Portugal Hopes for Euro Economic Bonus

Portugal is about to experience the planet's biggest sporting spectacle barring, or course, the World Cup and the Olympics. For three weeks, fans from across Europe will travel to the country to support their teams and soak up the atmosphere of Euro 2004. During their stay they will splash out an estimated €260 million ($318 million) on tickets for matches, hotels, food and countless other items.

With a Portuguese population of only 10 million, the hordes of visitors will bring a significant boost to the economy. But the tourists are only one aspect of the competition's economic impact.

"The importance of the tournament for Portugal is undeniable and it will have important effects in the sporting life and in the economic and touristic activities of all the host cities," Porto Mayor Rui Rio told the official Euro 2004 website.

Though it has become de rigueur for the hosts of major sporting events to tout the economic benefits, measuring it all can be tricky. While increased numbers of tourists and extra construction and infrastructure spending is easy to quantify, there are also several intangible factors, such as the heightened "visibility" of a host country or city.

According to one study commissioned by UEFA, Portugal will reap around €800 million in immediate benefits from Euro 2004, including income, promotional value and tourism. Some €244 million has been poured into the country's construction industry alone, creating jobs in the sector and boosting wages.

The study said Portugal can expect an increase in annual tourism revenue of between €179-357 million in the years following the tournament. The added tourism will create an estimated 14,000 new jobs, which in turn will bring around €200 million into the economy.

But all of those figures can't assuage the concerns of some worried that Portugal, which has faced recession and rising unemployment in recent years, is unable to afford what it has spent on the competition.

Massive investments

For example, some €650 million were pumped into building and renovating the ten stadiums to be used for the competition, even though many are likely to be underused after the European championship moves on. In total, Portugal is spending an estimated €4 billion in the run-up to the tournament. Besides the stadium costs, large sums were spent on high-speed rail links and other infrastructure.

"It's been a big investment for a small country," Luis Arnaut, the government minister in charge of sports, told the Associated Press. "It's one of the greatest financial outlays ever in Portugal."

A recent poll by Portuguese RTP television showed around half of those asked did not believe hosting Euro 2004 was worth the investment. Some experts on the economics of sporting events share the public's skepticism.

"During the competition there is of course a short boost, but after the games there's not going to be much left," Prof. Claude Jeanrenaud from the University of Neuchâtel in Switzerland told DW-World. "The long-term effect will likely be very small."

Impact on tourism

Jeanrenaud said although Euro 2004 would greatly raise Portugal's profile internationally, one could not assume the benefits would be solely positive for the country's important tourism sector.

"Tourism is already well developed there. Plus, during the games there will probably be less beach tourism as people decide not to go this year fearing it will be too crowed," Jeanrenaud said.

Still, Jeanrenaud said the Portuguese economy could increase its economic benefits should the country's national team, which is a tournament favourite, manage to will Euro 2004.

"It’s hard to put a figure on it in monetary terms, of course. But it can put the people in a good mood and that can help the economy," he said, adding that bonus could apply to whichever country is eventually crowned champion.