Steve Chen, Morehead State University; Ron Dick, Duquesne University; Ashley McNabb, Morehead State University; Yin-chu Tseng, Kaohsiung Medical University, Taiwan
This investigation presented administrative and marketing-related information on Kaohsiung City’s preparation for the 2009 World Games. The presented information was allocated through an extensive literature review on secondary sources, personal interviews, and observations from fall of 2008 to summer of 2009. Promotional strategies and activities, projected financial and sales data, reports on constructions, and issues and challenges related to the Games were further analyzed. The study further discussed the “not-for-profit” approach that was practiced by many East Asian Countries to gain international recognition and promote patriotism while hosting a major sport event.
The International World Games Association (IWGA), which currently includes 33 international sports federations, has been holding its competitions every four years since 1981 (24). The World Games is considered one of the largest sport competitions, other than the Olympic Games (7). The City of Kaohsiung was fortunate to be awarded the opportunity to host the World Games after a competitive bidding process (11,25). The 2009 World Games were held in the largest port city of Taiwan, Kaohsiung, from July 16 to July 26, 2009. Past literature has shown that hosting a gigantic international sport competition has provided a golden opportunity for the hosting country to demonstrate power and wealth, to boost economics and tourism, to increase publicity and media exposure, and to improve the hosting cities’ infrastructure (10,12-14,33). In addition, an enormous amount of national pride is often associated with the host countries when they host mega-events such as the Olympic Games or Federation Internationale de Football Association (FIFA) World Cup (1,14,29,39). For the aforementioned reasons, the administrators and citizens of Kaohsiung City sincerely hoped that the city could realize economic benefits from the 2009 World Games.
The Mayor and citizens of Kaohsiung City believed the 2009 World Games was a main event that would launch Kaohsiung to the center of the world stage (21). According to Tsai’s comments on the city government’s approach (37), the World Games was a perfect opportunity for the Kaohsiung residents to reaffirm their identity and loyalty toward the city. The potential economic profits and benefits brought by the events could also help the central government reevaluate the importance and development of the city. With the support of Kaohsiung citizens and volunteers, the Kaohsiung Games was described as the most successful World Games by the IWGA President, Ron Froehlich (16,18). In this investigation, the researchers went beyond the scope of a case study by presenting administrative and marketing-related information on how Kaohsiung City prepared for its first-ever major international sport event. The collected information and analyzed results may serve two specific purposes. First, the collected information can be valuable for the city to plan its bidding proposal for 2012 University Games. Second, the information may also provide great insights for other Taiwanese cities in preparing for any future international major sport events (i.e., the 2009 Deaflympic Games in Taipei and bidding for the 2010 World University Games).
#### Background History and Facts about the World Games
When the IWGA was formed in 1980, it had 12 international sport federations as charter members (7). The 2009 Kaohsiung World Games was the IWGA’s 8th competition and included 31 different sports. Since 1981, the number of participants in the World Games has increased from approximately 1500 to approximately 3400 in 2005 (7,24). Prior to the 2009 Kaohsiung World Games, it was estimated that the city would host more than 4,500 athletes, coaches, and staff. Athletes competed in 31 different sports which were divided into six categories, artistic and dance, ball sports, martial arts, precision sports, strength sports, and trend sports (24). In general, the seven previous World Games were all financed through a virtual company or foundation established by the government of the hosting countries (35). The hosting city was also responsible for covering the lodging, transportation, and dinner costs for all of the participants (34).
Building the venues for competitions was considered the most difficult challenge in preparing for the World Games. Kaohsiung City started two major constructions as early as 2004 (9). The Main Stadium of the Kaohsiung World Games was designed by the famous Japanese architect, Toyo Ito. It has a capacity of 40,000 seats and 15,000 standing spaces (9). The total construction cost of the stadium was estimated around $150-million USDs (31). The construction of the Kaohsiung Arena costs about $20-million USDs. The central government supported about 10% of the total construction cost (7). The arena has a 16,000-person seating capacity. The DC Construction company holds the right of business operation for the next 50 years. The Kaohsiung City Government will retain the operational right thereafter. For the infrastructural preparation, the Kaohsiung City planned to complete two tracks of the Metro Rapid Transit System (MRTS), both Red and Orange Lines, in 2009 prior to the opening ceremony of the World Games (11). Apparently, both systems were completed on time.
