Sport and the economy

The basic unit of an economy is expenditure and income. And the relationship between the two is this: your expenditure is my income and vice versa. This expenditure-income relationship can occur between two individuals or entities. It can also occur between the government and the firm or government and the individual.

This is the premise of economic activity but it does not end there as several rounds of this expenditure-income relationship produces further economic activity through the multiplier effect. This repeated process brings about economic expansion or what is popularly referred to as economic growth i.e. increments in gross domestic product. So, for economic growth or expansion to occur there has to be opportunities for these expenditure-income relationships to occur on a regular basis. It is also important to note that this expenditure-income relationship is what generates employment in the economy.

Assuming an effective and efficient tax collection system, all of these transactions or procurement generates income or revenue for the central government which can then be used to provide public goods such as sports facilities, schools, roads, hospitals and broadband internet. The provision of these public goods then ensures the smooth-running of the expenditure-income relationships by economic agents.

At this point, the reader will agree with me that the more the opportunity exist for this expenditure-income transaction to occur, the more people are given the opportunity to participate in the economy. And the more people participate in the economy through various forms of this expenditure-income transactions, the more the economy expands or grows.

Let us now turn our attention to sporting activities in Ghana. It cannot be gainsaid that Ghanaians love sports and indeed it is often said that Ghana is a football country. And our feats in the 2010 World Cup where we were a penalty kick away from being the first African country to reach the Semi-Finals of the quadrennial intercontinental football festival underscores this point. But the World Cup tournament is organised every four years and involves a select-few of our professional footballers. And we are not even making an appearance at the one to be organised this year in Russia. But that is beside the point.

As an Economist, I was shocked at the decision made on 1st March 2018 by Ghana’s Football Association (GFA) to postpone Ghana’s Premier League indefinitely. And to my dismay, it seemed that no one was concerned about the implications. From the little coverage it got in the media, it also implied that the postponement was not being treated as an issue of national concern, which it should rightly have been. Or perhaps it was seen by Ghanaians as ‘business as usual’ which would imply that the Ghana Football Association is not ‘fit for purpose’ as its number one aim is to organise professional football activities in the country.

In advanced economies throughout the world, sport is an essential segment of their economies consisting of two components, the sportsmen, sportswomen and administrators on one side and the commercial aspect on the other. Sporting activities is estimated to directly employ over 500,000 full time jobs in England and almost 2 million people for 28 countries in the European Union with 40% of the latter consisting of people under the age of 25 years.

Add the figures for indirect employment and part time jobs such as those who will work in a restaurant on a match-day, those that will sell club paraphernalia, those that sell advertisements, ticket sales on trains and buses that will send people to the match venues, sale of fuel used in cars driven to the match venue, etc. and the employment figures move well into the millions with revenues or additions to gross domestic product moving into billions of local currency.

The figures quoted does not include volunteering that offers people the requisite skills they need to take either full time or part time jobs in sports and the positive effects of this upskilling on the economy in general. In the absence of such a scheme, the government may need to cough-up funds to set a scheme where people will gain employable skills in sport – that is for those who choose sport as a career. This then becomes money-saved which can be used on other aspects of the economy.

Not all the benefits of sport can be quantified. That said, benefits such as reduction in youth crime, community development, gaining self-knowledge and environmental regeneration through the development of parks and pitches is palpable and improves the overall well-being of the people.

The data for estimated number of people employed by professional football or professional sport in Ghana is non-existent as a search through available databases did not yield any result and this lack of data might have contributed to the gleeful manner in which the Ghana Premier League was postponed as no one knows or appreciates the harm being done to the economy through lost government revenue via income taxes from those directly employed by professional football, lost expenditures as people stay at home and away from football stadia and with it, the money they would have spent on food and drinks, team paraphernalia, tickets, fuel, etc.

For the social cost, your guess is as good as mine. There are people whose employment directly depends on match-day activities. For example, those who work at the stadia may be on relational contracts that only require their services when there is a football match. In a such a situation, not only is there loss of income to the individual and their family but an inability to pay for things like rent/mortgage and food may induce the individual to engage in risky anti-social behaviours for money. This will come at a cost to society and the economy.

Potential investors, both local and foreign are also not going to invest if there is no guarantee that the football league will take place, so they can reap a return on their investments. This will also have a quantifiable effect on government finances and affect the economy as a whole. This together with the postponement will negatively affect the development of sport in the country.

My understanding is that national governments are not allowed to intervene or interfere in the administration of football in their respective countries as FIFA takes a dim view on this. This implies that there is little the Ministry of Youth and Sports can do about this in terms of remit.

That said, when things get this bad, to an extent where a whole football league has to be postponed indefinitely due to legal wrangling, then it is only appropriate for the government to step in through the legal route as the effect of the postponement on the economy, economic agents and economic activity is clearly negative. If this is successfully done, it will send a clear message that no individual or group or persons can hold the economy of Ghana to ransom.