|  | Feature | No.59 May 2010 |

Evolution of Sport, Economics and Globalisation
Pedro Guedes de Carvalho
Introduction
Globalisation has been examined by numerous scholars (Friedman, 2008; Fotopoulos, 2008; Goslin & Kluka, 2009; Maguire, 2002). Fotopoulos (2008) has argued that globalisation is the result of systemic trends merged onto the market economy’s rapid expansion of transnational corporations. The trends seem to have not been offset by forms of political activity, thereby causing globalisation. Several forms of globalisation have taken hold: economic globalisation (the deregulation of commodity, capital and labor markets), political globalisation (the emergence of transnational elite); cultural globalisation (the homogenization of cultures worldwide); ideological globalisation (the merging of similar paradigms of thought), technological globalisation (the integration of technologies throughout societies), and social globalisation (the development of social networks in all sectors of societies). Friedman (2008) has examined the impact of the "flattening" of the world, and argues that globalised trade, outsourcing, supply-chaining and political forces have changed the world permanently, for both better and worse. He also argues that the pace of globalisation is quickening and will continue to have a growing impact on business organisation and practice. The scholars above believe that globalisation is a synonym for global business and trade, but others (Goslin & Kluka, 2009; Maguire, 2002) believe that the same forces allow businesses to operate as if national borders did not exist and also allow social activists, labor organisations, journalists, academics, health care providers, and sport organiations to work on a global stage.
Sport has been defined in the 1978 International Charter of Physical Education and Sport (UNESCO) as “...any physical activity which has the character of play and which involves a struggle with oneself or with others, or a confrontation with natural elements. If this activity involves competition, it must then always be performed in a spirit of sportsmanship. There can be no true sport without the idea of fair play.”
The Council of Europe (1992; revised 2001) further defined sport as “...all forms of physical activity which, through casual or organized participation, aim at expressing or improving physical fitness and mental well being, forming social relationships or obtaining results in competition at all levels.”
Central to the above is the idea of sustainable development which recognizes that development is more than just economic growth. Development also involves a process of enlarging people’s choices and increasing opportunities available to all members of society. In the case of globalisation and sport, these choices and opportunities are based on inclusion, equity and sustainability, and building opportunities for generations without borders. This development is imbedded in socioeconomic phenomena.
From a socio-economic perspective, we are entering into a new era where complex environments force researchers to try new directions that utilize strategic approaches to socio-economic phenomena. According to Holt (2010), “…neoclassical era in economics has ended, and it is being replaced by a new era….that work will likely change the way in which we understand socioeconomic phenomena and the economics profession”.
Increasingly, the relevance of our contribution to the globalisation of sport will be made possible if we pursue new directions by embedding broader views of where economies are going. Systems are in constant flux; therefore, “sport economists must use lab, field and natural environments to determine what people actually do”…the more they go they are noticing that “institutions are very important since the incentives embodied in those institutions are often central in understanding people’s behavior” (Holt, 2010), which is directly linked to globalisation. In sport, institutions play a very important role and deserve to be studied carefully if we intend to understand behavioral changes.
Based upon economic discussions of dynamic forces influencing globalisation, Christopherson (2008) believes that the world is reflected by peaks in population density, electricity consumption, patents and scientific citations and, therefore, is not flat as Friedman (2006) postulated. She contends that there are still huge lags that will not be overcome soon, particularly in communications controlled by governments and corporations dispersed around the world. Key determinants of nations’ wealth are also unevenly distributed.
New technologies have also changed the way commodities are produced and delivered, thereby changing the habits and consumption patterns of a large number of the world’s population, but a substantial amount of the world’s population is experiencing starvation, poverty, illness, and illiteracy. Because some areas of the world are developing with lightning speed while others appear to be inert, globalisation appears to be somewhat skewed to those areas that have sufficient infrastructure to support additional development. This has caused a feeling that one must work harder and faster in order to be a part of a highly qualified labor force and able to compete worldwide. Globalisation is now emerging from globalising industries to globalisinging individuals.
In general, small and medium sized businesses are the ones able to create new employment places. High-tech based businesses have been quick to expand worldwide and create jobs abroad. In order to create jobs through sport, we must learn how to use global capabilities and adapt them to local needs. For example, how can we use satellite, wireless and new workflow software to fill local needs? Not everyone can go to the FIFA World Cup in South Africa in 2010 or the Olympic Games in London in 2012, but everyone could watch them on television with better seating than if they were in the stadium. A number of community meeting places will provide special opportunities (e.g., pay-per-view or big screen television at restaurants/pubs) to provide the experience and will sell locally produced goods to complement that experience.
Sport industry in the new complex era
Figures concerning the size and impact of sport on the economy appear frequently in journals and on internet sites; however, government statistics are still scarce, which means that there is no consistent indicators relative to the magnitude of the sport sector in the economy.
Table 1 – Sport Industry Overview