#### Preparations Completed by the National and Local Government
As soon as Kaohsiung City was awarded the opportunity to host the 2009 World Games, the former Mayor Hsieh Chang-ting announced three programs to transform Kaohsiung into a “City of Health” (25). It was Mr. Hsieh’s most lofty ambition to utilize the World Games to further develop the city and promote its competitiveness by becoming the largest trading seaport in Southeast Asia.
The information on organization of the Kaohsiung Organizing Committee (KOC) was obtained through personal conversation with Ms. Hus, the CEO of KOC. KOC was commissioned by the Kaohsiung City Government to plan and organize the 2009 World Games. In order to complete the required tasks for the game operation, the KOC formed nine divisions to handle the businesses. They were: (1) Administration, (2) Treasury, (3) Sport Competition, (4) City Development, (5) Supportive Division, (6) Marketing and Public Relations, (7) Culture and Tourism, (8) Information Technology, and (9) Safety (27). There were 26 full-time employees in the KOC. The leadership positions of the KOC include a President, a Sport Director, three Deputy CEOs, an Assistant Coordinator, two Executive Secretaries and a Chair of Divisions. In addition, the Kaohsiung City Government further assigned 43 people (including the CEO) and 14 non-committee staff members to support the KOC. Several visiting teams were also sent to Beijing to observe the practices of the Chinese Government in preparing for the 2008 Olympic Games (22).
#### Economic Benefits and Profits for Hosting Major International Sport Events
Past literature has documented how host cities of major sport events (i.e., Super Bowl, National Basketball Association (NBA) All-Stars Games, and Olympic Games) reaped direct and indirect profits from gate receipts, tourism, and television (TV) fees. To name a few examples: (1) visitors of the 2006 Super Bowl spent as much as $180 million during their trips and the total economic impact of the event was estimated to exceed $300 million (32); (2) the 2007 NBA All-Stars Game drew more than 25,000 out-of-town visitors, generating non-gaming revenue of $26.7 million (32); and (3) $400 million in TV rights and $200 million sponsorship fees were at stake in the 2002 Salt Lake City Winter Games (4). The National Broadcast Company paid broadcasting rights fees of $793 million and $894 million for the 2004 and 2008 Summer Olympic Games (14). The Chinese government announced its operating profit for the 2008 Summer Olympic Games at $146 million(5).
To the contrary, there were reports and studies that rejected the notion of international sport events, such as the Olympic Games, generating any profit at all. It is extremely difficult to calculate the financial merits of any particular Olympic Games, due to expensive construction and many, varying costs(15). It is estimated that costs for hosting the 2012 event could run more than $3 billion USDs. Sydney and Athens spent $3.4 billion and13 billion, respectively, on the Summer Games. With these huge costs, it is hard to perceive how profits can be made(15). In fact, host countries did not make money at all prior to the 1984 Los Angeles Olympic Games (3,4). The Los Angeles Games were able to turn the Olympics into a gold mine, netting $200 million, by introducing aggressive commercializing strategies and minimizing the construction costs (3). Cities such as Barcelona, Athens, Beijing and London would spend far more money than the U.S. host cities to build new facilities and develop their community, so the profits severely dwindle (2). Local residents seldom benefit from the profits. According to Sports economist Philip Porter, who studies the effect of large sporting events on communities, it’s not unusual for cities to make less than has been projected (4).
Most economists agree that economic impact of major sport events are often calculated from three areas (5). They are direct financial impacts, indirect financial impacts and intangible. Although most of the host cities may not prosper from the profit gains, cities such as Lillehammer, Norway, and Nagano, Japan have enjoyed worldwide attention by hosting the winter Olympics. Mayors of hosting cities clearly understand that the spectacle will promote national pride and justify local development (15). Burton and O’Reilly (5) warned against focusing solely on cost and profits as the criteria for evaluating the impact of the events. They want people to consider the intangible benefits of the Atlanta Games. Although the Atlanta Games only broke even financially, Atlanta has subsequently become a bigger, better, and more respected global city.
