The Economic Importance of Olympic and Paralympic sport
2
The four digits used for the 615 'Classes' shown in Table 1, for example 01.11, are commonly known as
Standard Industrial Classification codes or SIC codes.
Sport, in its totality, is not recognised as an industry within the framework of National Accounts.
However, as will be shown later, sport and sport-related economic activity is found to varying extents
in 182 out of 615 SIC codes. Throughout Europe, the method used to identify sport’s contribution to
the economy is the production of a 'Satellite Account'. The Satellite Account technique was developed
by the United Nations to measure the size of economic sectors that are not defined as specific
industries in the National Accounts, but which are clearly linked to the economy. In the UK there is a
tourism Satellite Account, a Satellite Account for sport (SSA), and more recently a Satellite Account for
golf. Satellite Accounts usually analyse industries from four perspectives.
Gross Value Added (GVA), which is the core of the National Accounts, and is defined as the
profits plus wages within an industry, less an adjustment for taxation and subsidies. GVA is a
proxy for Gross Domestic Product (GDP), the key measure of the scale of an economy.
Employment is reported as a head count of employees and the self-employed to quantify the
number of workers, and as Full Time Equivalents to quantify the number of jobs.
Consumer spending, which is defined as the spending of individuals and households on sport-
related goods and services.
The fourth, less commonly used measure is turnover, which captures the revenue flows associated
with a given level of GVA. In order to generate £1,000 in wages and profits it might be necessary for a
business to have a turnover of £1,800. This would include spending on all of the inputs required in the
production process. Turnover is estimated by using appropriate industry specific ratios derived from
the Input-Output Tables (IOT) of the UK.
To date UK Sport's strategy has been to use its resources to support Olympic and Paralympic sports in
order to achieve medal success. According to UK Sport's 'Investing in Sport' principles:
At the heart of our investment approach is our philosophy of targeted investment to support all credible
medal potential within the high performance system. This approach focuses the resources available
towards athletes and sports with the greatest chance of succeeding on the world stage, across an eight
year pathway……This approach, along with record levels of investment from the National Lottery,
Exchequer and Team 2012 helped Great Britain achieve 67 Olympic medals and 147 Paralympic medals
at Rio 2016 and four Olympic and six Paralympic medals at Sochi 2014
.
Prior to Sporting Future, there was no explicit requirement for sports to quantify and report on their
economic scale and significance. The new policy direction requires taking a different perspective on
the 'performance' of sport and to use a rather different vocabulary. UK Sport can therefore be seen to
be taking an important leadership role in quantifying the economic scale of Olympic and Paralympic
sport. As the distributor of £345m in the Tokyo cycle and a further £30.5m in the PyeongChang cycle it
is of value to UK Sport and the national governing bodies of sport it supports, to know the economic
significance of their activities. For the purposes of clarity, the key performance indicator stated in
Sporting Future for measuring economic development through sport is employment as estimated in
the Department for Culture, Media and Sport's Sport Satellite Account:
http://www.uksport.gov.uk/our-work/investing-in-sport