| Sport Industry Overview
Amount | Units | Year | % of the GDP
Estimated Size of the Entire Sport Industry, US | 410.6 | Bil. US$ | 2009 | 2.8%
Annual Company Spending for Sport Advertising, US | 30 | Bil. US$ | 2009 | 0.2%

Source: Adapted from Plunkett Research Ltd
http://www.plunkettresearch.com/Industries/Sport/Sporttatistics/tabid/273/Default.aspx
Table 1 above reflects the US sport industry size (2.8%) and the expenditure that private companies devote to sport advertizing. A number of new centers around the world are playing an ever more visible role in global sport, funding and sponsoring sport events, and pledging major investment into national sport infrastructure and community programmes, with a growing awareness of the overall economic and social benefits that sport can bring.
In Global Sport Industry Congress, held on 18-19 October 2009, in London, England, Andreff stated that:
“The sport industry is now estimated to be worth $500 billion worldwide, but the bulk of recent growth - and the most exciting prospects for the future - belongs to a new and ambitious generation of rapidly developing markets influenced by globalisation.”
Sport financing and GDP
Trying to measure worldwide expenditure on sport, Andreff (2009) predicted the global expenditure through a proxy of sport financing expenses related to the GDP of each country in the European Union (EU).
Figure 1 - Relationship between sport financing and EU country GDP
Source: Adapted from (Andreff, 2009)
Andreff postulated that “…The share of public financing reached from 8% (United Kingdom) up to 78% (Bulgaria) of overall sport finance. Public share diminishes when the level of GDP per capita increases. Sport financing by local and territorial authorities is practically non-existent in some countries (Malta, Bulgaria); a maximum is witnessed in Germany where financing by local authorities makes up for 96% of all public sport finance”. There is an increasing rate relationship in the reported countries between both indicators when GDP per capita is low; the relationship stabilizes when countries have GDP per capita over 18.000€.
Labor Mobility
A study conducted by Brauer, et al. (2010) at the 2009 African Football Championship assessed the number of players returning from abroad to play for their national teams. The relationship of players to the Human Development Index (HDI) was negative, indicating the more developed the country was, the more it sustained their own players. The better players from more undeveloped countries emigrated and played in the most famous sport clubs in Europe. From a more developed country’s’ perspective, the richer the club the more it utilized players from cheaper markets where they could find excellent players for lower salaries compared to those born and trained in the elite clubs.

Figure 2 – Relationship between player exports and Human Development Index
Source: Adapted from Brauer, et al., 2010
When examining Figure 2, we see that the number of exported players (playing abroad) who play on the national teams is higher in most of the countries; in Egypt and Tunisia, however, maybe the most developed countries that play in the African Cup, the relationship is more moderate. Several statements can be made from the Brauer and colleagues study:

1. (Africa`s) wars may push talented players out, and (European) club money pulls players in. For example, no Cameroon or Nigeria national players play for club teams in their home countries. Both countries have player export rates of 100%. Of Cameroon`s 23-player squad, seven earn their pay cheques in France while England, Germany and Spain each employs three.
2. Other countries with very high player exports include Côte d`Ivoire (22 players), Burkina Faso (21), Mali (21) and Togo (21). At the opposite end of the spectrum, the highest player retention rates are those of Egypt (19 out of 23 players, for a rate of 82.6%) and Tunisia (16 players, or 69.6%).
3. The North African Cup nations—Algeria, Egypt and Tunisia—show the highest degree of player retention, 63.8%, followed by the two former Portuguese colonies (Angola and Mozambique, 50%). The other 11 countries retain players only to the degree of 9.7%. Looking at player exports or retention from the point of view of the last colonial power that occupied each of the 16 countries from which the Afcon teams hail, we note that the nine former French colonies keep only 17.9% of their players at home and export the remaining 82.1%. The two former Portuguese colonies (Angola and Mozambique) keep 50% and export 50%, and the five former British colonies keep 31.3% and export 68.7% of their national team players.