The Kaohsiung City Government is standing on a crossroads facing an uncertain future. Based on the aforementioned paragraphs, the city has clearly spent a huge amount of money to prepare for the World Games, and anticipates huge economic profits and intangible benefits. Will the city’s investment turn out to be a prosperous return? The researchers sincerely hope the results of this study will provide preliminary findings to this difficult question.
The information on construction costs and spending on community development was gathered through a series of reviews of secondary sources and online articles prior to March of 2009. The findings related to this topic have mainly been presented in the Introduction. In order to obtain the marketing related information, promotional strategies, and projected financial data of the 2009 World Games, the researchers conducted interviews with the Chief Executive Officer, Marketing Director of the KOC, and two city councilmen. Seven specific questions given to the interviewees to obtain qualitative and statistical information are listed in Table 1.
The interviewees received the questions at the beginning of 2009. The researchers received all of the interviewees’ responses in early March of 2009. Answers were received via e-mail and phone calls. Information on stadium construction and promotional strategies released by the city government and press from 2005 to 2008 was extensively reviewed and analyzed in the month of February, 2009. The researchers categorized the collected information into two aspects: (1) public relations and promotional activities associated with the game, and (2) sales and other marketing related data.
Based on the results of interviews and search on the secondary sources, the researchers obtained the following marketing and public relations related information. The information was analyzed and categorized based on their two aspects.
#### Promotional Strategies and Public Relations Activities
To promote the World Games to Kaohsiung residents and countrymen of Taiwan, both local and national governments put great effort into creating many, varied activities. Special design competitions were held to solicit ideas for the official logo and mascot. Mr. Lin Hung-he won the (approximately) $13,000 USDs grand-prize as his design was chosen as the official logo (35). The former interim Mayor, Yeh Chu-lian also revealed the official mascot, Water Spirit, during her short tenure (35,38). Nearly $20,000 USDs was spent to reward the winners for naming the official mascot (38). To educate the fans and residents about the World Games the Kaohsiung Education Bureau established the World Games Education Program which involved all of the elementary and secondary schools. Students at each school were assigned to study a specific sport. They became familiar with the rules, history, and star athletes of their assigned sport. These students also received complimentary tickets to the games to cheer for the athletes (20). Other promotional activities for the World Games included: (1) a special float for the Independence Parade on October 13, 2003, (2) the announcement of national sport heroes, Chi-Cheng and baseball star of the Yankees, Wang Chien-ming to be the event spokespersons, (3) a poster contest, and (4) sport movie festivals (24,26,40).
The Taiwanese government publicized the news of hosting the World Games to many of its treaty nations. Delegates traveled more than half a world away to South America to express appreciation for the support and friendship provided by treaty nations (25). Former President Chen Shui-bian also promised to invite the Army parachute troopers to perform during the opening ceremony of the World Games(19).
On May 20, 2009 with the inauguration of the Main Stadium, a special concert was held in the Main Stadium of the World Games. The Pittsburgh Symphony Orchestra, the Vienna State Opera Choir, the National Experimental Chorus, the National Sun Yat-sen University Music Department Women’s Chorus and the Kaohsiung Medical University Singers worked together to perform Tchaikovsky’s ‘1812 Overture’ and Beethoven’s ‘Ode to Joy’. More than 40,000 people attended the concert (6). The Kaohsiung Metro Rapid Transit System also proved its capability to handle a high volume of passengers during the peak hours. During the competition period, fireworks shows, expositions, and food fairs were held every night at the True Love Harbor, one of the most popular tourist attractions in the city (6).
#### Sales and Marketing-Related Data
Table 2 lists the major sponsors of the 2009 World Games. A total of 40 sponsors and partners are further classified into three levels. About 80% of the total sponsors and partners were domestic business organizations. The amount of contribution from each level of sponsors and partners was not available for disclosure.
