which can be an important psychological benefit, he said.

Weighing the costs

The fact that a sporting event costs a lot of money is not in itself a problem, Becker said.

But the cost should be considered as early as during the application process, where the costs are weighed against the societal benefit compared to other, perhaps less spectacular, but important purposes.

The money should logically be spent where it provides the most benefit, Becker said.

He adds that cost overruns are not necessarily a problem in themselves, as long as they do not come at the expense of other important societal needs, such as kindergartens, elderly care and other critical infrastructure.

Becker compares the decision-making to a person's night on the town that doesn't necessarily end the way it was planned.

"If I go to the city to meet friends and end up drinking seven beers instead of three, and taking a taxi home instead of the bus, maybe I should have foreseen it, since has happened many times before," he said.

"I may regret it when I see my bank statement the next day, but I am the one who is responsible for my choices. Does the same apply to sports events?" he said rhetorically.

Reuse of existing facilities

One of the researchers' suggestions is to spread the different races and activities for large sports events across several facilities in the region or in the country.

This allows existing facilities to be reused, and avoids the expense of new facilities.

For example, the ski jumping events for the World Championships could have been held at Holmenkollen on the outskirts of Oslo, or in Lillehammer, where there are facilities from the 1994 Winter Olympics. The other events could have then been held in Trondheim, Solberg said.

Holmenkollen was given a major upgrade before the World Ski Championships in Oslo in 2011. It cost a whopping NOK 1.825 billion or about EUR 156 million, which caused a great deal of debate when the bill landed with the Oslo municipality.

The international ski federation FIS demanded this comprehensive upgrade. However, the event itself made a solid profit, but the investments were far higher than planned.

The researchers have been studying the World Ski Championships in Oslo among others to understand why major events often cost far more than budgeted.

White elephants

Norway has about 300 ski jumpers who are qualified to use the nation's large ski jumping hills. It is not certain that the new ski jumping facility at Granåsen will have such great general utility value after the World Ski Championships, Solberg said.

Sports economists call facilities with excess capacity "white elephants." A white elephant is something that costs more to operate and maintain than it manages to bring in in terms of income or benefit. The expression originates from white elephants in Southeast Asia that were seen as sacred animals and could therefore neither be put to work nor removed.

The costs for Trondheim's Spektrum, a 12,000-seat concert hall and arena, and the ski jumping hill in Granåsen are relatively similar. Spektrum is used for international championships, but also almost 24/7 by grassroots sports teams. The ski jump, in contrast, is used daily by a few athletes. A swimming pool would also be of far greater benefit to the local population than the ski jump, Solberg said.

"On the other hand, only large sports events like the World Championships provide an opportunity to upgrade large facilities, such as the Granåsen ski jump," he added.

The math

The company Ski-VM Trondheim 2025 is responsible for the implementation of the championship itself. The development of the facility in Granåsen, which has laid the foundation for such a large championship to be organized in Trondheim, is the responsibility of the municipality, county and national government.

The Granåsen facility has cost NOK 1.7 billion, or roughly EUR 145 million.

This total includes the construction of the normal and large slopes with associated facilities, the joint building at the ski jumps, a biathlon facility, roller ski trails, the top sports center, the stadium facility at the cross-country arena, a new ski bridge, buildings for operations and machinery, supply roads and the football hall between the main road and the ski resorts, (in Norwegian).

The state has contributed almost NOK 500 million (EUR 42 million), while NOK 51.5 million (EUR4.4 million) came from lottery sales (Norwegian betting). Trøndelag County has provided NOK 10 million (EUR 856,000). Trondheim municipality has provided NOK 1.1 billion (EUR 94 million).

Research on the 2025 Ski World Championships

Researchers will collect more concrete knowledge about the Ski World Championships in Trondheim through a research project on the event. The Ministry of Education and Research has allocated money for the research project, which you can read more about here: (in Norwegian).

Here's what the researchers are studying now

1. Measure the financial contribution to the city (e.g. from visitors, external sponsors, etc.)
2. The budget process.
3. Psychological safety: Document the challenges of being part of an organization where many inexperienced people are involved. Events like the World Cup stand out from annual events like the St. Olavs Festival, where the project organization brings with it experiences from year to year.
4. The psychological effect for local residents, such as enthusiasm, pride and the like.

The challenge

Implementing and holding a major sports event is a complex task with many players and moving pieces.

Becker points out that many of the actors have room to maneuver to spend money that they do not have to contribute themselves, they can make demands that they do not have to finance themselves, or they can dispose of funds from others without sufficient control from those who actually own the funds (such as society at large, or taxpayers).

"This can lead to overspending and a lack of cost control, which creates financial challenges as well as arguments and disappointment related to who pays the bill," Becker said.

The solution

To counter these challenges, the researchers propose establishing an expertise bank that will ensure the systematic transfer of experience and knowledge.

A shared body of information can help developers avoid repeating previous mistakes, reduce the risk of pitfalls and provide better control over both processes and costs.

The researchers recommend that this expertise bank be managed by an independent institution, which could include the following tasks:

• Counter strategic budgeting, where cost estimates are kept artificially low to ensure events are allocated to cities where the costs "appear" to be low but may not be.
• Promote collaboration with other applicant cities, which can make it more difficult for the international federations to play applicant cities off against each other in bidding wars.
• Assess whether the use of resources on sports events provides a risk-adjusted societal value that is greater than or equal to the best alternative use of the funds.
• Ensure that the allocation of events prioritizes destinations that have a competitive advantage, such as awarding a winter championship event to a winter sports destination.
• Implement risk and profit sharing mechanisms, so that organizers take greater responsibility for financial uncertainties.

While risks associated with major sporting events cannot be eliminated, strategies like these can contribute to more realistic and responsible budgets, the researchers said.

Related research is in the journal Managing Sport and Leisure.