Globalisation and sport – Economics-based categories for consideration
Considering that sport is globalised in some markets and localised in others we need to continue to treat them differently according to each market function; financing sport is not a balanced issue. It depends on the market and the country and also on the level of human development of each country. Some sports are developing with foreign athletes and some others are nationally based. This means that some sports are more open to global competition than others and should be aware of different market functioning.
There still appear to be some inequities in sport globalisation. There are some different markets for sport based on economic rationale. In one category is globalised sport that is practiced by elite athletes and coaches. This market is designated for the elite and socio-economically privileged. This is a clear private market where competition is global and organiations are a set of rich clubs with bond capital and/or specific investors that come from other economic sectors and try to play the game with the same strategy they play with their firms. Primarily sports such as tennis, horse racing, golf, automobile races and Football, Basketball, Hockey, Rugby, and cricket can be included in this classification.
In a second category we could include sports that are competing for national prestige and are essentially sponsored by public funds. These are sports that can sustain a set of athletes training and competing in special events to prepare and perform in two- and four-year cycles in European, World Championships or the Olympics. This is a closed and monopoly market held by government and some special multinational firms.
In the third category we could have private clubs sponsored by firms and the bonds of clubs. This category includes regulated competitions with a private-public partnership because some of the first winners will achieve participation in billionaire contests abroad.
The remaining category would be occupied by other clubs and considered as regional and national-based development, aiming to achieve a participation level where financing is mostly private (households), increasing the self esteem of the local people and contributing to individual healthy lifestyles and a more skilled labor force.
Those researchers interested in the development of socio-economic models based on the sport industry and market functioning for globalisation through sport can provide new strategies to better link globalisation and sport. Sport has always gathered people from the same neighborhoods and schools and through private clubs. Clubs were organised to compete with other cities’ clubs. Firms and universities were places/institutions where people competed, developing pride in community. Regional and national levels of competition have influenced major changes of sport organisation processes and sport development within regions and countries. Globalisation has the potential to deliver sport for all. The concept of “sport for all” is central to this understanding of sport. “Sport for all” initiatives aim to maximise access to and participation in appropriate forms of physical activity. Sport can be included as a tool for community development and social change, based on its powerful potential as facilitator of social interaction, builder of community identity, cohesiveness, inter-cultural relationships and social re-engineering (Kluka, 2008). Community development through sport refers to the use of sport as a tool for personal, national and international development goals. It also refers to how sport is used as a tool for addressing societal challenges. As sport becomes increasingly part of humanitarian and development work (which is part of globalisation), as well as a part of the corporate social responsibility practices of some private sector actors, researchers should be anxious to explore the potential, as well as the limitations, of sport in their work.
References
Andreff, W., Dutoya, J. and Montel, J. (2009). Playthegame: a European Model of sports financing: under threat? Downloaded from http://www.playthegame.org/knowledge-bank/articles/a-european-model-of-sports-financing-under-threat-4364.html 21 March 2010
Brauer, J., Ferreira, M.E. and Mendonça, S. (2010). Wars push but Money pulls. Mail & Guardian online http://www.mg.co.za/article/2010-01-29-afcon-wars-push-but-money-pulls
Carvalho, P.G. and Nunes, Paulo (2010 forthcoming). The non linear relationship between performance and sport clubs.
Christopherson, S., Garretsen, H. and Martin, R. (2008). The world is not flat: putting globalization in its place. Cambridge Journal of Regions, Economy and Society 1(3), pp. 334-43.
Friedman, T.L. (2006). The World is Flat - A brief History of the twenty-first century. New York: Farrar, Straus and Giroux.
Holt, R.P.F., Barkley Rosser Jr, J. and Colander, D. (2010). Middlebury College Economics Discussion Paper nº 10-01. Downloaded February 2010, http://www.middlebury.edu/~econ
Kluka, D. (October 10, 2008). Intercultural integration in and through sport management. Keynote professional paper presented at Congresso de las Unidades Educativas de Talento Deportivo, Margarita Island, Venezuela.
Contact
Dr. Pedro Guedes de Carvalho
Department of Sport Sciences
University of Beira Interior, CIDESD
Covilha, Portugal
Email: pguedes@ubi.pt

http://www.icsspe.org/