Public Television Service of Taiwan televised selected events. However, no fee amount for the TV rights has been disclosed. Most media coverage and exposure came mainly relied from the Internet. The KOC also collaborated with AllGenki.net to sell event tickets. Spectators purchased the tickets in one of the 4,800 7-11 stores in Taiwan by using the I-bon system, or at the event sites. The information on ticket prices was released in March 2009, and tickets were available for sale in April 2009. According to the news report, revenues for the gate receipts exceeded $2-million USDs (8).
For the sale of licensing merchandise, the official mascot, “Water Spirit”, was used as the main icon to create a series of subsidiary products. These products were produced by Cheerful Fashion Goods CO., LTD., a company devoted to cultivating young Taiwanese designers who design products based on traditional Taiwanese culture. The World Games licensing merchandise included polo shirts and t-shirts with color choices, recyclable chopsticks, flip-flops, key chains, passport holders, purses, shopping bags, coffee mugs, caps, and poker cards. The price of these souvenirs generally ranged from $4 to $30 USDs.
Prior to the event, an optimistic estimation (over 5,000) was given regarding the number of potential participants. According to the news report, the total number of participants from 131 countries indeed exceeded 5,000 (8). Because the Kaohsiung World Games was held during the summer time, which is the “hot” season for the city’s tourism, it was difficult to estimate the actual number of foreign visitors who arrived strictly due to the World Games. However, some economists estimated the number of the foreign visitors would reach between 30,000 and 50,000 people (31). The World Games was also predicted to bring in business worth $30 million USDs to Kaohsiung City. It was thought that the event could have a great impact on the price of real estate, estimating that the price of a house near the Main Stadium could expect a 30% increase in value (31). Based on the researchers’ personal observations, this prediction has been realized in some areas near the MRT stations adjacent to the stadium.
### Discussion and Conclusions
Past literature has in-depth discussions of economic impact and financial gains for international sport events. The data of sponsorship deals, TV rights fees, and gate receipts for past events such as FIFA Tournament or Olympic Games are available for the public to browse (1-2,17,30,36,41-42). It seems logical that scholars in Western societies, with the strong influence of capitalism, would focus more on financial (or economic) related information of the events. Clearly, there was a series of pre-game promotional and cultural activities sponsored by the KOC to increase the residents’ awareness of the World Games. However, all of the interviewees failed to provide valuable financial data on TV rights fee and sponsorship incomes. They seemed to have a vague idea or no interest at all regarding the topics of potential economic impact or projected revenues of the Kaohsiung World Games. There was also no available data on revenue generation through merchandise sales. More attention was devoted to issues related to the possible boycott by the Chinese team, the potential outbreak of H1N1 influenza, and cultural festivals sponsored by the city.
Financial information related to the Kaohsiung World Games, other than the spending in promotional activities and construction costs, was difficult to retrieve. A report had indicated the revenues in ticket sales exceeded $2 million USDs (8), but this is a small amount compared to the construction costs of nearly $170 million USDs. Based on the KOC CEO Ms. Hsu’s explanation, Kaohsiung City has taken a “not-for-profit” approach to recruiting volunteers and sponsors. This seems to be a common approach used by many of the East Asian countries to host major sport events. This implies that the local government is willing to absorb the operational cost, even if revenues fail to cover expenses. As long as the country receives recognition and media attention, it is seen as worthwhile to spend a huge amount of money for hosting the event. Thus, it is not difficult to understand why the Taipei city would promise to offer free admission to all spectators of the Deaflympic Games. Although the KOC outsources the ticket and merchandise sales to AllGenki.net and Cheerful Fashion Goods CO respectively, potential revenues through TV rights and ticket sales are not clearly discussed and emphasized. Apparently the previous seven World Games were all financed by a virtual company established by the governments of the hosting countries; however, none of the previous hosts has spent so much money in trying to advertise their country and the events.
In Kaohsiung’s case, the researchers would actually like to see a more commercialized approach to allocating funding. This would mean less spending of tax dollars for the games (35), and more involvement of the private sectors in advertising, donations, and sponsorships. There is no advantage to putting the city in debt in hosting an event that shows no promise in bringing profits.
Prior to the opening ceremony of the World Games, the Taiwanese government had monitored politically-related issues closely.
The patriotic acts of the Taiwanese residents and the Chinese government’s unfriendly political actions were considered to be critical issues during the competition period (28). Although it is common to witness political activists taking actions during a gigantic international sport event (i.e., Olympic Games) to express their ideologies (14), for a new event host such as Taiwan, any unexpected political activity during the event would negatively affect the reputation and image of the nation and future business opportunities brought by foreign enterprise. The Chinese team eventually boycotted the Opening Ceremony, but the KOC adhered strictly to the Olympic operational model to prevent any further political disruption (23,34). From the political perspective, the Kaohsiung World Games can be considered a great success. From the economic standpoint, it seems the city is not clearly standing on the “winning” side.
### Practical Applications in Sport
Based on the aforementioned discussions, the researchers would recommend the following to the City of Kaohsiung and other sport organizing committees for planning the future events:
1. Future sport organizing committees should develop a strategic plan to solicit more well-known international and domestic business franchises/industries to sponsor the event. In this case, the KOC had done a great job in recruiting a variety of sponsors according to their nature of business and functionality to satisfy the needs of the events. However, the KOC did not provide enough onsite opportunities for the sponsors to actively interact with the spectators. A future strategic plan for targeting sponsors should cover how to execute “activation” activities effectively and utilize complimentary tickets for hospitality. The committees need to provide clear incentives and business opportunities for the sponsors, so the sponsors can be convinced to invest their capitals and manpower. More complimentary tickets could be offered to the sponsors to enhance the level of hospitality.
2. The sport organizing committees should closely collaborate with the governmental agencies (i.e., city government, Sport Affairs Council, and Bureau of Tourism) to aggregate accurate financial reports (especially on the revenues of broadcasting rights and ticket sales and costs of construction) of the events. The collected information will be beneficial to the planning and bidding of future events. It also acts to show accountability to the public, by making the figures of total spending transparent. Without a clear income figure on broadcasting rights and sponsorship deals, it is hard to imagine how the organizing committee could make any profits.
3. For any developing countries wishing to achieve political stardom rapidly, bidding to host a mega-international sport event seems to be a good alternative. Evidently, China and South Africa both greatly increased their political visibility by hosting the 2008 Olympic Games and 2010 FIFA World Cup. The City of Kaohsiung should be actively involved in bidding on a moderate-scale for continental and international sport competitions, such as East-Asian Games, Asian Games, World University Games and special track-and-field invitationals. This will help Taiwan increase its political visibility and learn to handle its political conflict with China peacefully. Having these events in Kaohsiung will also maximize the opportunities for the use of existing facilities and boost potential tourism.
#### Table 1. The List of Interview Questions
Q1. Who are the primary sponsors of the World Games? (If the numbers are available, please specify the amounts of contributions for each level of sponsors.)
Q2. Which television network will televise the World Games? What is the estimated amount of the TV right fee?
Q3. How are tickets sold to the general public? How many types of tickets are available? What are the prices of all different types of tickets?
Q4. What are the major types of the World Games licensed merchandise along with their prices?
Q5. What are the projected revenues that the World Games may bring to the city?
Q6. What is the estimated number of the visitors during the period of World Games competitions?
Q7. How many full-time staff members are recruited by the city to prepare for the World Games?
#### Table 2. Major Sponsors of the 2009 World Games
|Level A (n=11) Official Partners
||China Airline, 7-11, Chunghwa Telecom, Carrefour, China Steel Company Group, Taipower, China Petroleum Company Corporation, Marina, Tissot, Volkswagen, Coca-Cola
|Level B (n=7) Partners
||SECOM, Banana Chippy, Wei Mon Industry, China Postal, Kaohsiung Medical University & Hospital, Heineken, Real Estate Development Association of Kaohsiung
|Level C (n=22) Sponsors
||Taiwan High Speed Rail, Taiwan Sugar Corporation, Giant, SYM, PXmart, Greenoil, Fish888, Starbucks, ShinKong Life, Hellocar, Hamilton Sunscreen, Dole, New Zealand Kiwifruit, Nitto Denko, Sundance, Bank of Kaohsiung, Sakura, Tong-yang, Cold Stone Creamery, Bros Sports, White Flowers
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### Corresponding Author
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